Life insurance is the most common form of financial security that Canadians invest in to support their loved ones. The question is, how much coverage do you need — and for how long?
Permanent insurance works just like your savings account: it accumulates cash values or paid-up portions of your policy tax-free, which can be withdrawn or is paid out to your beneficiaries. This guaranteed financial protection is lifelong, eliminating the need for periodic renewals — and premium recalculations; since it’s a lifelong investment, it provides long-term insurance coverage that guarantees protection across a wide range of risks that you’re exposed to over the years.
Permanent Insurance: Coverage That Stays With You
Do you need lifelong protection? Permanent insurance provides guaranteed financial protection even after you think your loved ones need it.
Even with a working spouse and adult children, your death still poses a financial risk, such as the ability to maintain the same lifestyle and further securing their future in this unpredictable economy, along with immediate needs like settling your estate.
This is what makes permanent insurance the smart investment option for the Canadian breadwinner.
Financial Benefits from Permanent Insurance
Just like any life insurance policy, permanent insurance pays out a death benefit, which can be used to fund both immediate and long-term expenses when you pass on. This offers financial protection for:
- Paying for funeral costs, outstanding debts, mortgage payments, and other remaining financial obligations.
- Paying capital gains or estate taxes as your properties are divided and transferred to your surviving heirs.
- Providing income replacement and savings for your spouse or survivors, especially during retirement.
- Maximizing your pension to help your spouse or survivors maintain their lifestyle
- Provide additional — and necessary — monetary inheritance to your children, especially if you pass on while they are still in school or not yet financially stable.
Permanent insurance accumulates cash value over time, on a tax-deferred basis.
Similar to retirement and education savings plans, this accumulated cash value can be withdrawn or borrowed from for a major expense during your lifetime. Unlike other life insurance policies, you won’t have to wait to reap — and miss out on — the fruits of your hard work.
Cash values can be used for several expensive, long-term investments such as a down payment for your home, your children’s education, or retirement savings.
This amount borrowed or withdrawn from a permanent insurance policy uses the accumulated cash value as collateral, resulting in extremely low-interest rates.
A core component of a permanent insurance policy, face amount — or the death benefit — is the amount paid out to your named beneficiaries at the time of your passing or policy maturity.
While cash value is the amount available for withdrawal prior to reaching policy maturity, the face amount is paid out at the time of your passing.
This death benefit is guaranteed to stay the same. It will be accessed by your beneficiaries in full, provided that any loan borrowed against the cash value had also been previously settled. Unlike the cash value, the face amount is not impacted by the insurer’s finances and experience, which are determined by expenses, mortality rates, and investment earnings.
Types of Permanent Insurance
Permanent insurance comes in several types, each designed to equip every Canadian family with lifelong financial protection.
All of these share the cash value feature for instant financial assistance even before policy maturity or the death of the policyholder.
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- You pay a level premium — or the same rate for the rest of your lifetime, with no surprise increases.
- Provides guaranteed death benefit amount and rate of return on cash values.
- Earn dividends, or the opportunity to earn additional death benefit and cash value as a result of favourable company sales of a participating policy, and augment current coverage for inflation.
- Offers flexible premium options that can be allocated to different investment options — perfect for the flexible policyholder and savvy investor.
- It provides the utmost flexibility in determining coverage amounts as your financial situation changes over time.
- Make lump-sum payments when possible to increase the cash value of the policy
- Skip scheduled payments in the event of a financial emergency and use the accumulated cash value to cover the missed payment.
Oegema Nicholson: Insurance and Investment Advisors
At Oegema Nicholson, we’re firm believers that you and your loved ones need suitable financial protection that evolves with your changing needs while still remaining affordable and flexible.
Permanent insurance guarantees lifelong protection and financial security for you and your loved ones, while providing generous investment opportunities.
Our insurance specialists are dedicated to helping you determine the right coverage amount and policy type for your needs, as well as the investment opportunities that would provide the most generous returns in the market.
You can count on our specialists to advocate for your needs and financial well-being by directing you to the most reliable opportunities that guarantee maximum protection throughout your lifetime — and even after, for your loved ones.
For more information on permanent life insurance and flexible investment options, call Oegema Nicholson (613) 224-1455 or contact us here.