Whole Life Insurance in Canada
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Whole life insurance
Whole Life Insurance is designed to provide permanent life insurance protection. Along with the coverage, this policy is accompanied by a Tax Advantage investment. It provides insurance coverage for the entire life time, provided premiums are paid when due. Get a Whole Life Insurance Quote today.
Whole Life Insurance being a permanent insurance plan brings along some of its perks:
- After a Certain time, if the insured decides to not continue their policy, they are guaranteed their paid premiums back paid up till that date as a lump-sum. This is known as Cash surrender value.
- Over time policy builds premiums which then start paying for the policy costs
- Guaranteed Death Benifit
- Policy grows tax free and the benefit paid is also tax free.
- Whole Life policy has the potential to provide dividends which the insured can use towards their current policy premiums or purchase any other addition Life Insurance on themselves, for example by increasing current policy coverage from $300,000 to $500,000.
- Whole life Insurance has the option of riders on the policy. This means that the insured has the option to add additional policies such as Term insurance on their policy. For Example, lets say you only want $200,000 coverage but feel like you need to secure yourself more financially for the next 10 years until your son or daughter turns 18 and can support themselves, in this case you will be able to add a Term Insurance rider to the policy which would give you the $200,000 for life + the Term Insurance coverage for the next 10 years.
- Last but not least, YOU pick what premium yo want to pay, this policy is very flexible.
What is the definition of whole life insurance?
Whole life insurance is just one of a number of different kinds of life insurance. Like its name suggests, a whole life insurance policy covers the policyholder for the duration of their entire life. As opposed to term life insurance, this form of insurance does not just last for a specific period of time, but up until the policyholder passes away.
In most whole life insurance plans, both the premium and the death benefit remain the same for the entire duration of the policy. As long as the policyholder continues to pay their premiums as per the insurance policy, their beneficiaries are guaranteed a death benefit. Premiums for whole life insurance are generally payable every year, although this may vary depending on the insurance plan.
Whole life insurance is the most basic form of cash-value life insurance. Although it is largely used by people as a way to ensure the financial security of one’s dependants, it is also a great way to accumulate wealth. Once you pay the premium, insurance companies will go ahead and invest a part of it. Returns on the investment form cash value. This makes whole life insurance not just a great way to protect your dependants, but also to save up money with significant tax benefits. One can also borrow against this cash value.
Unlike in most kinds of term life insurance, policyholders of whole life insurance may terminate their insurance. When one goes through whole life insurance quotes, terms and conditions, they should make sure to see whether there is any mention of a withdrawal clause. If a policy does contain such a clause, cash surrender value may be sought upon termination of a policy.
What are the different kinds of whole life insurance?
There are several different kinds of whole life insurance that those seeking insurance policy can choose from. The whole life insurance rates vary considerably depending on which type you opt for, but so do the benefits. It is essential to be aware of all the different types out there so that you’re sure you end up with the best plan with the most competitive whole life insurance rates out there.
Traditional whole life insurance, also commonly known as straight life or ordinary life insurance, ensures a minimum guaranteed rate of return on your cash value portion. Simply put, you are required to pay a fixed amount (level premium) every month, quarter, six-months or year. Even if the cost of your insurance goes up, you will not be obliged to pay a higher premium than the one set at the time at which you got your policy. If you wish to seek a loan against money in the policy, you may do so at a fixed interest rate specified in the policy itself. Traditional whole life insurance rates are generally higher than other kinds of insurance products since insurance companies benefit the least from them as they are more beneficial to the customer.
Another type of whole life insurance is the interest-sensitive or current assumption or excess interest whole life insurance. Although just like in its traditional counterpart the death benefit remains constant, the premium payment need not necessarily be constant. It may vary up to a certain maximum level specified in the insurance policy depending on market conditions. This fairly new type of insurance is often seen as a combination of universal and whole life insurance.
Another popular kind of whole life insurance is the single premium insurance. This kind of insurance is for people who are liquid and have the ability to pay a significantly large sum of money upfront. As its name suggests, this type of insurance policy requires the holder to pay the entire premium upfront. It is not uncommon for this kind of policy to have fees if the policyholder wishes to withdraw money from the insurance during its initial years.
Ultimately, which kind of whole life insurance you opt for should depend on what you are looking for from an insurance policy, what your financial situation is, as well as the kind of whole life insurance rates that suit your budgetary constraints.
What are the advantages of picking whole life insurance?
It is not surprising that whole life insurance is one of the most popular forms of insurance out there since there are countless advantages associated with it.
One of the biggest benefits is that whole life insurance quotes are fixed for the entire period of the term, unless you wish them to be otherwise. That means you don’t have to worry about drastic, unaffordable increases in the insurance premium once you become older. Insurance tends to become very expensive at later stages of your life, so how great would it be if the whole life insurance rates were fixed from when you got it when you were young and healthy? Plus, you would not need to keep giving medical exams unless you were looking to change your insurance schemes.
Unlike term life insurance, there is little risk in whole life insurance because so long as you continue to pay the premium as per the insurance plan, your dependents will receive death benefit. There is no concept of terms or specified times during which the death benefit stays valid. For many people, this is the kind of certainty they want in case of an untimely death.
Whole life insurance rates might be high, but it is important to keep in mind that people can take loans against the cash value of their premium. This means that one does not have to wait till the death of the policyholder to enjoy the benefits of having insurance. Different types of whole life insurance give different levels of guarantee on the rate of return on cash value, but it just ensures more financial security for the policyholder. Plus, you can enjoy a great deal of tax savings if you opt to use a whole life insurance scheme instead of saving it elsewhere.
What are the disadvantages of picking whole life insurance?
The biggest downside is that whole life insurance quotes are not always cheap. As a matter of fact, whole life insurance rates can be more than eight times higher term life insurance. However, it is advisable not to make direct life insurance comparisons with term life insurance since that offers limited protection, and is not near as versatile as its whole life counterpart. Moreover, whole life insurance quotes feature fixed premiums which means that as you get older and death becomes more likely, you will have to pay the same amount of money to your policy as you did before.
Whole life insurance is often promoted as a good investment, but the fact of that matter is that is definitely not the most lucrative investment opportunity out there. If one is looking solely to invest, they may be better off considering other options. However, insurance provides a protection against risk and the value of such protection should not be understated.
Who is a whole life insurance policy good for?
Ultimately, the kind of insurance you opt to get depends on what your specific requirements are. Instead of making the decision based on whole life insurance rates, you should actually see whether you are suited to this unique kind of insurance first.
The general rule of thumb is that whole life insurance is good for people who have long term responsibilities, including that live on after they die. Since this form of insurance guarantees death benefit on the payment of regular premiums, it is ideal for those who want to secure the payment of post-death expenses.
Whole life insurance rates may be more expensive, but it is important to note that it is still ideally suited to those who are not entirely financially secure. If one ever runs into a situation where they need a loan to make ends meet, they will not have to put up their home or car for collateral but instead can use the cash value that has accumulated from the regular payment of their premiums.
What are the requirements for whole life insurance?
The only real requirement is that the insurance premium be paid on time. In single premium whole life insurance, the premium is paid at the time the insurance is bought. Otherwise, the premium generally has to be paid either monthly, quarterly, semi-annually or yearly depending on the insurance contract. Once the policy has been paid up, no further payments may be necessary and there will be no further requirements.
What do whole life insurance quotes depend on?
Whole life insurance quotes, like other forms of insurance, depends on a number of different factors. It depends on the age of the person, their health records and the kind of whole life insurance they actually opt for. Whole life insurance rates are normally decided after insurance companies conduct a medical examination and study the applicant’s medical history carefully. Whole life insurance quotes are generally fairly inflated so as to reflect potential changes in the probability of death in the future.