Just because you can afford to purchase something, perhaps it is not in your best interest to own it.
A salesperson should first determine if it is in your best interest to own it and then help you decide what model to purchase. Many sales people are more interested in the sale than the best interests of the client. I am sure that most people can think of examples of things they purchased they really did not need.
Permanent life insurance is a bit like this. Not everyone who can afford it really needs it. For example, let’s look at Peter. He has a good pension plan with survivor benefits so if he predeceases his wife, she will have sufficient income to maintain her lifestyle by continuing to receive a portion of his pension, plus her own pension and RRSP/RIF income. Further, there are no capital gains taxes to be paid on her death and he does not want to leave any charitable donations. Further, he does not have children/grandchildren he wants to ensure he leaves some money to or he has sufficient savings to meet all these desires.
In this case, permanent insurance may not be in Peter’s best interest and when an insurance broker determines why he wanted to purchase life insurance, he should question the need. He could suggest “Long Term Care Insurance” but that is a different topic.
Permanent life insurance is a policy that is purchased where the premiums remain the same for life or until it is paid up. Some policies are paid for as long as the insured lives and others are paid for in ten or twenty years, after which no payments are required.
Permanent life insurance is like purchasing a large amount of cash now for pennies on the dollar. For a small percent each year, you can purchase money for delivery on your death to accomplish what you want. If you felt that your wife would benefit from getting a cheque for $50,000 or more when you pass away to help her with maintaining their lifestyle you would qualify to purchase some permanent life insurance. I have over permanent insurance in case I overspend to top up my wife’s pension if I pass early.
Do you want to leave some money to your children or grandchildren that would be above what would be left in your estate or you want to guarantee the funds will be there? Who knows what the market value of your home or stocks might be when you pass. This would certainly indicate a justification to purchase permanent life insurance. My parents left each of their grandchildren some money. Two used it for education and two for a down payment on a home.
Perhaps you have a cottage or property that will be subject to capital gains taxes. You can essentially pre-pay this tax so that it can pass through to the next generation by purchasing life insurance to cover this cost and paying for it over time. This has been shown to be the most cost-effective way to deal with capital gains taxes and would definitely justify the purchase of permanent life insurance.
Do you have a favorite charity you would like to support on your demise? You can purchase life insurance so that the proceeds go to the charity and use the premiums as a tax credit every year or use it as a tax credit on your final tax return. This is an excellent application for permanent life insurance.
How much does permanent life insurance cost? You can get a quote from our website www.lifeinsurancequote.com. When you fill out the information to get a quote choose whole life guaranteed life pay or guaranteed term to 100 in the “initial time period” field.
These are common uses for permanent life insurance but there are many strategies using permanent insurance for the wealthy. I have a website devoted to this subject. Visit www.wealthprotect.ca for five proven strategies for people with corporations and seven for individuals who want to save money using permanent life insurance.
If you qualify to purchase permanent life insurance, do not wait – it gets more expensive as you age and all the life insurance companies are increasing their rates due to the low returns they are now getting on their investments.
