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Life Insurance Explained: Whole Life Insurance (Part 3 of 5)

Posted on March 3, 2008 at 4:34 pm 
Filed Under Insurance Planning, Personal Insurance

In the third part of our series, we want to Whole Life Insurance and explain how it works and who it is most suitable for.

Whole Life insurance is one of the oldest forms of life insurance in Canada. In most cases, it provides a guaranteed level premium for life combined with a guaranteed cash value. Depending on the company of choice, Whole Life insurance can also “participate” in the company’s profits in which case the term “Whole Life Par” is used. This participation, in the case of a positive year for the insurance company, is typically paid out in the form of a Dividend and can be used to add to your cash value or simpy purchase “Paid Up Life Insurance”. To use an analogy, it is similar to owning a fixed income or GIC based life insurance policy that provides a number of different guarantees.

Your Take-Away: This form of life insurance is used in a number of different circumstances. For example, if you are looking for a safe, alternative investment vehicle, or simply want to leave money to your heirs without being dependant on the market, this can be a great opportunity. It is also used in some cases for individuals who are looking for basic life insurance that will last a life time and will not fluctuate in terms of premiums or cash value.

Another situation where this may be very suitable is for an individual who has a life insurance need for estate planning purposes but has taken a lot of risk with his other investments such as Real Estate, his own business, or even his overall portfolio. This product can provide the life insurance required based on his needs, but can completely eliminate any risk in terms of market volatility. In other words, it can be considered the fixed income component of this person’s overall investment portfolio.

In the end, knowing your options is essential and do not hesitate to ask your Advisor to explain everything before making a decision.

Until next time, have a Magnificent Monday.

Chris & Elisseos

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Comments

3 Responses to “Life Insurance Explained: Whole Life Insurance (Part 3 of 5)”

  1. Eric Hundin on March 3rd, 2008 4:48 pm

    I found your site on technorati and read a few of your other posts. Keep up the good work. I just added your RSS feed to my Google News Reader. Looking forward to reading more from you.

    Eric Hundin

  2. Life Insurance Toronto on March 29th, 2008 2:06 pm

    Whole life insurance completely eliminate any risk in terms of market volatility. That is the reason why is whole life insurance one of the oldest form. People like to purchase a products with minimum risk. Especially, when young families plan to get their own living. Definitely is necessary to have more websites with great posts as this one. Everybody needs to know about insurance because it is important in people’s life as a protection against unexpected situation.

  3. admin on April 7th, 2008 12:30 pm

    I appreciate your comment and further explanation of Whole Life insurance. I truly believe that every potential “insurance buyer” should know what their options are, and I hope this has helped. HOpe to hear from you again.

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