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Permanent Life Insurance

At P.D. Foster Insurance we wish everyone knew more about Permanent Life Insurance. It is one of the best options to create a nest egg starting at a young age offering the choice to either access the funds available in your policy saved over time, or leave behind a generous financial gift for loved ones when you die.

What is Permanent Life Insurance?

Permanent Life Insurance is a special type of insurance policy that not only provides coverage to beneficiaries but is also an investment that builds value over time. As a result, you can leave the policy to a beneficiary, or access your contributions as a loan or withdrawal. Even if you choose to access funds, the balance is left to your beneficiaries when you die.

What types of Permanent Life Insurance are available?

Generally, there are two Permanent Life Insurance options:

  1. Whole Life Insurance: This type of policy lasts your entire life while building value over time. The “cash surrender value” (CSV) grows based on investments made by the insurance provider. Whole Life Insurance comes in participating and non-participating options. The main difference between the two is with non-participating policies your insurance company provides estimates for your expected returns at the start of the year which are then deducted from your premiums. This can reduce your premiums over time as long as expected growth is positive. For participating policies, your CSV interest is applied back to the CSV, so it becomes more like an actual investment. As a result, you receive returns similar to a dividend. As well, participating Life Insurance policies are principal guaranteed, which means if they see negative returns your CSV is not impacted. This makes it a safe and smart investment option.
  2. Universal Life Insurance: Universal Life Insurance is more complex. It works much like participating life insurance but with tax advantages. In this case, you have a choice in how your CSV is invested so your premiums are often referred to as investments. Like an investment you also receive reports, so you understand the status of your CSV such as investment returns. Tax advantages, including your CSVs, are tax-free unless you make a withdrawal, although you still have to pay a provincial ‘policy tax’ that ranges between 1% to 5%.

Generally speaking, Universal Life Insurance policies are suited to high-net-worth individuals who have reached limits for their RRSP and TFSA contributions while Whole Life Insurance policies offer a more secure investment.

How are Term Life Insurance premiums calculated?

There are several factors used when calculating your premiums, including your:

  • Age: Life Insurance premiums increase as you age, so it is always best to choose to contribute to a Permanent Life Insurance policy at a younger age, so your premiums remain lower and your wealth continues to grow.
  • Health: If you suffer from chronic diseases or have a family history of disease, your premiums can increase.
  • Lifestyle: Lifestyle choices such as smoking can also increase costs.
  • Gender: Statistically women live longer, so can usually see fewer premiums than their male counterparts.
  • Occupation: Higher-risk jobs can increase your premiums.

We will discuss your specifics to help you make the right choices for your Permanent Life Insurance policy.

How do you know how much Life Insurance coverage is best?

One of the biggest benefits of Premium Insurance Policies is that the premiums don’t tend to increase. This is why it is recommended you purchase a policy when you are young and healthy. You will enjoy the same premiums for life. In some cases, you can even have a special policy where you pay premiums for a limited time and then the premiums stop while your CSVs continue to grow. That said, how much coverage you need is based on the details mentioned above, as well as your financial goals. Our team can help you determine the right policy and coverage for your needs.

Why Choose P.D. Foster Insurance

At P.D. Foster Insurance we have been offering life insurance solutions to our customers since 1949. When it comes to Permanent Life Insurance policies, we are excited to help our customers also build their wealth. We work with qualified insurance providers to offer comprehensive Permanent Life Insurance policies that both provide a safety net for financial support when you need it, while also providing for loved ones when you die. Our goal is to find the right policy for your needs, so you reap the full benefits of this very versatile Life Insurance option.

For more information about Permanent Life Insurance, speak to our team today.

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