Recent developments in the investment markets and its volatile performance have revived an old workhorse. More and more Canadians are opting for a permanent or a whole life insurance scheme to reduce the hassle of renewals and the extra paperwork that comes with it. Investors are also looking into this policy to diversify their portfolios.
Also, permanent insurance can act as a tax-efficient fixed income investment alternative. But how is permanent or whole life insurance is a good investment? Well, let’s have a look at the list below.
A few reasons why permanent insurance is a good investment
- The return of premium received is tax-sheltered for this type of policy, and it also has significant estate benefits.
- Unlike accumulation policies such as mutual funds and universal life insurance schemes, the cash and dividend value of a permanent insurance policy never decreases as you make your monthly payments
- Anyone who is looking for stable returns can invest in permanent life insurance schemes
- The offset of taxes will become payable on your RRSP
- A permanent life insurance policy can minimize the impact of taxes on other taxable assets in your estate- such as capital gains tax on the increase in value of a cottage
- You will have the option to leave a financial gift in your name to your favorite charity
These seem excellent reasons why anyone can consider applying for permanent life insurance, but does it make sense for you?
Should I apply for permanent insurance?
This would entirely vary from individual to individual. With permanent life insurance, you will have lifetime coverage, which means it will be your financial safety net till the day you die. Also, you will be using it as an investment, and the cash component will only grow over time. You can withdraw the proceeds at any time you want. You may also receive anywhere between 25% to 100% of your permanent life insurance policy’s, Death benefit before you die or if you are diagnosed with a specific condition such as stroke, heart attack, invasive cancer, or end-stage renal failure.
These do look like only pluses, but one significant downside to permanent insurance is that you will have to pay higher premiums. There could be tax implications, if you decide to surrender a policy or pass away with an outstanding loan.
So, before you apply for whole life or permanent life insurance, it’s advisable to weigh in the pros & cons of the policy. You should also have a clear idea of your financial situation as well as your financial goals. If you need help with that, you can always get in touch with the team at Canadian LIC. They have a team of excellent insurance brokers who can advise you on what type of policy you should opt for based on your requirements. They can also resolve any queries you may have regarding any insurance policy or scheme. Contact them; you won’t regret it.
Simplifying Permanent Life Insurance for You
Permanent Life Insurance has been the go-to policy for many Canadians because of its no hassle, no fuss terms and conditions. It is as plain as water; the policy offers coverage for the entirety of the policyholders’ life or as long as the premiums are paid. On top of that, there is also a savings component available in the policy, and it offers continuous growth at a guaranteed rate. If you do not have a clear idea of what a Permanent Life Insurance policy is or what type of benefits it comes with, this blog is for you. Read on to learn more about the Permanent Life Insurance policy so you can make a well-informed decision when you’re choosing your plan.
Redefining financial security with permanent Insurance
As the name says, it’s Permanent Life Insurance, which means you get the coverage benefits for your lifetime. Unless you’re not able to pay your premiums, your policy will never lapse. And with the additional benefit that the policy can be used as a savings vehicle, you are guaranteed some extra cash even if you don’t have primary savings account to look into.
This savings component that we keep talking about accumulates funds from the premium that you pay. Now, you can not withdraw immediately after you’ve just purchased the policy; wait for some time for the funds to get accumulated. Once the waiting period is over, you can withdraw the funds you want and use them for anything you want. You can use them for your child’s higher education or for a long-awaited trip that you couldn’t take because of a busy schedule. The choice is entirely yours.
The best aspect of Permanent Life Insurance is, you will never have to worry about finding yourself in a financial crisis. Because of the savings component, you will always have some funds to use in case of an emergency. In the unfortunate event that you (the policyholder) pass away, the death benefits will be immediately released for your beneficiaries to claim alongside the accumulated funds in the cash component.
One thing you should also know is, as long as you don’t overdo your premium limits (meaning you pay an excess in premiums so your savings can increase), you can take out funds from the policy without paying any taxes. Permanent Insurance is because policy loans are not considered as taxable incomes.
The types of Permanent Life Insurance policies
Generally, there are two types of Permanent Life Insurance policies available in the market. One is
- Participating Permanent Life Insurance: You will have the benefits of Vested Cash Values and Insurance payout; the premiums will always stay the same. You will also have the option of paying a yearly dividend.
- Universal Insurance: You have guaranteed cash values on some policies, but you can choose your investment options. This policy is less expensive than its counterpart, and premium payments are flexible.
If you’ve read through here, we hope that this blog has informed you enough to make a decision. However, it is advisable to contact us at Canadian L.I.C. brokers to clear any queries you may have.
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The above information is only meant to be informative. It comes from Canadian LIC’s own opinions, which can change at any time. This material is not meant to be financial or legal advice, and it should not be interpreted as such. If someone decides to act on the information on this page, Canadian LIC is not responsible for what happens. Every attempt is made to provide accurate and up-to-date information on Canadian LIC. Some of the terms, conditions, limitations, exclusions, termination, and other parts of the policies mentioned above may not be included, which may be important to the policy choice. For full details, please refer to the actual policy documents. If there is any disagreement, the language in the actual policy documents will be used. All rights reserved.
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