In our last newsletter, we looked at what when it is the right time to buy term insurance. This month we focus on when you should consider permanent insurance. There has been a resurgence in interest in this type solution among all demographics. But this solution isn't right for everyone.
Children: Parents are investing in permanent insurance for their children for a couple of reasons. The low cost at young ages as well as options to pay the policy in full in 20 years makes it attractive. In addition, purchasing coverage for children at young ages protects their insurability for their lifetime.
Young Adults: Permanent insurance is still inexpensive for young adults. While it is more important to ensure that their insurance need is met to protect their loved ones, it can be a good time to start building a component of lifetime protection for estate planning purposes or an alternative source of retirement.
If you’re maximizing RRSPs and TFSAs, permanent insurance can provide an additional source of tax-sheltered investment room.
Seniors: As term insurance becomes more expensive or unaffordable in later years, some seniors like the idea of a low maintenance plan and increasing death benefit to keep up with inflation. Life insurance provides an immediate tax-free cash injection for loved ones responsible for taking care of last expenses. Most term policies can be converted into a solution that provides lifetime coverage.
There are many different types of permanent insurance, from basic term-100 to policies that limit your payment period. Each type of permanent policy offers distinct advantages. Depending on your goals, budget, and health situation, one option might be more suitable than others.
Talk to us today about whether permanent insurance is right for you.
Credit: Richard Parkinson for his article Permanent Legacy in Forum magazine,
February 2019.