Although there may appear to be a vast array of life insurance policy types available, they all consist of one of two basic forms: Permanent insurance and Term insurance. As the names imply, permanent insurance is permanent (for life) and term insurance is temporary. Most people require a combination of the two types to fit their needs. Examples of permanent needs are funeral expenses, survivors' income, taxes at death on capital gains, taxation of RRSPs and RRIFs and charitable bequests. Examples of temporary needs are mortgages, children's education and business loans.
Permanent Life Insurance
Universal Life - This is a permanent insurance plan which provides for separation of insurance and savings components of the policy. All premiums, after deduction of provincial premium taxes of 2%, are deposited to the daily interest account. Funds sufficient to pay for the Cost of Insurance, benefits and monthly administration charges are retained in the daily interest account to pay all charges for the following 12 months. The balance of the premium is available for allocation to other investment options including guaranteed investment accounts, Canadian Equity Index-Linked Account, U.S. Equity Index-Linked Account, International Equity Index-Linked Account, and Canadian Bond Index-Linked Account. The guaranteed Cost of Insurance (COI) charge pattern available is Yearly Renewable Term (YRT). Universal Life can provide lifetime coverage provided sufficient premiums are paid to maintain a positive account value. The tax free benefit payable on death is the sum insured plus the account value. The UL plan may be surrendered for its cash surrender value equal to the policy account value less any applicable market value adjustments on guaranteed investment accounts.
Term to Age 100 - Although the name of this plan implies temporary protection this plan provides a level amount of permanent life insurance to age 100 of the life insured, at which time the face amount of insurance is paid. Premiums are guaranteed, are level and payable to age 100.
Fifteen Pay Term to Age 100 - This plan provides a level amount of permanent life insurance to age 100 of the life insured, at which time the face amount of insurance is paid. All premiums are guaranteed, level and payable for 15 years only. A guaranteed cash value will develop, commencing in the 10th year, which will be available to the policyholder upon surrender before the death of the life insured.
Twenty Pay Term to Age 100 - This plan provides a level amount of permanent life insurance to age 100 of the life insured, at which time the face amount of insurance is paid. All premiums are guaranteed, level and payable for 20 years only. A guaranteed cash value will develop, commencing in the 10th year, which will be available to the policyholder upon surrender before the death of the life insured.
Instant Issue Life Insurance - This plan is designed for individuals age 45 to 75. It is a guaranteed issue permanent plan with just 5 qualifying questions. Premiums are guaranteed, level and payable for 20 years only. The death benefit in the first 2 years will be the return of the premiums paid plus 10% interest to the date of death. Thereafter the full protection is paid when death occurs. The death benefit amount is paid to the policyowner if living after the later of 20 years, or age 85.
Temporary Life Insurance
LifeStyle Term - These plans consist of 10 year, 20 year, or 30 year Renewable & Convertible Term Insurance. The sum insured is level and all premiums are guaranteed. LifeStyle Term can be renewed until age 80 of the life insured, at which time the insurance terminates. These plans are also available on a joint - first to die basis.
Preferred Underwriting of LifeStyle Term - Today's emphasis on healthy lifestyles allows applicants to be grouped into a greater variety of lifestyle categories. This results in a more appropriate premium being charged. In the past, healthier applicants subsidized the insurance costs of those who were less healthy. LifeStyle Term rewards better risks with lower premiums. Preferred Underwriting classes available for LifeStyle Term include three nonsmoker classes and two smoker classes.
Quick Issue Critical Illness - Quick Issue Critical Illness is designed to provide funds to help you financially care for yourself and your family and maintain the same quality of life after surviving a critical illness. The plan provides a tax-free lump sum living benefit to the owner of the plan on the occurrence of the first of the covered illnesses of the insured, provided the insured survives the waiting period following the onset of the critical illness. The waiting period is 30 days from diagnosis, except for Loss of Speech (6 months) and Paralysis (90 days). No living benefit is payable if cancer is diagnosed within 90 days of issue. Three types of Quick Issue Critical Illness plans are available: 10 Year Renewable to Age 75, Level to Age 75 and Level to Age 75 with Flexible Return of Premium. Quick Issue Critical illness is issued upon answering "No" to just 8 qualifying questions, provided there are no unfavorable reports from the Medical Insurance Bureau.
