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What is Life Insurance?

Life insurance is a contract between you and an insurance provider that guarantees a death benefit to your chosen beneficiary upon your passing, in exchange for regular premium payments.

Key Terms

  • Death Benefit: A tax-free lump sum payment made to your beneficiary.
  • Premium: The amount you pay periodically (monthly or annually) for the policy.

The specifics of the death benefit amount, premiums, and the duration of the policy are agreed upon by both parties. Optional add-ons, known as riders, can be included to tailor the coverage to your needs.

Why Consider Life Insurance?

Life insurance provides financial security for your dependents, ensuring they can manage living expenses, pay off debts, or take the necessary time to grieve without financial stress.

Ultimately, life insurance is not for you but for your loved ones, offering them the financial freedom and support they need in your absence. Various providers in Canada offer customizable policies to suit diverse life insurance needs.

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Different Life Insurance Options

1

Corporate Owned Life Insurance

Reduced tax cost of life insurance premiums

2

Mortgage insurance vs. Life insurance

How to protect your biggest asset

3

Non-Medical Life insurance

Fast and convenient application process

Life insurance is a powerful tool for many different financial situations. Here are a few reasons why you might buy a life insurance policy:

If others depend on your income
If others depend on your income or care – If you earn money for your family, you may want to make plans to replace that income after your death.
Your estate won’t cover final expenses
Your estate won’t cover final expenses – Even if you don’t have dependents, an insurance policy can be useful if it covers final costs, such as funeral expenses, which protects your next of kin from a financial burden.
Group insurance may not be enough
Group insurance may not be enough – Your employer may offer a low-cost or free basic life insurance policy. These policies can be useful but are often not enough for workers with dependents, as they typically represent only one or two years of income.
You want to leave more to your heirs
You want to leave more to your heirs – If you’re interested in leaving a financial legacy, a life insurance policy helps you maximize the size of your estate and reduce potential taxes for your heirs.

Why Should You Buy Life Insurance?

Life insurance isn’t a popular topic of conversation. After all, buying a policy is like gambling against your own life. But it’s not something that should be ignored. There’s no law that says you need to have life insurance. But if you have children or other dependents, life insurance is definitely a smart idea. Life insurance is designed to help the people who depend on you for financial support. When you get right down to it, taking out a life insurance policy is the best way to guarantee that your loved ones will be financially secure should you die.

When you decide to take out life insurance, choose a policy that meets your life insurance needs with a premium that you can afford. A premium is an amount you agree to pay every month/year to the life insurance company. If you should die, the people named in your policy (the beneficiaries) receive payment for whatever the value of your insurance policy was issued.

Life insurance will protect your family and/or specified dependents in the event of the policyholder’s death. In nutshell, it is an essential component in planning for the future. There are many options available depending on your situation. There are three main types of life insurance, Term Life, Universal Life, and Whole life insurance.

Types Of Life Insurance

Term Life Insurance

Simplest and least expensive type of policy. It’s pure insurance with no cash value account. A term life policy has only one function, to pay a specific lump sum to whoever you’ve designated, upon a specific event, your death, on the specific time chosen (eg. Term 10, Term 20, Term 40, etc.). It’s important to look at the future when picking term life insurance. Term life insurance is often used to cover a mortgage or a loan.

Whole Life Insurance

Provides permanent protection for your dependents while building a cash value account. With this type of insurance, the insurance company manages the policies various accounts. It’s an excellent choice if you want lifelong coverage and equity in the form of a cash value over time. Costs are usually guaranteed when you first purchase the policy. Some plans allow you to pay for a limited number of years, then never again. Imagine you could buy insurance when you’re 40, finish paying the premiums when you’re 50 and be fully covered for the rest of your life.

Universal Life Insurance

Provides Permanent insurance protection for lifelong peace of mind, plus Investment account options that can grow your savings, tax-deferred. You choose a guaranteed death benefit amount that will be paid to your beneficiaries when you die. Your payments are deposited to a “policy fund”. Any money you deposit over and above what is required for the cost of the insurance can either be placed into investment accounts to grow-deferred or used to increase the value of your death benefit.

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At SSJ financial, I place my clients’ interests first. I firmly believe that one size doesn’t fit all. Every advice that I offer, fits into a customized plan to suit the needs of my clients.

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