Related Information

• Types of Life Insurance

  Learn about the Different Types of Life Insurance

  Almost all life insurance falls into two main categories – term or permanent. Permanent is sometimes referred to as whole life or cash value insurance. Both require premiums and both pay the face amount upon the death of the insured. But they have some distinct differences. Here’s a brief description of the types of insurance.

  Term Insurance

  Often called pure life insurance, term policies provide coverage for a fixed period. The term can range from one to 25 years (it’s typically 5 or 10 years), or even to age 65 or 70, depending on the policy. At the end of each term, the policy must be renewed. Premiums rise with each renewal, reflecting the fact that you are getting older and are more likely to pass away.

  Since coverage is limited to a fixed period, premiums for term policies are initially much lower than for a comparable amount of whole life coverage. Term costs do increase over time, though. Eventually, the premiums may exceed those of whole life, and beyond a certain age (usually 65 or 70), you can no longer buy term insurance at all.

  Permanent (Whole Life) Insurance

  Whole life and other types of permanent coverage are more complicated than term policies. The coverage is for life with no time limit, and premiums generally are set for life at the time of purchase, meaning they will never be increased, no matter what happens.

  Initially, you pay much more than with a term policy. The difference can be viewed as a reserve that is used partly to cover the higher premium requirement in future years. At some point, the reserve may even cover all future premiums, at which point the policy is said to be paid up. The reserve is also used to generate a cash value for policyholders. This cash value can be used in a number of ways:

  • You can borrow from the insurer, usually up to 90 percent of the balance
  • You can use it to pay your premiums for a while, sometimes at reduced face value
  • You can discontinue coverage and convert the cash value into income
  • You can cancel the policy and receive the cash surrender value (generally the same as the cash value)

  Because of the cash value aspect, whole life is often referred to as life insurance with a savings component. But shortcomings in regular whole life policies – particularly their low effective yields – have prompted the industry to introduce a few variants.

  Term-to-100

  Despite the name, this is really a permanent contract. You pay fixed-level premiums and receive coverage to age 100. If you live to age 100, the policy terminates but you receive a cash payment equal to the face value or more (depending on contract terms).

  Many Term-to-100 policies do not have a cash value per se – one that can be accessed during the life of the policy. As a result, Term-to-100 is sometimes described as stripped-down whole life, and is much less expensive than whole life. It has become popular since its introduction in 1979 and accounted for about 8 percent of all new individual life insurance policies sold in Canada in 1997.

  Universal Life

  First introduced in 1982, this type of policy keeps the savings and insurance components completely separate. Within policy limits, you can decide how much or how little you want to pay into the reserve, or even pay a single premium to fund the entire policy.

  You have some choice over how the reserve is invested, and can withdraw cash from it, not just borrow against it. You can adjust the premium and the face value.

  Universal Life is a direct industry response to the “buy term and invest the difference” argument, and it has become very popular as well.

  Note: Insurance Products are made available through GP Capital Insurance Agency Ltd.

• How Much Life Insurance Do I Need?

  How Much Life Insurance Do I Need?

  The answer depends on your age and your circumstances. Children, for example, have little need of life insurance, although parents sometimes buy policies in their name as a savings vehicle.

  Young singles have little need for life insurance either, except perhaps to cover funeral expenses and any debts not insured elsewhere. Mortgages and car loans, for example, can be purchased with their own insurance protection.

  If, however, you have dependents – a spouse, children, or others – then life insurance is often the only feasible way to provide financial security in your absence. The question of how much insurance you need depends on your family’s income requirements.

• Insurance Companies Represented

  Through GP Capital Insurance Agency Ltd., We offer a wide variety of insurance products from 15 leading insurance companies to satisfy individuals, families and business owners. With every new stage of life comes a need to review your insurance plan.

  Life Insurance Companies Represented

  ASSUMPTION LIFE	HUNTER MCCORQUODALE
  BLUE CROSS	INDUSTRIAL ALLIANCE INSURANCE
  BMO INSURANCE	Humania Assurance
  Canada Life	Manulife Financial
  DESJARDINS FINANCIAL SECURITY	RBC Insurance
  EMPIRE LIFE	Sun Life Financial
  Equitable Life	IVARI
  FORESTER LIFE

  Segregated Funds Represented

  Invesco Segregated Funds	Great West Life Assurance Co.
  CI Segregated Funds	Mackenzie Segregated Funds
  Canada Life	Standard Life
  Empire Life	TD Guaranteed Funds

  If you have any questions about purchasing life insurance, send us an email and we would be pleased to help.

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• Insurance Planning Tools

  Insurance Planning Tools

  A life insurance needs calculator is a great tool for determining how circumstances or changes in your life—such as taking on a mortgage, having children or changing jobs—could affect your life insurance needs. Get an estimate in minutes!

  INSURANCE CALCULATOR