Permanent life insurance is life insurance that remains active until the policy matures, unless the owner fails to pay the premium when due. The policy cannot be cancelled by the insurer for any reason except fraudulent application, and any such cancellation must occur within a period of time defined by law (usually two years). A permanent insurance policy accumulates a cash value, reducing the risk to which the insurance company is exposed, and thus the insurance expense over time. This means that a policy with a million dollar face value can be relatively expensive to a 70-year-old. The owner can access the money in the cash value by withdrawing money, borrowing the cash value, or surrendering the policy and receiving the surrender value.
The basic types of permanent insurance are whole life, universal life, limited pay.
Whole life coverage
Payment for only 10 year,15 year, 20 year or till 100 available
Whole life insurance provides lifetime death benefit coverage for a level premium in most cases. Premiums are higher than term insurance at younger ages, but as term insurance premiums rise with age at each renewal, the cumulative value of all premiums paid across a life time are roughly equal if policies are maintained until average life expectancy.
Part of the insurance contract stipulates that the policyholder is entitled to a cash value reserve, which is part of the policy and guaranteed by the company. This cash value can be accessed at any time through policy loans and are received income tax free. Policy loans are available until the insured’s death. If there are any unpaid loans upon death, the insurer subtracts the loan amount from the death benefit and pays the remainder to the beneficiary named in the policy.
Not only will you be covered for life, but you can also grow your savings tax-free! It’s the right choice for you if:
- You want to leave your loved ones an even bigger inheritance
- You’ve maxed out your RRSP or TFSA contributions
- You’re in business and want to protect your company
Advantages and features
It’s a flexible product that offers a two-for-one solution:
- The insurance component provides coverage adapted to meet your needs at any stage of life
- The investment component lets you build your savings tax-free
- You can bundle multiple coverages for multiple insureds under one policy
- Your policy can be adjusted to meet your changing needs
- You can choose to round out your insurance with add-ons like:
- A healthcare component (critical illness or other healthcare coverage)
- A disability benefit
- Accidental death and dismemberment coverage
- Accidental fracture coverage
- Children’s insurance