If you are in the market for life insurance, there is one decision you will eventually have to make – whole or term life? If you’re unfamiliar with these terms then here’s a quick 101 for you. Term life insurance is the most basic and popular form of life insurance. It’s popular due in part to the fact that it is easier to understand and covers the bases of what life insurance is meant to do which is provide financial stability to the beneficiaries. Term simply defines the period you which you have coverage. The other choice, whole life insurance, is a little more involved but still very easy to understand.
Whole life insurance never expires. When the insured person passes away, their beneficiaries are paid out the entire death benefit, tax free. Now, as you might expect, this kind of coverage comes at a price. Whole life insurance rates can range anywhere from 3 to 4 times as much (or even higher) depending on the amount and length of coverage you are seeking compared to similar term life insurance plans. Obviously there are other components of whole life insurance that justify the higher premiums.
Forced savings is the first. Forced savings because a whole life insurance plan is also an investment tool as the premiums you pay are being invested by the insurance company. Since you are entitled to a portion of these profits you can borrow against the value that has built up with your policy. This value is referred to as “cash value” and can be used for many financial purposes, including borrowing against it as a guarantee on a loan. The second advantage is that if you decide to cancel your insurance you receive your cash value. With term life insurance, cancelling or defaulting on your payments, means your coverage ceases and you receive no money back.
So what is a typical whole life insurance rate? To know for sure you would have to speak with a professional advisor. Unlike the more basic term life insurance plans, there exists much more variety with whole life plans. Everything from investment options, to age and health status all play a role in establishing the premiums you will end up paying. Speaking with a licensed LifeCover.ca affiliate is the quickest route to getting your questions answered. Let us show you just how easy life insurance can be and why everyday more Canadians are turning to us to help save them time and money on life insurance.