Protecting the Life You’ve Built
Top 5 Questions About Life Insurance
With Answers
There are two primary types of life insurance: term insurance and permanent insurance (which includes whole life and universal life). Each serves a different purpose.
› Term life insurance is affordable and designed to provide coverage for a set period (e.g., 10, 20, or 30 years). It’s ideal for covering temporary needs like a mortgage, children’s education, or income replacement during your prime earning years.
› Permanent life insurance lasts your entire life and includes a cash value component. It’s often used for estate planning, tax-sheltered growth, or leaving a legacy.
Your need depends on your goals. Do you want pure protection? Choose term. Are you looking for long-term financial strategy with tax-advantaged growth? Consider permanent insurance.
The right amount of coverage varies based on your individual responsibilities and goals.
› A common rule of thumb is 10 to 15 times your annual income, but that’s just a starting point.
› Consider your family’s total financial needs: mortgage balance, debts, child care, tuition, final expenses, and future income replacement.
› Include your existing savings and group insurance from work when calculating the gap.
An advisor can run a personalized needs analysis to help ensure your coverage is neither too low nor excessive, just right for your life and financial picture.
That’s a common misconception. Life insurance can be a smart financial move for many people, even young professionals, singles, or business owners.
› Young adults can lock in low rates while healthy, and permanent policies can grow tax-deferred savings for the future.
› Couples without children often use life insurance to protect a mortgage or support a surviving partner’s lifestyle.
› Business owners may need insurance to fund a buy-sell agreement or protect against the loss of a key person.
› Single individuals might consider coverage to avoid passing final expenses or debts to loved ones.
Bottom line: If someone depends on your income, or if you have long-term financial goals, life insurance can be a strategic asset, not just a safety net.
Life insurance offers several unique tax benefits that make it a powerful planning tool.
› Tax-free death benefit: Beneficiaries typically receive the life insurance payout free from income tax, which can be used to pay debts, fund education, or preserve a family lifestyle.
› Tax-deferred growth: With permanent policies, the cash value grows tax-deferred, similar to RRSPs or TFSAs.
› Tax-efficient estate planning: Permanent insurance can fund estate taxes or equalize inheritances, especially important if you own a business, cottage, or other illiquid assets.
› Business owners can use corporately owned life insurance to extract money more tax-efficiently from their companies.
These benefits make life insurance not just a protection tool, but also a smart financial and legacy planning strategy.
With so many providers and products, it can be difficult to compare policies, and the lowest premium isn’t always the best value. Here’s what a trusted advisor will help you evaluate:
› Financial strength of the insurer: You want a company that will still be there in 30+ years.
› Conversion options: Does your term policy allow you to convert to permanent coverage later without medical exams?
› Riders and custom features: Such as critical illness protection, child coverage, or return-of-premium riders.
› Underwriting requirements: Your health, lifestyle, and occupation may affect approval and pricing.
› Cost transparency: We’ll help you compare quotes and explain the why behind the pricing, so there are no surprises.
Partnering with a licensed, independent advisor ensures you’re not being steered into a one-size-fits-all product, but into a solution that truly fits your needs and your budget.
What the Wealthy Know About Life Insurance
Life insurance is often part of sophisticated wealth and tax strategies. Here’s how high-net-worth individuals use it:
To transfer wealth tax-efficiently to the next generation
To preserve capital gains on a family cottage or business
To fund charitable donations through gift planning
To create tax-free cash flow in retirement via policy loans or withdrawals
You don’t need to be ultra-wealthy to benefit, just informed. Many of these same strategies can be applied to your situation.
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