Making sure you have the right financial plan can mean the difference between leaving your loved ones financially stable and leaving them to deal with debts an inadequate income.
Life insurance is used to create financial security for you and your family. If you should die prematurely, your life insurance can:
- Leave an income for your family
- Ensure your family has the resources to maintain a comfortable standard of living
- Help fund your dependants educations
- Cover funeral and burial costs
- Pay off any outstanding debts
Life insurance provides a tax-free benefit to any named beneficiary. Naming a beneficiary in an insurance contract ensures the money is paid directly to the person, corporation, or organization and will not go through the deceased’s estate.There are many types of insurance plans to choose from. Having the right people to help you determine the right plan for you is essential. Your objectives and philosophies will be important factors in determining whether or not a plan will meet your needs and goals. For those of you who are incorporated, the majority of your life insurance policies can be owned and paid for by your corporation. This allows you to receive a tax-free benefit while using corporate dollars to pay for the premiums. This can lead to significant savings.
Types of Insurance
Term Life Insurance is an easy and affordable way to provide financial security.It can be used to meet short-term protection goals for the lowest initial cost. Available in terms of 5, 10, 15, 20, 25 and 30 years, these plans allow you to have financial security with affordable initial prices. They offer low affordable rates for the initial period of their term (5–30 years) and renew at higher premiums thereafter. Your term insurance, if set up properly, can be converted in the future to longer permanent plans without any medical evidence.
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Purchasing a home is one of the largest financial transactions you will ever make.Your home will be one of your biggest assets and most of you will be using a mortgage to finance this asset. Your mortgage, like any large debt, can be a huge financial burden to a surviving spouse or dependant in the event of an untimely death. Insuring your mortgage through an insurance plan is a smart and responsible decision. Your mortgage lender (most commonly your bank) will in most cases offer you mortgage coverage. Their coverage will pay off the balance of your mortgage in the event of a death. Please note you do not have to purchase your mortgage insurance through your lender. In most cases your insurance broker can find you more flexible and more affordable insurance to cover your mortgage. As your independent insurance advisors, we can survey the market and find which life insurance company has the best coverage at the lowest cost.
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Permanent life insurance, this coverage will provide you with protection for life.Unlike term insurance, this coverage will provide you with protection for life. The advantage of Permanent permanent insurance is it provides you with lifetime coverage at the same guaranteed rate (no premium increases). There are many plans to choose from depending on your needs and objectives. There are plans like the 20 pay policy, that will cover you for life, and are guaranteed to be paid in full after 20 years. There are also plans like the T100 where the annual premiums are fixed (in other words; premiums are level), until age 100. It is best to sit down with your insurance broker to ensure you find the right product for your needs.
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Universal Life is a very popular life insurance product.
This product allows you to combine your life insurance protection with a tax-advantaged savings and investment component. Unique and vastly different from term and other permanent insurance plans, a Universal Life policy can be designed to accumulate large cash values that grow tax-free, much like your RRSP. The insurance benefit is paid to your beneficiary upon your death, is tax-free, and will include the initial death benefit and any cash accumulation throughout the policy.
This diverse plan allows the insurance and investment component to meet the specific needs and objectives of each individual client. The policy is designed to be flexible so that it can allow you to pay the policy up within a certain amount of years, to increase, decrease or stop your premiums, or even stop them completely over a certain time period.
The Universal Life Plan is often used as a corporate-structured life insurance policy. With its unique investment component, it allows a corporation to drop corporate funds into the plan which will accumulate tax-free. This accumulating cash value is accessible to the client and can be withdrawn from the policy. The amount of tax or surrender fees to be paid upon withdrawal (if any) is completely dependent on the withdrawal vehicle used.You can decide how the money is invested. Many companies have a variety of funds and bonds to choose from, allowing you to be as risky or conservative as you like.
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