What
is it?
A contract is established between you and an insurance company which guarantees a specified amount of money will be paid to the beneficiary of your choice if you pass away.
The death benefit is typically tax-free and bypasses probate1 - this means the funds will be available to your beneficiaries quickly.
You and your loved ones will have peace of mind knowing that, if you pass away, your beneficiaries will receive a cheque and be able to use the funds however they feel would best serve them.2
Why
is it important?
If you start your working career at age 25 and planned to work until 65 (40 years) making $25,000 per year, you would have made $1,000,000 in your lifetime.
This simple example highlights one thing - your ability to generate income is a great asset that your dependents would have to make up for if you passed away unexpectedly.
Purchasing life insurance is one way to ensure the people you care about have some form of financial protection in case something happens to you.
Things to keep in mind
Permanent life insurance (sometimes called wholelife insurance or universal life insurance) is a category of insurance products that most people have heard of. This type of policy guarantees that something will be passed to your beneficiary regardless of your age when you pass away.
These polices often include features that make them attractive, there may be potential for growth and funds in the policy typically can be accessed in the future. While they can be powerful tools when utilized in estate or succession planning, it is important to look at these policies as insurance products rather than investments.
First and foremost, these policies are meant to protect your loved ones in the event of your death.
- 1. Probate - the process of taking a will to a court to confirm its legal validity.
- 2. Examples of life insurance uses include paying for; outstanding liabilities or a mortgage, last expenses and funeral costs, childcare or funding the education of any dependents.