My name is Marianne Lalonde and I am a level II Insurance Broker and the owner of Option1 Financial.
There’s a saying that the only certainties in life are death and taxes. I can’t help you with taxes, but I can help you make an informed choice about buying a life insurance product in Ontario. I also offer a mortgage referral service should you need help finding a mortgage broker.
Each of us is different when it comes to our needs and our budgets. The good news is, a life insurance policy can be tailored to offer you something that will accommodate your situation whatever it is.
Manulife – Manulife Financial
I provide life insurance products through Manulife Financial. Life insurance is a contract between you and your insurance company. The insurer agrees to pay a lump-sum of money at your death, and you agree to pay a fee called a premium. A benefit is paid to your designated Beneficiaries when you pass away.
3 Types of Policies
- Whole Life
- Universal Life
Life insurance can be divided into two basic classes
- Term which is temporary
- Permanent (whole life and universal)
Types of Life Insurance
Term (Limited Duration)
- Term Life Insurance is a product for people who want coverage for a limited period of time.
- People with budget constraints who still want insurance.
- Owners of small and medium-sized businesses in case of the loss of a key employee
Most term insurance policies have the following features:
- The sum insured and the premiums are guaranteed for the term of your policy i.e., 10 year or 20 year term policies
- The premiums are influenced by the amount of insurance and the condition of your health, lifestyle and the term you choose
- There are ‘renewable’ and ‘conversion’ privileges
- You may insure multiple persons under the same contract
Whole Life Insurance
Whole Life is a permanent policy suited to the needs of people seeking financial stability and security for their loved ones in the event of a premature death. These policies are suited to people seeking a simple, flexible and affordable product.
Common features and advantages of whole life Insurance
- Three permanent options are available:
- L20, lifetime coverage with premium payments for 20 years;
- L65, lifetime coverage with premium payments up to the age of 65;
- Life, lifetime coverage with premium payments for your lifetime.
- Your amount of insurance and the premiums are both guaranteed for the term of your policy, depending on what options you choose.
- There are guaranteed cash surrender values.
- The premiums are determined by the amount of insurance chosen, the general state of your health and the plan you choose.
- You may insure multiple persons under the same contract.
Universal Life Insurance
Universal life insurance can insure your financial security and your loved ones through one and the same contract. The policy also accumulates an additional tax-sheltered amount.
Who Should Consider Universal Life Insurance?
- Individuals or families seeking financial security and the accumulation of additional funds for retirement.
- Young dual-income professional couples who would like to pay the insurance premium more quickly.
- People with higher than average income who are looking for a tax-sheltered savings vehicle other than a registered retirement savings plan (RRSP).
- Business people wanting to finance a shareholders agreement or insure a key employee
Features and Advantages of Universal Life
- Affordable permanent life-insurance protection combined with an attractive tax-sheltered savings account.
- Flexibility to choose and modify the amount of insurance, the cost options, the payment frequency, and the premium amount in accordance with your needs.
- You can diversify your savings though a range of investment options.
- You have the option to make partial withdrawals to carry out your projects.
- You may insure multiple persons under the same contract
Universal Life Insurance offers the opportunity to maximize the growth of your tax-sheltered savings through a full range of investment options that offer competitive returns.
The most obvious and significant benefit of buying life insurance is the lump sum payment it provides when the insured person dies. This lump sum is non-taxable and it is paid directly to the beneficiary designated in the life insurance policy.
Why Buy Life Insurance
The most common reason for buying life insurance is to protect a person’s dependents. If that person dies, his or her dependents have to deal not only with the loss of a loved one, but also the loss of that person’s present and future income.
The tax-free, lump sum payment from a life insurance policy can replace the deceased person’s earnings, pay debts and other liabilities, and cover education costs and daily living expenses of the surviving family members.
Preservation of the Estate
Another reason to buy life insurance is to pay any debts, tax liabilities and other estate costs to ensure that the estate’s assets don’t have to be eroded or borrowed against to cover these expenses.
Here are some of the financial liabilities that can threaten your estate:
- Capital Gains Taxes
Life Insurance can provide funding to pay for capital gains tax that you owe.
- Registered Plans and Tax Liabilities
When you pass away any registered funds you own will create a tax liability for the estate.
- Estate Taxes
You may be liable for estate taxes in other jurisdictions when your loved ones die.
- Probate Fee and Other Estate Costs
Life Insurance can provide the funds needed to cover probate cost and other estate costs, such as funeral and burial expenses. Estate administration costs such as executor’s fees, evaluator or appraiser fees, and legal accounting fees also need to be considered.
- Building and Preserving You Estate
It’s not easy to accumulate money and it’s even harder to amass significant funds to leave behind.
Life insurance can be an efficient way to create an estate and transfer wealth to later generations. Because the life insurance policy’s proceeds are paid tax-free to the beneficiary, it is a simple and efficient plan to create or add to an estate.
Protection from Creditors
Life insurance can offer protection in the event there are claims against the estate, depending on provincial laws and how the policy is set up.
Withdrawals, Policy Loans and Leveraging
Once a cash value has accumulated in an exempt life insurance policy, money can be accessed through a cash withdrawal or a loan from the policy. Transactions such as this are considered dispositions of the policy and are potentially subject to taxation.
A way to access the value within the policy without triggering tax consequences is through leveraging. You can create an income stream by using the life insurance policy as collateral security for a loan.
Call 1-800-722-7172 for expert advice and save your money
Call Toll Free