Helping Markham and Toronto Residents Determine What Type of Life Insurance to Buy.
Markham and Toronto residents have a lot of choice when it comes to choosing a life insurance plan. All life insurance contracts are based on an amount of coverage for a specific amount of time. Depending on your personal situation, goals and dreams, you may require life insurance for a short term period or you may want life insurance in place for the rest of your life. Usually, the shorter the time period of coverage (say, coverage for 10 years) the lower the premiums and the longer the time period (say, coverage to age 100) the higher the premiums.
Term Life Insurance
Term insurance is classified as an insurance contract that’s locked in for a 5,10,20 or even 30 year period. Term insurance is designed to cover temporary insurance needs in your lifetime. A common example of a term insurance need would be raising a family. If your main concern is to provide funds to your family to pay off a 20 year mortgage then a 20 year term life insurance would help to cover that need. Once the term insurance period is over you’ll have to pay a considerably higher price to maintain the same insurance coverage. You may very well have to take another insurance physical to qualify all over again. That means your health must still be in good condition. Declining health, a dangerous job or hobby and bad habits can make coverage unaffordable or unavailable.
Permanent Life Insurance
It’s what the name implies, it’s with you for life no matter how old you are when you die. Permanent insurance plans come in different forms, including Whole Life, Universal Life and Term to 100 plans. The premiums are projected to remain level over your lifetime and in some cases can be designed to stop at retirement while your coverage remains in force for life. Permanent insurance is often used by people who want to leave a legacy and transcend some of their wealth to the next generation. Permanent life insurance is used to ensure that your spouse will have some insurance coverage in the later years to protect retirement and fund final expenses. Permanent life insurance policies can build a cash surrender value that’s available if needed in the event of emergencies, opportunities, or education for your children. Of course these benefits come with a price – the initial premium for permanent insurance is 3 to 10 times higher than it is for the equivalent amount of term life insurance – so if your budget is limited be sure you buy as much as you need even if its all term life insurance – but if you have some room in your budget it usually makes sense to include some permanent life insurance in your program. As time goes on it will probably make sense to covert some of your term life insurance to permanent life insurance.
One mistake people sometimes make is underestimating how long they will need life insurance. Life insurance fills the financial gap between your financial needs and your financial realities. Many people are caught unprepared as they get older, wishing they locked-in some form of permanent life insurance when they were younger, while it was still affordable and available. By owning both types of life insurance, term and permanent, you are better prepared for the unexpected things that happen in life. Let’s face it our financial lives never go as smoothly as the financial press and pop culture gurus would have us believe.
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