Life insurance

Life insurance advantage - The death benefit is paid out income tax free.

Life insurance is a vehicle meant to ensure that your objectives are met in the event of premature death.  As well, it can be used to lessen the burden of final expenses, keep key employees from leaving, compensate business partners, secure debt repayment and create legacy wealth.  Life insurance should be used for what it is – insurance.  It’s not an investment vehicle, it’s a protection vehicle.  As we build our nest egg we need an insurance component to protect our assets to ensure our beneficiaries are taken care of as well as ensuring that our commitments and objectives are achieved. 

There are numerous and multiple diverse insurance products available ranging from temporary (term) to permanent (universal or whole). It’s necessary to first understand what our main purposes for wanting life insurance as well as making sure it fits our family’s and/or business’ objectives.  Life insurance is a common sense component of our financial portfolio that has to make common sense.  It’s an important centerpiece to ensure that no matter what life brings we can have peace of mind that our beneficiaries will be OK.

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Term Insurance

• think of it like leasing an apartment - lasts as long length of contract (10, 20, 30 years)
  
• like paying rent - there's no equity being built
  
• commonly used to cover a short term need - objectives being covered while building assets
  
• expires at certain age (usually at age 90)
  
• becomes cost prohibitive - premiums grows over time (after fixed pricing of contract)
  
• clients upgrade it to a permanent insurance policy (mainly to build cash value and for final expenses)
  

Permanent Insurance (universal life or whole life)

• think of it like owning a house - as long as premium is paid the policy stays in place
  
• like owning a home - equity is built through time (cash value)
  
• cash value can be used as tax-free loan (somewhat like home equity loan) - expected to be paid back
  
• premium remain level
  

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