Did you know that your life, and the ability to earn income, is the biggest asset you own? Please read below and feel free to share and learn about why life insurance is very important to have while understanding your options. It is financial assurance for you and the ones you love who depend on you too.
Term life insurance (Temporary): Lower initial price: Like renting an apartment versus buying a home, term insurance is known for its lower price. It is an entry level product that is more affordable. Price increases: One of the major disadvantages of renting is that landlords usually increase their rental prices over time. Likewise, whether someone owns 10, 20, or 30-year term, at renewal time, the price goes up. Protection ends: Another disadvantage of renting is that landlords reserve the right to terminate the lease under certain conditions. Term insurance is designed to eventually become more expensive and less affordable in your old age, when you need it the most. In other words, term insurance is priced to expire before you do. No equity: A renter has no equity at the end of a lease and, if they want to remain in the property, must renegotiate a new lease with the landlord. At the end of a term policy, there is no cash value. If you are still healthy and want to maintain coverage, you must reapply. Regardless of your health condition, the cost will increase significantly because you are older.
Whole life insurance (Permanent): Higher initial price: Whole life has a higher price tag which, as the next three points demonstrate, has a purpose and a value. One should expect to pay more to own a home versus renting, but keep in mind that price is only relevant in the absence of value. Price remains level for life: Just like owning a home via a 30 or 15-year mortgage, the price of whole life insurance remains level for life. Most whole life policies also reach a point where the payments are no longer required, and yet the policy and cash value remain in force for life. Protection lasts a lifetime: Just as the name implies, whole life insurance is priced to last as long as you do, providing coverage or “a roof over your head” (which usually increases in value) for your entire life. Builds equity: As mentioned earlier, just like building equity in your home, the payments you make on a whole life policy create a cash value. This cash value accumulates on a tax-deferred basis over time at least at the guaranteed interest rate, and also provides liquidity via withdrawals or loans. So yes, the price of whole life insurance is initially much higher. However, similar to owning a home, your payments create a value over time, either via the equity in your home or a guaranteed lifetime “roof over your head” for your family.
Whole Life Insurance Provides a Guaranteed Investment. Your cash value isn't subject to market losses, as it is with mutual funds and other financial services schemes. When the stock market significantly drops again (and it's never a question of if but when), you won't lose a dime.
Bottom line, term and whole life insurance are both excellent products. The reality is that term insurance is a more affordable and suitable fit for most of the younger clients we serve. However, it is our job to properly educate and empower individuals, families, and business owners who can afford only term, or even better, a combination of both term and whole life to fully own this all-important protection. In either case, the main objective for every financial professional should be to ensure the right amount of coverage versus simply selling the features and benefits of the insurance type they prefer or are licensed to offer. As a client, you may simply wish to ask them what they personally have and why? Are they impartial in their recommendations? Their answer may help you decide if they are a good match to be the right advisor for you too!
Here at ProLaunch, we hold an accredited independent license to recommend the best solution with the most value at the lowest cost in regards to your personal situation. Unlike other advisors, as a broker, we work directly and exclusively for you rather than another company. We can meet together with no-obligation in Toronto, Barrie and Orillia or we also have a Non Face-to-Face option too. Let's connect today and discuss your goals and concerns with full discretion assured. Book an appointment by calling 1-800-686-2703 or contact us at: www.ProLaunch.ca
We create highly customized Private Placement Life Insurance policies for business owners and high net worth individuals. A great performing investment can become very mediocre once taxes are taken into account. This is sometimes the case with hedge funds. While some hedge funds might produce above average returns, their investment strategy may possibly be very tax-inefficient resulting in less than expected returns in the pockets of investors.
Private placement life insurance (often referred to by it’s initials: PPLI) is a form of cash value universal life insurance that is offered privately, rather than through a public offering. This can become a very powerful tool for purposes of estate planning. In essence you can buy a hedge fund inside an insurance policy and the value will grow tax free and upon death the cash value of the policy passes to heirs tax free. It’s designed to maximize savings and minimize the death benefit.
Private placement life insurance is income tax efficient, while providing the owner with tax-free access to the policy cash values. Because of the tax benefits, the very wealthy, including family offices, are increasingly embracing private placement life insurance.
If someone, for example, has a significant windfall that results in a large infusion of ordinary income in a particular year, such as winning the lottery, inheritance, or a large bonus for an executive and business owner, private placement life insurance can offset the tax while supporting charities, including private foundations. With advanced planning, the cash value appreciation and insurance coverage can also escape gift and estate tax. It can also be structured to provide world-class creditor protection. To learn more, book an appointment by calling 1-800-686-2703 or contact us with full discretion assured at: www.ProLaunch.ca