OverviewPermanent Life Insurance

Although the answer to this question varies for everyone. If you don’t require it right now, it’s probably because you have term insurance, but you will need permanent coverage eventually! The reality is that everyone is going to pass away at some point, and there will be expenses left to loved ones that can be covered by permanent life insurance. Some of the more common reasons for purchasing permanent life insurance are:

Final expenses.

Costs like funeral, burial, probate, legal and accounting fees to settle an estate, and other expenses at time of death can add up, and permanent insurance can ensures your family doesn’t have to pay for it out of their own pocket.

Tax-deferred investment growth.

If you have maxed out your RRSP and TFSA accounts, permanent insurance provides a vehicle to benefit from tax-deferred growth of your investment, which can also be paid out tax-free to your beneficiaries upon death, as an efficient way to transfer your wealth.

Increasing what you leave for your spouse and children.

Permanent life insurance allows you to multiply the amount of money you are leaving for your loved ones. The premium dollars you put in to the policy allow it to grow (on top of the insurance component), and then pay a tax-free death benefit to your beneficiaries.

Providing for a dependent with a disability or lifelong dependency.

Providing protection for a dependent that you provide care to will help to ensure that they are financially secure after your death. A trustee can also be named to help look after the money on behalf of the beneficiary, if they are unable to do so themselves.

Term life insurance will soon become too expensive.

As you age, term life insurance will continue to become more expensive, as the likelihood of you passing during the term increases. Exploring permanent options will allow you to lock in coverage for life at a set premium, to ensure you remain protected when you need it most.

If you are younger and have a high need for insurance, the best place to start is going to be term life insurance. It provides the most coverage, for the lowest amount of premium. While you are looking to protect your mortgage, income, and provide for your dependents, having the proper amount of coverage will always be more important than the term of the coverage. The great thing is, you don’t have to choose between term and permanent, there are actually options to convert your term policy to a permanent policy in the future without undergoing any further medical questions or tests.

However, life insurance only brings value if the policy continues to be in force when you pass away. As term insurance costs rise over your lifetime, converting all or a portion of your coverage to whole life insurance will allow you to keep coverage in place while term insurance premiums would continue to rise and coverage would eventually expire. Life insurance is about finding what is right for you, but that will change as you reach different stages in your life. The most important factor is ensuring that your coverage remains active throughout your life to provide security for you, and your loved ones, no matter what happens.