Traditionally life insurance was purchased to protect your family and loved ones from the impact of a premature death. Over time, life insurance has evolved and is now also being used for investment and estate planning purposes. We offer a broad selection of term, whole or universal life insurance to meet your needs.
Term insurance provides temporary protection and has no cash value. It is inexpensive to start, easy to understand, and efficiently provides a large amount of coverage for a defined period of time. Premiums increase every 10 or 20 years, depending on the term chosen.
Term insurance expires prior to life expectancy, and becomes prohibitively expensive over time as premiums increase dramatically at each 10 or 20 year renewal. There is no flexibility to change or skip premiums payments and the coverage has no cash value.
Most term insurance can be converted, in whole or in part, to permanent universal or whole life insurance without medical evidence of insurability up to a certain age.
Whole Life Insurance
Whole life insurance is permanent insurance. It provides lifetime coverage and is low maintenance. A participating (PAR) whole life insurance policy is a unique asset that combines permanent life insurance protection with a tax-advantaged investment component (typically invests using a conservative balanced approach with an emphasis on fixed income investments) as well as the opportunity to receive policy holder dividends. The tax-advantaged growth within the policy provides excellent value to policyholders. Participating whole life insurance offers guaranteed premiums, death benefits and cash values.
A PAR whole life policy is currently classified by the Canada Revenue Agency (CRA) as an exempt life insurance policy for taxation purposes. In Canada, the opportunity to earn policyholder dividends is unique to participating policies where the policyholders share in the experience of the pool of life insurance policies through the payment of policyholder dividends. Policyholder dividends vest immediately upon receipt.
According to the CRA, a whole life insurance policy is a tax-exempt policy. There is no income tax on accumulating policy reserves, the assignment of a policy to a bank as collateral for a loan is not a disposition for income tax purposes, and loans received by the policy owner may be tax free.
Universal Life Insurance
Universal life insurance is also permanent insurance. It provides lifetime coverage and long term protection with built in flexibility. Universal life provides the traditional protection offered by all life insurance plans as well as the ability to invest in a tax-sheltered investment account. This type of coverage normally has guaranteed mortality costs, policy and investment expenses.
Like other assets you own, permanent life insurance may have a “cash value”. The lifetime protection offered by universal life insurance allows you to use your insurance as a tool for estate planning and/or as a tax deferral mechanism. Similar to a mortgage on your home, you can pay the policy off over 20 years, or any other time period depending on deposits made. Universal life insurance has a lower net cost compared to term insurance.
According to the Canada Revenue Agency, a universal life insurance policy is a tax-exempt policy if it passes the annual exempt testing process. There is no income tax on accumulating policy reserves, the assignment of a policy to a bank as collateral for a loan is not a disposition for income tax purposes, and loans received by the policy owner may be tax free.
Financial Underwriting Guidelines
Below are some general guidelines on how much coverage you may be eligible for:
Source: Sun Life 2015