According to a poll conducted by TD Insurance and Environics Research Group, almost one in three of 1,500 Canadian adults surveyed said they don’t have life insurance. This figure is high considering the financial burden their families would face with the loss of income due to premature passing. While discussing death can be upsetting for many people, it’s important to address how to protect your loved ones and maintain their long-term financial stability after you pass.
What Is Life Insurance?
A life insurance policy is designed to protect your loved ones and provide financial stability in the event of your death. For the policy to be in effect, you have to pay a set monthly premium, which varies depending on the amount of coverage you wish to have.
Once you pass, the individuals you have listed as beneficiaries of the policy (spouse, partner, children, friends) will receive a lump sum death benefit payment, as laid out in your insurance policy.
What Is Whole Life Insurance?
Whole life insurance provides coverage for your entire lifetime. It’s a type of permanent life insurance policy that also accumulates cash value as you pay your premiums over time. As long as these premiums are paid on time, the policy will remain active for your entire lifetime, but if you cancel your policy early, you may receive a partial refund.
Once you pass, your life insurance company will pay your beneficiary a predetermined death benefit. Whole life insurance can offer a high level of financial stability and peace of mind, as it guarantees a payout to your beneficiaries, regardless of the age at which you pass away.
Whole Life Insurance vs. Term Life
Whole life insurance and term life are two very different insurance products. While a whole life policy provides life insurance coverage for your entire lifetime, term life insurance only provides temporary coverage. Term life insurance is particularly beneficial for parents with young families who may need help covering their expenses if one spouse passes away. These policies come in 10 or 20-year terms, so you can choose the best coverage to suit your situation.
The Benefits of Whole Life Insurance In Edmonton
Premiums Don’t Change
While your payments for a term life policy don’t fluctuate during the term, these policies expire in 10 or 20 years. At this point, you can purchase a new term life policy, but because the premiums increase with age, you may be paying a lot more to get coverage again. The advantage of a whole life policy is that they offer level premiums over your lifetime, so the amount you pay each month remains the same.
Builds Cash Value Over Time
Whole life insurance policies come with the unique feature of having a cash savings component; the cash value of a whole life policy generates a fixed interest rate, so it serves as a type of investment. As the policyholder, you are able to withdraw or borrow against the cash value, which is useful if you need emergency funds; however, the amount of money you take out will be reduced from the benefit that is paid to your family upon your passing.
Estate Planning
Consider purchasing a whole life insurance policy as part of your estate planning strategy. Life insurance benefits are not considered part of your estate, so they are not held up by probate but paid directly to your beneficiaries. This payment can help cover your family’s immediate needs, as well as pay for funeral costs and final income taxes.
Legacy Creation
If passing wealth on to your loved ones is important to you, participating in a whole life insurance policy can help you achieve this. You can name your children and grandchildren as beneficiaries, providing for their immediate needs and securing a sound financial future.
Purchase Whole Life Insurance in Alberta
From providing financial security for your loved ones and estate planning, life insurance offers many benefits. If you’d like to learn more about the cost and benefits of whole life insurance policies, book a coffee meeting with the certified financial planners at Red Willow Wealth Management. We’ll assess your financial needs and put together a plan that works for you and your family.
