Page 47 - A Canuck's Guide to Financial Literacy 2020

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Situational Examples of Term Insurance

o Matt recently bought a home with a $500,000 mortgage and 20-year
amortization. If he were to pass away, he wants to ensure that his mortgage
is paid off for his family
o Denise and Joe want to ensure that their children's education is paid off. The
children are 5 years old and would be in school until 25.

Whole Life Insurance / Permanent Insurance

Whole life insurance is a popular type of permanent insurance. As the name says, it
provides protection for the whole life of the insured individual. Whole life insurance is also
sometimes referred to as straight life insurance or ordinary life insurance that is guaranteed
to remain in effect as long as the premiums are paid. At the time of purchasing a whole life
policy, the premiums are determined ahead of time and are not to set increase over the life
of the policy. As the death benefit and the premiums are guaranteed not to change over
time, the insurance company would bear any consequences if they were not to meet these
obligations.

The younger when purchasing whole life insurance, the more affordable your premiums will
be.

Cash Value
The unique feature of whole life policies is the fact that they provide a cash value. The
premiums that a policy holder would pay monthly are invested and the income that gets
earned creates a cash value. This cash value can be access and used in several ways
which are discussed below. The longer you've owned the policy, the larger the cash value is
and more options for the individual.