Types of Life Insurance

  1. Term Life Insurance

Term Life Insurance, is “rent” according to my advisor, and the cheapest form of life Insurance. With a term plan you’re renting a block of life insurance for 10 or 20 years. At the end of 10 or 20 years, they quintuple your price and if you don’t have a heart attack and renew at 85 they cancel the lease.

  1. Universal Life Insurance

Also known as “Term to 100,” is rent to own. If you’re still alive at age 100, the life insurance company will send you a letter thanking you for the decades of premium payments and tell you it’s all paid off, please stop paying.

  1. Whole Life Insurance

Whole Life insurance is the most valuable life insurance contract in Canada. With a whole life insurance contract, you’re buying a block of life insurance and — like your home after 20 years — it’s completely paid for life. No more payments ever required.

Under whole life insurance there are two separate types: there is non-participating whole life insurance, and participating whole life insurance.

With non-participating whole life insurance you own your block of life insurance after 20 years.

During your lifetime the life insurance company will pay you a little interest each year, which will grow tax-free inside your plan. Inside your life insurance contract.

Participating whole life insurance is the most valuable contract in Canada because from the moment you open the plan, you participate (share) in the profits of the life insurance company and those profits are paid to you as a tax-free annual dividend.

The annual dividends are deposited inside your contract and grow tax-free for during your whole life. After 20 years, you own the contract completely and you are free to use the cash values in your plan for any financial need in life, such as paying for your children’s education, down payment on a home, fulfilling your dream to start your own company, or even as a retirement income plan. That’s right because the cash values grow compounding tax-free during your entire life the cash values are so large you can actually use the annual dividend or the cash value as an added source of retirement income.