By the Sun Life team
Not sure how to choose your life insurance? Temporary, permanent, with participation or universal: which of these types of insurance corresponds to your needs and your objectives? Here’s everything you should know before making a decision.
Are you thinking of getting life insurance? It’s a great way to protect your family financially.
In summary, life insurance pays an amount to your family or beneficiaries in the event of your death. They can then use the money received to pay:
debts,
child care,
a mortgage,
other current expenses.
How does term life insurance work?
Term life insurance can be relatively inexpensive. It protects a fixed term. But it is essential to know that its cost can increase with your age.
Typically, one purchases term life insurance to protect one’s family with significant financial obligations—for example, young children or a mortgage.
Suppose you have $400,000 left to repay your mortgage. A term life insurance of $500,000 would avoid financial difficulties for your loved ones in the event of your death. They could use the death benefit* to pay off part or all of the mortgage.
(*Money that an insurance company pays out to your beneficiaries when you die.)
How does permanent life insurance work?
Permanent life insurance protects life. It is more expensive than term life insurance, but the amount of your premiums* remains the same. After a certain age, permanent life insurance could be cheaper than new term life insurance.
(*The monthly or annual fee you pay for your insurance. Most permanent products have guaranteed premiums, meaning they don’t change. But others have an adjustable cost: their premiums may vary over time.)
How does participating life insurance work?
Participating life insurance is a type of permanent life insurance. It offers you lifetime protection and the possibility of enjoying tax-efficient growth:
cash surrender value;
death benefit.
Your contract entitles you to participation*, which you can use to:
increase your coverage;
receive a cash payment;
reduce your annual premium;
produce interest by letting it accumulate.
(*Dividends are not guaranteed. You may receive dividends if the results of the SunLife Participating Account are more favourable than the assumptions made. These results are based on investment performance, death benefits and fees to support the values ​​guaranteed in the policies. If the Board of Directors determines a surplus, a portion of it may be paid out as policy owner dividends.)
