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hi, welcome to my wall about life insurance and the ups and downs of different types

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Life insurance is a financial safety net that helps you, your family, or your business financially after a loss of life.

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Life Insurance Canada | What is Life Insurance

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How Life Insurance Works in Canada | Insurance 101

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Purchasing a life insurance policy is considered good planning and, for some, the pinnacle of "adulting." Here's how to know if you actually need it.

Life insurance shouldn't be one of those things you put off thinking about-because you (and the people who depend on you) could need it at any time. But many do wonder if it's worth the monthly premiums. How do you know if it's necessary? Why do we need life insurance anyway?

"In general, life insurance is most necessary when you have dependents who would be impacted financially by your death," says Lorne Marr, director of business development at Hub Financial and founder of LSM Insurance, an insurance brokerage in Markham, Ont. "Typically, life insurance is used as a way to pay off a large debt, such as a mortgage on a home that you want to leave to your heirs." But technically, you do not need life insurance. Unlike car insurance for drivers, it's not required by law in Canada.

Why you may need life insurance

If you have a spouse and kids, ask yourself: What do you want to happen to them when you're gone? Chances are, you'd like for them to maintain their current lifestyle, as opposed to dealing with financial uncertainty or having to move out of their home. (Read this MoneySense article to learn how life insurance works.)

If you have dependents, you probably need a life insurance policy. It can help settle debt obligations (such as your mortgage, auto loans and credit card bills), allow your dependents to stay in the family home, and cover everyday living expenses. Beyond that, it can pay for future life expenses (the cost of your children's post-secondary education, for instance).

If you're single and no one is actively depending on your income, a life insurance policy is still worth considering. The death benefit may be enough to take care of any debts, cover those inevitable end-of-life expenses (such as your funeral arrangements) and provide financial support for your loved ones or favourite charities.

When you have a mortgage

A life insurance policy isn't required for a mortgage in Canada, but it's recommended. "It's just smart to have," says Jason Roy, a financial security advisor and managing partner at Adkins Financial in Brantford, Ont. "Your mortgage is most people's largest expense and usually taken out on a couple's total income. When something unforeseen happens, the last thing you want to be doing is making decisions because you are financially forced to."

When you're single and have debt

You may want insurance in this case, depending on your situation. A life-needs analysis can help you decide by accounting for things like your age, outstanding debts, assets and savings. A life-needs analysis also takes into consideration any future plans to start a family, leave money or assets behind to family members or donate to charities.

Why you may not need life insurance

If you're single, with no dependents or debts, and have enough savings and assets to cover all your end-of-life expenses, then it's probably not necessary. The same goes if you have a family, but are financially set up in a way that would leave them well-cared for (i.e., a mortgage-free house, no debt and lots of savings tucked away).

Still unsure? Here are more scenarios

Retired, with no dependants

Katerina is a single 70-year-old woman with a mortgage of about $115,000. With no dependents and living on a limited budget, she would prefer not paying life insurance premiums.

No. "You do not need life insurance [in this case]," says Marr. However, let's say Katrina wanted the reassurance of leaving money behind. That would be one reason to consider The verdict: term life insurance or whole life insurance. A term life insurance policy, in particular, might be a better fit for someone like Katrina, for a few reasons:

It is often the most inexpensive life insurance option available.

The full-face value of the policy pays out upon the policy holder's death.

It's often a suitable replacement for mortgage life insurance, which is more expensive and offers payouts that decline as the face value of the mortgage declines.

It can create a nest egg for the loved ones you leave behind, which can be used to provide income replacement, pay off debt, create an emergency fund, cover final expenses incurred upon your death or simply leave money behind as part of an estate.

"If none of these apply to you and none of these circumstances are part of your overall financial plan, then save your money," Marr says.

Young and single, with some debt

Steven is a 30-year-old single male with no kids or dependents. He rents an apartment, has a small car loan of $15,000 and credit card debt of $3,000, but has savings of $50,000.

The verdict: No. "Assuming [Steven] does not want to leave behind anything for their family or charity should they pass away, life insurance would not be required at this time," says Adam Mitchell, president of Mitch Insurance, in Whitby, Ont. "Their current savings is enough to cover their outstanding debts and their funeral expenses, so life insurance would not be required at this time." That said, if Steven eventually buys a home, gets married or decides to start a family, it would be wise for him to revisit his life insurance needs.

Married with children and a mortgage

Angela and Ryan are married with three children and are both 45 years old. Money-wise, they have a mortgage of $350,000, credit card debt of $4,000, and car loans totalling $40,000. They have savings of $200,000 and no other tangible assets.

The verdict: Yes. "With debts totalling $194,000 over [what they have saved] and three dependents, there will be a need for life insurance," says Mitchell. "The total amount would be determined by a complete life-needs analysis." Depending on the results of that analysis, and the couple's budget, there may be a wide variety of options. Their options would include:

A joint first-to-die policy, which pays out a death benefit to the beneficiary upon the death of the first of the two people insured under the policy.

A joint last-to-die policy, which pays out a death benefit to the beneficiary only once both individuals have died.

Separate term life insurance policies.

Separate whole life insurance policies, for additional coverage focused on the family's long-term financial planning. Whole life insurance provides coverage for life at a fixed premium, and another benefit is that you don't have to re-qualify for coverage as you get older.

Established with good savings

Karen, a 60-year-old widow with no dependents, rents a condo, holds a $10,000 car loan and $4,000 in credit card debt. She has savings of $400,000 and no other tangible assets.

The verdict: No. "She has enough savings to reasonably cover all of their debts and final expenses, as well as leave behind money to family or charity if they wish," Mitchell says. "No life insurance would be required."

Quick questions about life insurance, answered

Are you required to do a physical exam?

Not necessarily. "It really depends on your age and the coverage amount you are applying for," Roy says. Either way, you'll likely be asked a lot of health questions, so that the insurer can better determine your level of risk, based on your habits, medical history and family medical history. Have that info ready and don't be surprised when they ask.

What isn't covered by life insurance?

Some causes of death, such as death by suicide within the first two years of signing your policy, may not be covered. Exclusions may also be made for certain high-risk activities, like extreme sports (think: rock climbing and parasailing). Finally, misrepresenting yourself or lying to your insurer will void your coverage.

Does age affect your insurance premiums?

Yes. The older you are, the sooner you are likely to pass away or encounter health problems. With that higher risk comes higher premiums. However, if you have term life insurance, your premiums are set for the duration of the term; it's at the time of renewal that they may increase. And with certain permanent life insurance policies, your premiums remain the same for life-but this means paying more at a younger age.

What happens if you drop your life insurance policy?

It depends on the type of coverage you have. "Most term policies do not generate a cash value, so if they are cancelled the policy is voided," says Mitchell. "However, with a whole life or universal life policy, there may be a cash value at the time of cancellation that would be paid out to the insured... This cash value may be subject to a surrender penalty, which would be determined by how long the policy has been in force, and the penalties listed in the policy."

Final thoughts

So, do you really need life insurance? The answer, as we hope the above makes clear, is not a simple yes or no. A lot depends on your situation, financial obligations and goals-whether or not you have kids or a large mortgage, for example. You may not need life insurance if you are single, live a modest lifestyle and are good at saving. But in many cases, if you have dependents, debts or not enough savings to cover end-of-life expenses, it's worth seriously considering.

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Purchasing a life insurance policy is considered good planning and, for some, the pinnacle of "adulting." Here's how to know if you actually need it.

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Simple more in depth look at the different types of life insurance

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Simple more in depth look at the different types of life insurance

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You're not alone in thinking about life insurance. For many Canadians, it's an important part of a comprehensive financial plan. It can help your named beneficiary, such as your family, replace your income and fulfill their plans - such as going to university or retiring - in your absence.

But do you know what type of life insurance is right for you? And are you aware of what life insurance can do for you, beyond helping pay for a funeral and related expenses?

Let's find out together.

Term life insurance

Term life insurance  is a lower-cost product that protects you for a set period of time, like 10 or 20 years. When that time's up, your coverage is renewed at a higher cost if you don't cancel your coverage. You can also convert it to permanent life insurance without having to answer questions about your health.

It also has a lower initial cost than permanent life insurance, and it's a popular way for those just starting out to protect themselves and their families. Term life insurance is usually less expensive than permanent life insurance, so you may be able to purchase more coverage.

Participating life insurance

Participating life insurance, sometimes called permanent life insurance, gives you lifelong insurance coverage as long as you pay your premiums.

It's called participating life insurance because the premiums you pay for your coverage, along with premiums from other participating life insurance policyowners, go into a participating account. The insurance company's professional investment team manages this account, investing to increase its value.

It's from this account that your death benefit and any potential dividends are paid. While dividends are not guaranteed, any you may receive can be used to buy additional coverage, reduce your annual premium payments or be taken out as cash (though any cash values withdrawn from the policy may be taxed).

Universal life insurance

Like participating life insurance, universal life insurance  is permanent, meaning it lasts the rest of your life - as long as you pay the premiums. Universal life insurance combines the advantages of a permanent, lifelong policy with a tax-advantaged investment component.

So, what may make universal life insurance right for you today? The short answer: flexibility. This kind of insurance typically lets you to select your preferred premium schedule, the amount you want to pay (within limits) and an investment mix that matches your unique risk profile.

What's right for you today?

Term life insurance is the lower cost option in the short term. But while participating and universal life insurance tend to be more expensive initially, the growth potential of the cash value of these types of policies could make them better value in the long run.

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What are the main types of life insurance?

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You're not alone in thinking about life insurance. For many Canadians, it's an important part of a comprehensive financial plan. It can help your named beneficiary, such as your family, replace your income and fulfill their plans - such as going to university or retiring - in your absence.

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the disadvantages of term life insurance 

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the disadvantages of term life insurance 

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Term life insurance is the simplest form of life insurance offering death protection for a specified time period at a fixed rate.

The term ends after the specified period gets over, and after that, the policy needs to be renewed at a higher rate.
When should you opt for a Term Life Insurance plan?
Term Life Insurance is the best fit for people in need of temporary life insurance. It is also well-suited for young individuals starting a family in their 20s or early 30s when they are short of cash with possible mortgages.

If you have a mortgage, you may opt for a Term Life Insurance plan in Mississauga and Toronto, Canada, so you can leave enough money to pay it off in case of your death (we are assuming that you do not have a separate mortgage life insurance).

If you have started a new family with young children to provide for with the cash running now, Term Life Insurance is the best option for you.

If you think you don't need coverage for your entire life, Term Life Insurance is again your best option to go for.

Term Life Insurance - The Advantages
Term Life Insurance is really simple to understand.

As the rates are typically low, this makes it easy to shop around. You will just need to make 3 choices to opt for this insurance - the amount of coverage, the term period, and the insurance company (an experienced financial advisor can help you make these decisions wisely based on your current circumstances and budget).

As long as you are paying your premiums on time, you will definitely get the coverage.

Biggest value for money if you are young

All life insurance policies include a mortality charge for death benefit. Insurance companies pay this benefit by statistically determined mortality charges, no matter whether you are signing up for a whole, universal, or term life policy.

Individuals looking for maximum death benefit with minimum investment should opt for Term Life Insurance (this works exquisitely well when you are in young in your 20s or early 30s) because other insurance policies have other charges for additional features.

Term Life Insurance premiums are more affordable than other life insurance policies.

The premium correlates directly with mortality charges. Mortality charges are interconnected directly to the policyholder's likelihood of death.

Hence, young individuals can easily secure low premiums - the younger you are, the better it is going to be!

Permanent Insurances like Whole Life Insurance plans are costlier in comparison but they do come with other key benefits.

Individuals in need of temporary coverage can benefit substantially

Individuals requiring a cover for a definite period of time can benefit tremendously from a Term Life plan.

For e.g., if you need a coverage for 15 years, a Term Life policy can help significantly.
Term Life Insurance - The Disadvantages
This is the major problem with Term Life Insurance.

You may have a hard time determining how long you need the policy for because you cannot predict the future.

What if a scenario comes where you may think 20-years coverage is enough, only to realize that you need additional years of coverage when your policy is nearing the expiry date?

A renewal is costly. And then if you are not young anymore, say in your 60s, you will have to go through additional medical exams and your premiums will skyrocket.

Another huge problem!

The premium rises every year. This is because as one gets older, his chances of death and sickness rise. As a result, the premiums rise.

For young policy holders in 20s and early 30s, this is not a problem. But it heavily disregards old individuals in their 50s and 60s.

Many people prefer to grow their wealth along with their life insurance policy. The very idea of having a 30-years policy and then outliving it, seeing it expire may seem like a total waste of money. But then, this is exactly what happens with Term Life Insurance.

Alternatively, you get a capital build-up option with other permanent insurance policies like Whole or Universal Life Insurance.

The death benefit and term cover of Term Life Insurance are set on stone. You cannot change anything on the contract.

Other life insurance products, on the other hand, are very flexible where you may choose to adjust premiums or the death benefit.

Every dollar you pay on your term life insurance plan is taxed.

Permanent insurance plans allow you to pay your charges out of their asset or saving components, that grows tax-free.
So, what should you opt for between Term Life and Permanent Insurance policies?
It all depends on your age, requirements, budget, liabilities, and current financial condition. A need based analysis needs to be done before coming to a decision.

Our experienced financial advisors backed by 30 years of experience in the field of insurance and investment can help you come to a feasible decision. Get in touch with us now!

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Know The Advantages And Disadvantages Of Term Life Insurance In Ontario -

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Term life insurance is the simplest form of life insurance offering death protection for a specified time period at a fixed rate. The term ends after the specified period gets over, and after that, the policy needs to be renewed at a higher rate. When should you opt for a Term Life Insurance plan?

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How Term Insurance Works In Canada? | Insurance 101

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advantages and disadvantages of whole life insurance 

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advantages and disadvantages of whole life insurance 

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Permanent insurance is not an insurance product that can be taken lightly.

It's a product that is only right for certain insurance needs and circumstances that could help or hurt you, depending on how it is used. The Globe and Mail publisheda piece on the "Pros of Permanent Insurance" and, while all of them are true, they're only telling half of the story.

We've outlined the pros and cons of permanent insurance below, so that you have all the information and can truly select the right insurance product for you and your family.

First, the pros. Of course, we cannot outline the risks of an insurance product without also mentioning its strengths.
Pros
A permanent policy remains active regardless of age - One of the first positives outlined in The Globe and Mail article has to do with the fact that most term insurance policies expire at a certain age. With permanent insurance, you don't have to worry about that. A permanent policy remains in-force for life.

You can grow an investment within the policy - Two kinds of permanent policies - Universal Life and Whole Life - come with an investment component. For every single dollar you pay in annual premiums, you have the option to contribute three to four dollars into the investment fund attached to the policy. The best part is that these investments grow on a tax-sheltered basis within the policy and can be paid out tax-free, along with the value of the policy.

You can enjoy level premiums for the rest of your life - Whole life policies generally come with level premiums for the life of the policy, which means the premiums never rise and as the policyholder you always pay the same amount.

Permanent life insurance policies have limited pay periods - With permanent policies, you don't necessarily have to pay the premiums forever ad infinitum. This is because of limited pay periods, which may have you pay premiums for the first ten years of the policy for example and then never have to pay premiums ever again on that policy.

You may be able to participate in the profits of the insurance company - If you purchase a whole life insurance policy, you'll be able to choose between a participating and non-participating policy. When it comes to a participating policy, these are called "participating" because they allow you to participate in the profits of the insurance company. You do this by receiving dividends as part of the investment component of the policy.

Those are some of the biggest advantages to buying a permanent insurance policy, but along with them come various risks, so the pros are not without the cons, which is where we're going next...
Cons
Permanent life insurance is expensive - Permanent insurance is generally much more expensive than term insurance. Money Sense Magazine gives the following example comparing the price differences between term life insurance, universal life insurance, and whole life insurance: "A 35-year-old male non-smoker might pay $35 a month for a term policy with a death benefit of $500,000. A universal life policy with the same death benefit might cost $190 a month, while a comparable whole life policy could easily top $250."

Most people cancel their permanent policies early - Permanent policies aren't for everyone and most people underestimate their ability to pay the annual premiums and end up not being able to afford them. They usually bow out and, by doing so, lose out on the investment component anyway before they break even. According to an article in the Wall Street Journal, the Society of Actuaries found that 20% of whole-life policies are terminated in the first three years and 39% within the first 10 years. If you are one of these people, you are much better off with a cheaper term life insurance policy.

Very little of the first year premium actually goes into the cash-value account - One little-known secret is that advisors are given large first-year commissions to sell permanent policies, which total over half of the first-year premium. That means that very little of the premium actually goes into the cash-value investment account. Brian Fechtel, an agent who runs a website called BreadwinnersInsurance.com, recommended "blended" policies in the Wall Street Journal. These policies combine permanent and term components in a way that keeps costs down while still providing the tax-advantaged benefits of a permanent policy.

You shouldn't really be thinking of insurance as an investment - Take it from this post by Gail Vaz-Oxlade: the investment component of permanent insurance shouldn't really be your first priority when buying life insurance. As she writes, insurance is about risk mitigation for a "just in case" scenario and the investment component should always be secondary in the mind of the policyholder. That means you should be thinking about what the coverage amount is that will protect your family and not the return on investment.

Permanent insurance is inappropriate for short-term expenses - If you're buying insurance to cover funeral expenses, a mortgage, a college fund, or any other short-term expense, then you're much better off buying term insurance for a certain length of time. This is because these expenses will end and your coverage will no longer be needed once they are paid off. They are on a certain timeline, so the insurance to cover them should be too. Whether you choose a ten-year term, a 20-year term, or something longer like term-to-75. For most insurance needs, term insurance will have you adequately covered.

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The Pros and Cons of Permanent Life Insurance | Life Insurance Canada

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Permanent insurance is not an insurance product that can be taken lightly. It's a product that is only right for certain insurance needs and circumstances that could help or hurt you, depending on how it is used. The Globe and Mail publisheda piece on the "Pros of Permanent Insurance" and, while all of them are true, they're only telling half of the story.