Shoreline Financial in Victoria BC
Shoreline Financial in Victoria BC Shoreline Financial in Victoria BC Shoreline Financial in Victoria BC Shoreline Financial in Victoria BC


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Shoreline Financial in Victoria BC
Shoreline Financial in Victoria BC
Shoreline Financial in Victoria BC
Shoreline Financial in Victoria BC
Shoreline Financial in Victoria BC
Shoreline Financial in Victoria BC
Shoreline Financial in Victoria BC
Shoreline Financial in Victoria BC
Shoreline Financial in Victoria BC
Shoreline Financial in Victoria BC
Shoreline Financial in Victoria BC
Shoreline Financial in Victoria BC
Shoreline Financial in Victoria BC
Shoreline Financial in Victoria BC
Shoreline Financial in Victoria BC

Life Insurance

The sole purpose of life insurance is to provide liquidity (accessible money) at death. The three most common types of life insurance are whole life, term, and universal life. These three policy types vary considerably in their respective advantages and disadvantages. Consequently, the best life insurance portfolio for any person must be custom designed based on both their financial portfolio and their personal needs, and may contain more than one type of life insurance.

Given the importance and complexity of life insurance, it's always best to seek out a qualified agent or broker to help you select the products that best meet your needs.

Shoreline Financial in Victoria BC

In the sections that follow we outline the key advantages and disadvantages of each type of life insurance. If you have any questions, are interested in adding to your current portfolio, or perhaps most importantly, would like to review your current portfolio with one of our agents, please contact our office to set up an appointment.

Whole Life:

A coverage designed to provide coverage till death, or for the entire life of the insured.

Advantages:

  • coverage for life
  • flexible payment options (e.g., single payment, annual payments until death of insured).
  • age dictates the cost of coverage
  • after a period of payments the policy has a cash value
  • cash values can be converted to an annuity at a later date
  • premiums can be waived on disability

Disadvantages:

  • cost is higher than pure term insurance (per thousand of coverage) because the policy ultimately has a cash value.
  • real return on cash values can be effected by inflation
  • real future insurance values can be effected by inflation
  • cash values can be effected by the return given if the policy participates in dividends.
  • if the policy is converted to an annuity the insurance is terminated

Term Insurance:

A coverage for a certain term (e.g., coverage needed to provide insurance for a mortgage). A wide variety of term policies are available including renewable policies of one, five, ten and twenty year terms, term to age 65, term to age 100, mortgage term and group term (examples).

Advantages:

  • term rates are pure (i.e., avoid the extra cost required to hold a cash value, see whole life)
  • waiver of premium may be added
  • accidental death may be added

Disadvantages:

  • some policies are not renewable or convertible
  • converting or changing contractually, typically results in a more expensive policy.
  • outstanding or late payments may terminate coverage
  • a medical is needed to establish or reinstate coverage

Universal Life:

A relatively new product that incorporates some of the advantages of term insurance into the framework of whole life. Specifically, universal life adopts the pure cost of term insurance, giving the policy holder the choice of investing excess funds in either a GIC or a mutual fund account. Therefore, it is possible to build the policy value internally both in anticipation of future needs and to hedge against inflation. This flexibility and power of universal life has led to its motto, buy term and invest the difference.

Advantages:

  • see whole life
  • chose where excess funds are invested
  • tax advantages for funds being held
  • greater flexibility

Disadvantages:

  • see whole life
  • certain payment plans negate the advantages (e.g., on certain payment plans the cost of the pure insurance can adversely effect the returns, the policy could lapse in the future!)

To benefit from the freedom and flexibility of universal life policies care must be taken when selecting the monthly payment stream. The best prudent advice, stay away from minimum payment streams.

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