![]() ![]() Whole life insurance and universal life insurance are two different types of permanent life insurance. Then instead of paying the higher fees, take the difference and invest it yourself. In most cases, we’d recommend a term life insurance policy with affordable premiums that protect you for the entire term of the policy. However, for most people, the higher fees simply don’t justify the potential for tax deferral down the line. Why rare? Typically, it is only appropriate for people with very high incomes seeking tax-deferral components that might benefit their estate taxes. On rare occasions, an advisor might recommend a whole life insurance policy for estate planning purposes. Our 100% online application allows you to get coverage in the comfort of your own home! Get Started Whole life insurance and estate planning The average Canadian with dependents may not fit into this category. Whole life insurance can be a reasonable choice for people who have very high incomes and are looking for some of the tax-deferred benefits of life insurance. Learn more about how all life insurance products work, from term to whole to universal. If you decide to cancel your policy at any point, you'll receive the policy’s cash surrender value, or the amount of money you previously overpaid by. The structure of whole life insurance allows you to pay the same premiums every year throughout the policy, even though the cost of your insurance technically increases over time. At this point, your insurance company will start pulling money out of your cash surrender value account to cover the difference. So when you reach a certain age, the premiums you pay for your policy won't be enough to cover the cost of your insurance. ![]() It's no secret that you aren't going to live forever. This structure allows your account to accumulate interest, which increases your cash surrender value.Īs you get older, your probability of passing away, and, therefore, the cost of your insurance, gets higher. In other words, your insurance company takes the amount of money that you've overpaid during the early years and invests. These “excess premiums" form the policy's cash surrender value. ![]() With a whole life insurance policy, the premiums you pay during the early years are usually higher than the amount needed to cover the risk of your death. ![]()
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