FREQUENTLY ASKED QUESTIONS

Commonly known as term insurance, this insurance can be 10 years, 20 years or even 30 years. The term benefit remains constant as does the premium for the length of the term. Mortgage insurance is also considered term insurance. Mortgage insurance traditionally will decrease in face value as the mortgage decreases. The premium for mortgage insurance normally remains the same for the term for example 25 years. Term insurance is generally your least expensive form of insurance. Term insurance is used to cover a temporary need in the case of an unexpected death. Debts to be paid off, children’s education need to be funded and a surviving spouse needs to be provided for with an income replacement. Premiums are generally guaranteed for the term you choose and usually are renewable at a higher rate without further medical evidence. Rates are determined based on age, health and lifestyle. Prices are very competitive and can vary significantly amongst different carriers.

Permanent Life Insurance is used when there is a need for life insurance to remain constant for the life of the insured. As the name suggests, the insurance is permanent and covers you to age 100 where it normally is fully paid up at that point. The primary reasons to obtain a permanent policy would be to ensure immediate liquid funds were available for last expenses such as funeral costs, estate expenses and fees such as capital gains tax, providing an income for the surviving spouse, leave an inheritance for children or grandchild or perhaps a charitable foundation. Permanent Life Insurance products are most frequently known as Whole Life, Universal Life or Term to 100. These permanent policies have guaranteed premiums for life that never change and the contract continues to age 100 where at that point is fully paid up.

A Universal life policy is flexible allowing changes in premiums as needs change along with a savings component with multi-level of investment choices, and payment periods. The Universal life policy builds up cash value which the client has access to over their lifetime in the form of a withdrawals or loan against, some withdrawals may be subject to tax, depending on policy and legislative limits
 
A Whole life policy is a structured policy with the premiums being deposited with the insurance company which will pay out dividends based on companies experience. The dividends may be used to buy more life insurance or accumulate cash value. Funds may be used as a loan against the policy accessed in the future for retirement or to help pay expenses.
 
Whole Life and Universal Life policies have savings components while Term to 100 is pure insurance with no cash value element to it. Some Whole Life and Universal life policies can be set so that they are guaranteed to be paid off in say 10 or 20 years, with no payments required after that.
 
Each persons needs are unique – I help construct a plan for both the short term and long term to ensure that all exposure is protected, keeping in mind the purpose and need for coverage, whether short term or long term – sometimes the best protection is a combination of Term and Permanent to meet both temporary and permanent needs. A combination of Term and permanent helps provide a large amount of coverage in the early years when needed the most at an affordable price. It would decrease over time eventually leaving the permanent life protection to cover the final expenses require, pay taxes, etc. TEMPORARY TERM INSURANCE – Temporary need – Coverage for 10, 20, 30yrs – Low initial cost – Premiums increase on renewal – Level death benefit – No cash value – Option to convert to permanent PERMANENT LIFE INSURANCE – Permanent need – Coverage for life – Guaranteed premiums for life – Level premiums with flexibility – Potential increasing death benefit – accumulates cash value