Whole life insurance offers permanent coverage which guarantees a death benefit, plus a built in savings component.
Whole life insurance is little more involved than term life insurance and also pricier. The reason for the extra cost is due to an investment component that is factored into the premiums you pay. Essentially the insurance company invests on your behalf. That accumulated amount is referred to as cash value. The advantages of having that cash value is that you are entitled to it at any point.
Having cash value is like having money in the bank. Since it is an asset you can access at any point, you may choose to borrow against it in the form of a policy loan. Or, your life situation may change and you may instead opt to cancel your policy and use that accumulated cash value to supplement your retirement costs. It’s easiest to think of it as “forced savings.”
Whole life insurance guarantees a death benefit. Obviously this type of coverage comes at a price, but as long as you continue to pay your premiums your beneficiaries will receive money. Many times people use this assured death benefit to cover the cost of a funeral, to help offset the cost of transferring a family business or simply to pass along a portion of their estate tax free.
Whole Life Insurance May be Ideal For:
- Anyone looking for coverage for the entire span of their life
- Wealthier individuals who use it as part of their estate planning as a tax shelter
- People who prefer not to be as involved with their finance but still recognize the importance of savings
If you are considering buying whole life insurance, it is important to remember that it isn’t as straight forward as term life insurance. Simply due to the countless options now available, plus the amount of money invested warrants a definite consultation with your local broker.
LifeInsuranceCanada.org is supported by a network of independent licensed brokers across Canada. If you are looking for whole life insurance in Canada an independent broker can help you compare companies more objectively than a captive agent. Get connected with a broker today by requesting a free quote.
