Life Insurance

Mortgages need Life Insurance make sure you have both

Everyone knows a little about Life Insurance..but how much do you really understand the options?

There are three basic types of life insurance:

• Term - this is temporary protection without investment benefits; it lasts for a stated period of time (usually 5, 10, 15 or 20 years), and may expire at age 75, 80 or 100, depending on the policy. If you die when the policy is in force, the company pays the death benefit; if you die after it expires, there is no coverage, and no death benefit will be paid. Because it is simple protection, term premiums tend to be the lowest of the three kinds of insurance, but increase as you age. With term insurance, premiums are guaranteed at the time of purchase, for the term you choose. You will know exactly what the premiums will be at each term renewal.



• Permanent - as long as you pay the premiums, the coverage stays in effect, no matter what your age. These policies tend to offer less flexibility, but some offer financial benefits through the cash value of the policy. Premiums can be level for life (they don't increase as you age, even if your health changes), or they can vary depending on the plan you choose. Premiums tend to be higher than term when you're younger, but will be lower than term when you're older and possibly uninsurable due to health. Premiums may be the same for a lifetime or vary after a certain number of years.



• Universal Life - this coverage combines features of term and permanent insurance, giving you more flexibility around your coverage, and more choice in investment decisions for the cash value of the policy. Premiums are flexible and fluctuate based on the amount of money you have in your policy fund.

Critical illness insurance

Although most of us don't like to think about it, a critical illness can happen to anyone. And it does happen to many. Canadians are more likely to experience a critical illness than they are to die before the age of 75.1 Are you prepared, should this happen to you? What would you do if you could no longer work? How would this impact your family?

For most people, the diagnosis is just the beginning

If you become ill, your focus should be on recovery and regaining your health. Critical illness insurance pays a lump sum benefit following the diagnosis of one of the covered illnesses. It offers you choices and allows you to recover on your own terms.

Your benefit could allow you to:

• avoid withdrawing money from an RRSP or other savings or investments
  
  
• pay down debts such as your mortgage or loans
  
  
• choose medicine and treatments not covered by group, personal or government plans
  
  
• replace lost income so you have choices - for instance, your partner can take time off work to help you
  
• maintain your business by hiring a person to run it until you return to work