What types of permanent life insurance are available?

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There are several different types of permanent insurance some of which policies are similar.

Whole Life, also called “ordinary life insurance”.

This traditional permanent life insurance will cover the insured for his/her entire (whole) life. The premium payments generally remain the same for the life of the insured.

Variable Life. This permanent life insurance policy offers a fixed premium payment schedule (like whole life), while it accumulates a cash value account offering other non-guaranteed accounts which invest in securities, with the associated risk of the stock market (portfolio performance can fluctuate either positively of negatively).

Universal Life (UL). This plan offers more flexibility than traditional whole life insurance. Universal life insurance allows the policy owner increased flexibility to pay premiums on a flexible basis, versus a fixed schedule. However, a certain level of premiums must be paid into the policy to cover the costs associated with the insurance coverage. Failing to do so may cause the insurance policy to lapse. Flexible tax-deferred interest rates on the policy’s cash value (some have guaranteed interest rates) add to the appeal of a Universal Life policy.

Indexed Universal Life Insurance. This coverage provides a death benefit, with tax-deferred growth on your cash value account which is indexed to one or more stock market indices. Many allow for a guaranteed minimum interest rate to protect the policy owner against the odds of a market downturn.

Variable Universal Life (VUL). Blending the premium payment flexibility benefits of universal life insurance with an invested portfolio with the upside market potential of variable life, many VUL policies feature tax-deferred earnings. Allowed policy withdrawals and loans from the policy cash value (which will reduce the cash value and death benefit) are subject to interest charges. Like variable life insurance, VUL policies are designed to invest primarily in securities with the upside potential to grow the policy’s cash value, with the associated market risk of losing money. Purchasing the right life insurance is an important strategic decision as you aim for financial independence.

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Life Insurance policies vary according to contract terms. Please read any Life Insurance policy contract provided, or the segregated fund summary information folder prospectus before the time of purchase. Full details of coverage, including limitations and exclusions that apply, are set out in the policy of insurance. Commissions, trailing commissions, management fees and expenses may be associated with segregated fund investments which may not be guaranteed and their market value changes daily and past performance is not indicative of future results. A description of the key features of a life insurance policy, a segregated fund; and any applicable individual variable annuity contract is contained in information provided by the company from which it is purchased. Talk to your advisor before making any financial decision. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors. The information provided is accurate to the best of our knowledge as of the date of publication and is general in nature, intended for educational purposes only, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors. Rules and their interpretation may change, affecting the accuracy of the information.