Permanent Life Insurance
WHOLE LIFE Insurance
Whole Life Insurance products are permanent Life Insurance plans that offer level coverage at a guaranteed level premium structure for your lifetime. There can be an increasing Life Insurance death benefit that is dependent on level of premium deposits and dividend performance. Life Insurance Carriers’ dividend performance is based on: mortality costs, return on investment and expenses on operation of corporation.
Recent Life Insurance plan designs have improved the flexibility of this Life Insurance product primarily with additional premium deposits.
The Life Insurance contract has the flexibility to use future dividends to pay ongoing premiums, but this is not a lifetime guarantee, as dividends fluctuate. Dividends can also be applied to acquire additional increase in Life Insurance death benefit through Paid-Up dividend options.
UNIVERSAL LIFE INSURANCE
The Universal Life Insurance is an Insurance Policy that combines not only the life insurance, it also includes an investment component which allows you to choose the allocation of funds to use in the future years.
What Is Universal Life Insurance?
Universal Life insurance is a long-term form of life insurance that provides you lifetime coverage with flexibility to adjust the policy as your needs change. The cost of life insurance is fully guaranteed while the premium deposits can change from year to year or be skipped all together while the policy remains in force. This Life Insurance policy needs to be reviewed annually to take advantage of the various investment opportunities within the contract.
With Universal Life Insurance, you choose the size of premium deposits (between minimum and maximum) and the payment period based on an assumed rate of return. In addition, the policyholder owns the cash surrender value of the Life Insurance policy. Policy owners can choose from a wide range of investment options to invest in, including savings accounts, GICs and equity indexes.
Key Features of Universal Life Insurance
The flexibility of Universal Life Insurance allows the owner to choose the premium level and payment period best suited to their situation. The minimum premium payment level will be sufficient to provide coverage for life. Deposits in excess of the required minimum premium are credited to the investment account that the policy holder has selected. This separation of insurance and investment provides for flexible planning opportunities. For instance, the policyholder can forego paying premiums for a year or in some cases for the remaining life of the policy if there is sufficient cash built up in the policy to cover pure insurance cost within the plan.
Deposits into a Universal Life Insurance policy are done on an after tax basis but the cash value growth is tax deferred while inside the plan. There are limitations applied on the maximum premium that the policy holder can contribute into the plan.
Universal Life Insurance policies may be especially attractive to investors who have used up the contribution room in their RRSPs and are looking for another method of tax-deferred investment growth. Although withdrawals are not tax-exempt, the policyholder can choose how much to withdraw and when, deferring taxation until retirement when marginal rates will probably be lower, minimizing taxes.
Through the leveraged concept, you are able to assign the policy to a financial institution and borrow against cash values which will enable you to use your money while living without tax consequences or disposition. On death, your loan is paid off and your beneficiary also receives balance of death benefit.
If the cash value is not needed, it will increase your death benefit which is paid out to your heirs on a tax free basis.
Who Benefits Most
Generally there are a number of clients who will obtain exceptional value within the Universal Life Insurance contract:
- A higher-income individual who needs insurance that will last the rest of their lives, who also have investments outside RRSPs which they are paying taxes currently and may also wish to creditor proof those assets.
- A business owner, who wishes to utilize corporate after tax dollars to provide a corporate asset while also creating a life insurance program to meet corporate needs.
- Professional who has maximized his/her RRSP’s and wishes to utilize a tax preferred accumulation vehicle while providing Estate protection for their family.
- A grandparent or parent who wishes to create a “Fund” for grandchildren or children.
- Charitable organization who is the beneficiary under the policy.
Our role is to find the best Life Insurance Carrier which will provide you with a Life Insurance policy that generates the maximum value for your premium dollar.
Your Life insurance solutions have to be designed with consideration to other planning: Professional Services Corporation, Family Trust, Operating Company, Charitable Giving, Partnership Agreements, Wills, Henson Trust etc…