Whole Life Insurance

By: Mylife Canada  09-12-2011
Keywords: Life Insurance, insurance coverage, Insurance Policy

Key Facts

  1. Whole Life Insurance policies build up a cash value.
  2. Whole Life Insurance has a level cost of insurance where the premiums stay the same for the life of the policy.
  3. Policyholders can cancel or surrender the whole life insurance policy at any time and receive the cash value.

myLIFE CANADA ~ Mr. Dempsey

Whole Life Insurance policies from myLIFE CANADA spread the cost of insurance out over a long period of time. Premiums can be paid over your lifetime, or up until a certain age. Whole Life Insurance is ideal for people who think long-term and wish to have a plan that is not subject to investment gains or losses.

Whole life insurance policies have the following features:

  • Permanent insurance with premiums that never increase and coverage that never decreases.
  • Guaranteed death benefits so you know exactly how much the policy will pay upon claim.
  • Earnings are tax-deferred.
  • Flexible cancellation options -- you can surrender the policy at any time and the policy’s current cash value will be returned to you.

Whole Life Insurance policies have various options:

  • You can choose to pay premiums for the rest of your life, or for a set period of time (i.e. purchase the policy for a set number of payments). You can even purchase the policy in one single payment. If you decide on a shorter payment period, you will receive a larger discount.
  • You can add Term Riders -- temporary additional insurance coverage to meet short-term needs (e.g. if the whole life insurance policy is for $100,000, but you need $500,000 coverage now, you can add a $400,000 term rider).
  • You can add Child or Spousal Riders -- additional insurance coverage for a child or spouse on the same policy.
  • You can waiver the premium -- a safeguard against losing your policy. If you have an accident and become disabled, you may no longer earn a high enough income to pay your insurance premiums. With the Waiver of Premium option selected, after 6 months of disability, the insurance company will waive all of your premiums so you do not lose your policy and refund the premiums you paid over those 6 months.

Whole Life Insurance has many uses:

  • Saving extra money for retirement.
  • Estate preservation – upon your death, any property that has gained value while you owned it (except for the family home) is deemed "disposed of" and your family must pay the taxes. An insurance policy can help pay these taxes.
  • Charitable giving -- leaving the proceeds of the policy to charity to provide a large tax deduction for the final tax return. You can also use the tax deductions while you are alive by transferring ownership of the policy to your chosen charity. This makes the premiums tax deductible but not the final payout.
  • Enhanced buy-sell agreements for business partners -- partners take out insurance on each other to continue the business in the event of one partner's death, while simultaneously providing a retirement plan in the process.
  • Pension Maximization -- a smart way to provide a pension for your spouse after you die. Instead of taking a reduced pension income, you can take the full pension and purchase a life insurance policy with the difference. When you die, the payout from the insurance policy can be used to buy an annuity, providing a life-long income for your spouse.

The information in this article was current at 06 Dec 2011

Keywords: insurance coverage, Insurance Policies, Insurance Policy, Life Insurance, Life Insurance Policies, Life Insurance Policy

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