When people think about life insurance, they typically think about people of an older age. However, life insurance is not just for people of an older age group.
Anyone who buys life insurance in Ontario can reap significant benefits. One thing that is for sure is that death can, unfortunately, come when you least expect it.
No one truly knows what lies ahead in life so it’s important to be prepared for all possibilities, especially if you have people relying on you financially.
Losing a loved one is not only heartbreaking but if that individual was the one person that a family relied on financially to pay bills like mortgages then this could be even more catastrophic.
Losing the ability to pay your mortgage or put food on the table for your family can add a whole new level of stress to an already very trying time.
Life insurance helps to ease the financial burden on your family in the stressful and devastating event of death.
So that when death does come, no one is left short. There are a few different types of life insurance that you can choose from. These include:
Term Life Insurance:
Term life insurance is a policy that has a fixed term so therefore if you do not pass in the time of the term then you are no longer insured.
While this may sound pointless, this is often a very popular choice as it allows the policyholder to have a higher sum of money with much lower insurance premiums.
40 years is the longest term life insurance that you can get, and only very few companies offer this. You would normally be looking at around 20-30 years for a term life insurance policy.
Something important to note with term life insurance is the earlier you take out your policy, the cheaper the premium will be.
Another benefit of term life insurance is how easy it is to understand. There is no field-specific jargon and any confusing investment elements to it, it is as simple as paying a certain price monthly for the fixed term set out in the contract.
Depending on the company, a beneficiary sometimes has the choice of whether they want to take out the money in one lump sum or if they want to receive it monthly as an income, this gives them the ability to make their own choice on how they want to manage the money.
Another thing that is important to note about term life insurance is the income tax benefits that you receive.
The premium that you pay is tax-deductible and the payouts as per the existing tax laws come with tax exemptions.
Whole Life Insurance:
Whole life insurance is a policy that is guaranteed to remain for the lifetime of the policyholder, no matter how long they live. So you do not have to all worry about the insurance expiring and then having to get a new policy.
There are many advantages to a whole life insurance policy, one of the main ones being that your insurance premium is fixed and therefore does not change throughout time.
On top of this, the premium that you pay also contributes to your cash value so the longer you pay your premiums, the bigger the payout will be.
You can also access this money at any time if need be, however, that will reduce your death benefit and could interfere with other aspects of your plan.
Many life insurance companies pay dividends. You can either take them as cash or use them to pay portions of your premiums every month.
Another option would be to reinvest them into your policies to allow your death benefit and the cash value to grow at a much quicker rate.
There are also some tax benefits to whole life insurance policies, the death benefit is tax-free and if you at any point want to borrow against your cash value then you can do so without paying taxes as long as the loans are repaid properly.
To conclude, an investment in life insurance is not just an investment in yourself, life insurance is an investment in your family and your loved ones.
It is not reserved for people who are getting on in their lives, it is for everyone and covers all possibilities.
As I previously stated, you never know what life will throw at you, but it’s extremely important to be prepared for anything.
In the event of a tragic death, life insurance is there to provide you with financial stability and peace of mind.
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Written by Josh Green: Author at Diaspora, a life insurance company operating worldwide.
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