Insurance
Protecting
you and
your family
Life insurance provides a tax-free cash payment to your beneficiaries, helping cover expenses like debts and funeral costs while maintaining their standard of living.
Life insurance
Life insurance is an insurance policy that can help your family maintain their standard of living if you die. It can also help cover debts or expenses such as funeral costs.
Life insurance can also be used to:
Cover estate taxes: When the death benefit is payable to your estate
Save for retirement: By using permanent insurance policies that let you build savings as well as provide insurance protection.
Donate to charity: By making a charity a beneficiary, or the owner and beneficiary, of your insurance policy.
Protect your interest in a business: By providing money to buy out a deceased business partner’s stake in the business.
Types of life insurance
It’s important to get the type of insurance that best meets your needs.
There are two main types of life insurance in Canada:
Term life insurance: Guaranteed for a specific length of time.
Permanent life insurance: Guaranteed coverage for life.
Universal life insurance
provides guaranteed lifetime coverage. It also includes an investment component that generates tax-deferred savings.
Here’s how it works:
You make ongoing deposits to the policy — with some flexibility in terms of the amount.
A portion of the deposit is used to pay the premium.
The rest is invested and grows tax-sheltered, allowing you to boost the value of your long-term savings.
When you die, the beneficiaries you name in your policy receive the insurance amount and the investment proceeds — tax free.
You may also be able to borrow against the savings you’ve built up and use this money to supplement your retirement income. When you die, the policy proceeds can be used to pay back the loan.
Comparison
Type of life insurance policy
Premiums and coverage time
How this insurance might be used
Term
Insurance coverage guaranteed for a pre-defined term, typically 5, 10 or 20 years
Premiums stay the same for length of the term
Renewal of term is guaranteed, but at a higher premium rate
Coverage ends at a specified age (often age 75 to 85)
Lowest cost form of insurance
Often used during working years to provide the capital needed to replace income when a key breadwinner dies
Coverage is not guaranteed for life, so may not be appropriate for estate planning goals
Whole life
Permanent insurance guaranteed for life
Premiums stay the same for life
Permanent insurance guaranteed for life
Premiums stay the same for life
Permanent insurance guaranteed for life
Premiums stay the same for life
Retirement – savings can be used as loan collateral to provide money in retirement, or withdrawn if you end the policy
Estate – can be used to cover your estate’s tax liability or enhance your estate’s value
Universal life
Permanent insurance guaranteed for life
Premiums are adjustable depending on savings and insurance needs
Policy provides both insurance protection and tax-sheltered savings
Retirement – savings can be used to cover ongoing premiums, increase the policy’s death benefit or used as loan collateral to provide money in retirement
Estate – can be used to cover your estate’s tax liability or add to your estate’s value
Term to 100
Permanent insurance guaranteed for life
Premiums stay the same until age 100, or may in some cases be payable over 20 years
Typically has no savings component or cash value
Lowest cost form of permanent insurance
Pre-retirement – can be used to replace income if you were to die unexpectedly
Retirement – can be used to cover your estate’s tax liability or add to your estate’s value
How to get Insurance
Term insurance offers affordable coverage for a specific number of years, typically available in terms of one, five, 10, or 20 years, and is the most common type of life insurance. While premiums remain constant throughout the term, it becomes more expensive as you age, and coverage is generally unavailable after age 75 to 85. Most policies are renewable, allowing you to extend coverage without a medical exam, though renewal premiums are predetermined in the contract.
