Life & Home

Life insurance provides peace of mind for you, and a secure future for your family.

Why do I need life insurance?

If you have dependents and are uninsured, they may experience substantial, perhaps catastrophic, financial difficulties upon your passing. This is particularly true if you have a mortgage or other substantial debt. If you are insured, they’ll be protected against financial disaster…and you’ll sleep better at night.

What kind of life insurance should I get?

There are two main categories of life insurance:

Term life insurance

Term life insurance is, as the name suggests, temporary. You may wish to be insured until retirement, or until your children are self-sufficient, or perhaps for the duration of a mortgage. Most term policies are 10 years in length, although some carriers offer 5-, 15-, 20 or 30-year terms.

Permanent life insurance

Permanent life insurance lasts for the duration of the life of the insured (provided premiums are paid up, of course!) and provides a death benefit to the insured’s dependents.

Permanent life falls into two subcategories:

Whole Life

  • Under a whole life policy, the cost of the insurance is stretched out over a lifetime. Likewise, the premiums can be spread out over your lifetime, or until you reach a certain age. Part of your premium actually pays for the insurance and part is invested in a participating fund. The amount invested each year will be determined by the insurance company based on its mortality experience, expenses and investment returns. The insurance company returns income from the par fund to policyholders through a dividend. That dividend can be used to reduce future premiums, buy more insurance or taken as cash. There are different tax consequences depending on your choice.

Universal

  • Universal life is more flexible than whole life, and is a transparent version of Whole Life. The insurance company clearly separates the insurance and investment components. The client chooses from several different cost of insurance methods and many investment options. The premiums and death benefit are variable and can be adjusted according to the terms of the policy, which vary by carrier. Basically, there is a minimum premium and a maximum premium and you can choose to pay any amount between those two figures. Any excess above the minimum is used to invest in the many choices provided by the insurance carriers within the Universal Life policy on a tax deferred basis within the limits prescribed by the Income Tax Act.

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    Raymond L. Winer
    CPA, CA, LPA RZN, LPP
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    I Pro Realty 
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    647-943-5538
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