Whole Life Insurance Canada
A common policy type, Whole life Insurance Canada, has many advantages.
Whole life a popular form of burial insurance (Burial Insurance is when insurance is required to cover the cost of a funeral). It is a good idea to consider a whole life policy when the insurance required is for a permanent (life long) need such as a funeral or estate taxes. It is generally not used for a short term insurance need (i.e. a debt that will be paid off – like a mortgage)
Whole life Insurance Canada Advantages
- No expiry - Whole life does not expire. It lasts for the “whole of your life”. It only expires if you fail to make your payments or if you choose to cancel the policy. The insurer can not cancel the policy.
- Level Premiums - Most whole life policies have premiums that do not change. Some policies pay a dividend and this can be used to reduce your premiums over time. And there are some permanent policies – similar to whole life – where there is a chance that the premium will increase. It’s a very good idea to check on this.
- Guaranteed premiums (usually - watch the fine print) - some policies are fully guaranteed (including cash values). See Guaranteed Whole Life Insurance Canada for more details.
- Good for estate planning - Like I mentioned before this type of policy is best used for a life long need. Unlike term insurance, whole life does not expire. You can count on it being in force decades later and being available at an affordable premium.
- Builds cash values (sometimes guaranteed) - A whole life insurance builds a cash value over time. Some people have reported that the best investment they ever made was in a whole life policy. There can be some impressive savings built up in these plans. Whole life should not be bought as an investment – it’s just a nice side benefit that builds up.
Whole life Insurance Canada Disadvantages
- Higher Premiums Whole life costs more than term insurance because it has more guarantees and the premium stays level (term insurance increases in price).
- No choice over how the cash reserve is invested - some people get upset that they have no input on how the cash value is invested. If you want some input and control on how the cash value is invested you should consider Universal Life Insurance.
- Access to cash value - the cash reserve can only be accessed through a policy loan (reducing the death benefit) or cancellation of the policy.
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