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Please click on underlined links below to see complete explanation of coverage.

10 Year Renewable And Convertible Term

Level death benefit, designed to meet short term needs. The cost of this coverage increases in guaranteed ten year increments until eventually expiring, usually at age 75. This plan is convertible to specific permanent coverage offered by the issuing insurance company without having to prove good health.

15 Year Renewable And Convertible Term

Level death benefit, designed to meet short term needs. The cost of this coverage increases in guaranteed fifteen year increments until eventually expiring, usually at age 75. This plan is convertible to specific permanent coverage offered by the issuing insurance company without having to prove good health.

20 Year Renewable And Convertible Term

Level death benefit, designed to meet short to medium term needs. The cost of this coverage increases in guaranteed twenty year increments until eventually expiring, usually at age 75. This plan is convertible to specific permanent coverage offered by the issuing insurance company without having to prove good health. For an extra cost, some insurance companies offer a partial return of premium or partial paid up insurance at the end of a twenty year term.

30 Year Term

Level cost and death benefit for thirty years, designed to meet short term needs.

Term to Age 65

Level death benefit, designed to meet medium term needs. Since most people today live well beyond age 65, it would be a false sense of security to buy this kind of insurance thinking that it would fulfill a permanent need.

Term to Age 70

Level death benefit, designed to meet medium term needs. Again, since most people today live well beyond age 70, this would not be the kind of insurance to buy for permanent needs.

Term To Age 75

Level death benefit with level premiums to age 75. The cost of this coverage is guaranteed to remain level until one's age 75 when it expires. It is usually not convertible to any other permanent coverage offered by the issuing company. Note that while this appears to be lifetime coverage, many people are living well beyond age 75 these days so for some people this kind of coverage should be considered designed to meet short term needs. It is suggested that you examine coverage that is more permanent in nature if you truly want to be covered until you die.

Term To Age 100

Level death benefit. The cost of this coverage is guaranteed to remain level until one's age 100 at which time it becomes paid up. This type of coverage has no cash values. Term to age 100 that does have a cash value is considered to fall into the type of coverage called whole life. Often rate surveys reveal that a Whole Life policy (sometimes called Term 100 With Values) is less expensive than is a non-cash value Term 100 policy. Needless to say, the insurance companies have a good reason for pricing their policies this way. It's sufficient to say that sometimes it can actually cost less to buy a policy with cash values. Note: Some Term to Age 100 policies have an option to endow at age 100 which means that if you are still alive, you could recieve the face value of the policy in cash, although it would be taxable.

Whole Life - Pay For Life

Usually a level death benefit but sometimes, if you wish, an increasing death benefit. Terms like "Par" and "Non-par" are used with this kind of coverage. Par whole life coverage generates "dividends". "Dividends", in life insurance, are a partial return of premium you have paid for your coverage plus investment growth, if any. "Dividends" are not guaranteed and will fluctuate up or down from year to year. If you received a "dividend" projection some years ago on this kind of life insurance policy, it would be a good idea to ask your life insurance company for a current "dividend" projection. You may find that things have changed considerably. "Non-par" whole life policies, on the other hand, have no "dividends" and future cash values are not projected, they are guaranteed.

"Non-par" whole life policies are the only type of whole life policies which can be compared for you by our rate surveys because of their fully guaranteed values. "Non-par" whole life policies can have a level cost over a long term, usually to age 100 at which time they are paid up. They can have graduated premiums over the first several years of the policy which then level out for the remainder to the premium paying period. They can also have a level cost for a specific period of time, such as to your age 65, or 25 years, or 20 years, or 15 years, or 10 years and even less. The shorter the period of time that you wish to pay, the higher will be the cost for that period of time. The guaranteed cash surrender value of whole life policies varies by the amount of coverage, time paid and company issuing coverage.There is a cash value which could be accessed if the insurance coverage is no longer needed.

Whole Life - Quick Pay

This is a guaranteed level premium policy with premiums payable for a very short period of time [as little as 5 years depending on the Life Insurance Company] until it is completely paid up. Death benefit is level and is paid up at the same time that premiums cease. There is a cash value which could be accessed if the insurance coverage is no longer needed.

Whole Life - Pay For 15 Years

This is a guaranteed level premium policy with premiums payable for 15 years. Death benefit is level and is completely paid up in fifteen years. There is a cash value which could be accessed if the insurance coverage is no longer needed.

Whole Life - Pay For 20 Years

This is a guaranteed level premium policy with premiums payable for 20 years. Death benefit is level and is completely paid up in twenty years.There is a cash value which could be accessed if the insurance coverage is no longer needed.

Whole Life - Pay To Age 65

This is guaranteed level premium policy with premiums payable until the life insured's age 65. Death benefit is level and is completely paid up at the insured's age 65. There is a cash value which could be accessed if the insurance coverage is no longer needed.

Universal Life

Along with the ability to pay insurance costs with pre-tax dollars, Universal Life Insurance holds the secret to tax sheltered investment growth outside an RRSP. This kind of coverage is a mystery to most people, including many brokers who sell it. The profile of an individual who considers universal life should encompass the following; [1] should have a need for life insurance; [2] should be in a high marginal tax bracket; [3] should want to create additional future income; [4] should have already maximized RRSP and pension contributions; [5] may be paying too much tax on investment income; [6] should have an investment horizon of at least 10 years.

There are many variables to be considered. Basically, when you pay into a universal life policy, all of the money goes into a holding account which is invested by the insurance company, at the buyer's direction into one or more kinds of investments. Essentially, the selection of investments being the buyer's responsability, transfers most of the risk in this kind of policy, to the buyer. The investments may range from daily interest and term deposits to mutual funds or segregated funds. [Poorly performing mutual or segregated funds could create negative growth in the policy, requiring additional deposits over and above what was originally projected.] The money in your holding account grows tax sheltered, and from it, the insurance company draws money to pay for your life insurance and administrative costs for looking after this holding account.

There is often a minimum rate of guaranteed growth, roughly at or about 3%. Any growth beyond what is required for cost of insurance and administration accumulates tax sheltered as savings which can be drawn out at a later date for things like education or retirement. Under current tax laws, there is also the possibility of leveraging cash out of this kind of policy by assigning it to a bank and taking a tax free loan against the policy.

The cost of buying a universal life policy varies from a guaranteed minimum to support the cost of life insurance to a maximum only limited by law to keep the policy tax exempt. Paying more money into the policy than is required to keep the life insurance in force, creates a growing pot of tax sheltered cash which can be accessed at a future time. A reasonable expectation of growth in the holding account might be, by today's standards, in the range of 5% to 7% but it could be more or less. This kind of policy is most often used by people who are trying to tax-shelter money and who wish to have future life insurance premiums paid with before tax dollars. Remember, at the 50% marginal tax bracket a 5% sheltered growth is equivalent to a 10% non-sheltered growth. The "net growth" is what's important, not the "gross".

The Income Tax Act of Canada imposes certain restrictions on Universal Life policies. If a person intends to overfund a universal life policy, it's important to pay attention to the 10-year, 250% rule. This rule limits contributions to a policy as of year 10 forward to 2.5 times the fund value 3 years previously. This anti-dump-in provision may come as a shock to policyholders who do not make earlier fund deposits of a sizeable amount. The Income Tax Act also allows a policy's death benefit to grow each year. The 8% test limits how much additional deposit room is created in the policy as a result of the growth. The 8% rule only applys to those who are making maximum deposits into their policy.

Universal Life policies are among the most difficult of all life insurance contracts to compare. Generally, it is impossible to make an apples to apples comparison because there are so many variables relating to investment options, when and how much investor bonus is paid, if any, surrender fees and management fees. The constant factors on which we can focus are; (a) Cost of insurance; (b) Whether the cost of insurance is level (Term to age 100) or increasing yearly (YRT - yearly increasing term); (c) Growth rate assumption, probably between 4% to 7%; (d)Amount of initial death benefit; (e) Amount of money to be deposited; (f) Number of years deposits are to be made; (g) What your objective is, ie, maximize cash surrender value at a certain age, guarantee insurance coverage for life, guarantee paid up policy within certain time period, etc. Once your broker knows what you expect a Universal Life policy to do, the broker can find the best policy from the Life Insurance Companies which offer this policy for comparison.

Mortgage Reducing Term

Life insurance with a death benefit reducing to zero over a specific period of time. For example, you may purchase $200,000 coverage which reduces to $0 coverage over 20 years. When you purchase this coverage from a life insurance company, the death benefit is paid upon the death of the life insured to a "named beneficiary", usually the spouse, tax free.

If you purchase this coverage through a lending institution where you have your mortgage, the lending institution is the sole beneficiary entitled to receive the death benefit in order to eliminate the outstanding mortgage. Mortgage insurance purchased through a lending institution is not portable and is not guaranteed. Not being guaranteed means that it is possible that the lending institution's group insurance carrier could cancel all policy holder's coverage if they are experiencing too many claims. If you sell your home and buy another, you will have to qualify for new mortgage insurance. Maybe you won't be able to qualify. In any event, we recommend not using reducing mortgage insurance to protect your mortgage because most people today don't live in the same house for the rest of their lives. You might end up buying two or three or more homes with a larger mortgage in your life time. If you buy level death benefit term coverage, you will never be sorry.

Critical Illness Living Benefit

This kind of benefit is currently marketed by several Life Insurance Companies in Canada. Generally speaking, it pays a lump sum of money, tax free in the event of heart attack, stroke, life-threatening cancer, major organ transplant, coronary artery surgery, multiple sclerosis, renal failure, paralysis, blindness and deafness. Should death occur before a claim is made, often all premiums paid will be refunded. In order to successfully obtain this kind of coverage, not only the applicant has to be healthy but the applicant's immediate family has to have a history of good health. Since each life insurance company offering this product has slightly different wording in their policy, it would be in your best interest to discuss your purchase in depth with your broker.

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