How much for whole life insurance premiums? Find Out Now.
Sunlife Life Insurance Quote, Whole life insurance adds long term value for your family. There is a reason that it is the most expensive kind of insurance as the prices are guaranteed not to change and the coverage will be there when you pass. The price is increasing due to low interest rates and the guarantees that the insurance companies offer. Also, contact us as one of the best options does not appear on any quote engines and it will be cancelled in 2013. See below the quotes for an explanation of whole life insurance.
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The Purpose of Whole Life Insurance
Whole life insurance is designed to provide coverage when a person dies to help with ongoing expenses and provide income for loved ones. It is also used for paying estate taxes, and tax advantaged charitable giving, estates for children and grandchildren. Business owners also use it for a number of tax saving and wealth preserving strategies. It provides a guaranteed amount of insurance at a guaranteed price. Depending on the type of whole life insurance it can also provide an increasing amount of life insurance and good returns on the savings portion of the monthly or annual deposits.
How Whole Life Insurances works
There are essentially four parts to whole life and also for universal life insurance policies. With whole life insurance they do not break down what these costs are – you are only given what the monthly or annual premium will be while with Universal Life insurance these components are provided.
Mortality Cost – this is the cost that the actuaries calculate will provide funds to pay the claims based on mortality tables.
Administration charge – the company assigns a cost for the administration plus the premium tax which is about 2% in most provinces.
Savings or Investment. This is what is left over after the first two charges are taken out of your deposit.
Return on the savings – this is the interest rate that is credited to the cash value in your account each year. For whole life policies this is the dividend or performance credit for participating policies.
In addition, some policies guaranty that the above costs will not change and a minimum savings or investment return.
Types of Whole Life Policies
There are two types of whole life policies – participating and non-participating.
Participating whole life policies
These policies include a dividend (sometimes called dividend credit) each year based on the financial performance of the investments that the money paid by these policy owners achieves. Consequently, the face value of the policy will increase over the years if the policy holder chooses not to take the dividend as a cash payout which is one of the options but is seldom done.
If the fund does very well, some of the profits will be set aside to make up the difference in years when the fund underperforms which tends to result in fairly stable dividend payouts although they have been decreasing over the past three years as returns bonds have fallen.
There is also a difference in how insurance companies pay dividends. Most insurance companies are stock companies – public companies whose shares on listed on stock markets. In this case, the profits flow to the benefit of the shareholders. For example, Manulife Financial refers to their dividends as a performance credit and the amount of the credit is determined by the board of Manulife based on the returns of the pool and other factors.
Because there are a number of variables that are not fully guaranteed, we do not provide instant quotes for this type of whole life insurance but would welcome an opportunity to discuss it with you and provide examples of its many benefits. Please go to contact us and request at call mentioning whole life in the request or call the number above.
Tip #1 Seriously consider purchasing a policy from a mutual company like Equitable Life
There are a few mutual insurance companies, like Equitable Life, where the permanent insurance policy holders are actually shareholders in the company – they do not have shareholders in the traditional sense. In their case, if the returns in the “whole life pool” are not what the board would like, they can move some of the profits into the pool to sustain a dividend rate. Not only that, given that they are the company’s shareholders, if the company demutualizes, they will get paid as a shareholder based on a formula. When Manulife demutualized modest sized policy holders received well over $10,000.
Ask for an illustration from Equitable Life to be included in your review. If the price and returns are similar, consider using a company that, if they demutualize, you can get a nice bonus payout as a quasi-stock holder. Your policy remains in effect and it has no impact on it whatsoever. However, the primary objective is the insurance and growth and frequently a stock company simply offers better value and guarantees.
Tip #2 Dividends (Performance Credits) are not Guaranteed
Many policies are illustrated assuming a historical dividend or performance credit level but in these times of reduced long term returns and increase regulatory requirements there is ongoing pressure to reduce these dividends and credits. Ensure the illustration includes what will happen if the dividends are less than forecasted and that you are comfortable with that.
Tip #3 Cash surrender values may not be guaranteed
Many policies will show two columns of cash values – one is guaranteed and the other is based on the dividends which are not guaranteed. The guaranteed cash values, when shown are usually very conservative.
Non-Participating Whole Life Insurance Policies
Non- participating whole life insurance policies guarantee the premium, cash values and amount of insurance your beneficiary will receive. They provide an illustration that includes this information and the illustrated values are fully guaranteed. Usually it is for a set amount of life insurance and the face value does not increase as it does with participating policies. It will contain a cash value and this is a guaranteed cash value that can be accessed as a policy loan or if you collapse the policy (tax implications). We sell far more of this type of whole life as people want to be guaranteed they will get the amount of insurance they signed up for and it is significantly less money than a participating policy. We only provide instant quotes for this type of whole life insurance as it is fully guaranteed.
Non-participating whole life policies are frequently used to provide for final expenses and they tend to be of smaller face values which make them more affordable.
These policies also have quick pay options and you can get instant quotes for these options as well. They can be paid off in 10, 15, 20 years or paid up at age 65 years depending on the age of the person buying them. Obviously the quicker it is paid off, the higher the premium but the return on the higher premium can be significant as the cash values increase much faster. We have developed plans where the premiums end at about retirement age.
Tip #4 The cost of whole life policies has increase almost 30% over the past three years. Buy now!
Due to the low returns and increased regulatory requirements on Canadian Life Insurance Companies we have seen three and four price increases on the cost of whole life insurance policies over the past three years. This increase in prices will continue and the product that we like the best at this time which does not show up on any quoting engines will be removed from the market at some point in 2013 according to our sources.
How you get the cash value out of your policy.
Whole life insurance is sometimes referred to as “cash-value life insurance”. This type of cash surrender insurance policy provides permanent insurance that will never expire plus a cash value that increases over time.
The cash value of is available to the policyholder in the form of a loan. The policyholder is charged interest on the outstanding balance of the loan until the full amount is repaid. However, the interest rate is low compared to loans provided by other financial institutions.
The loan is also available regardless of the policyholder’s credit rating. If the loan is still outstanding when the policyholder dies, the beneficiary benefits are decreased by the loan amount in order to satisfy the loan balance owed to the Canadian whole life insurance carrier.
If you want to get at the cash value without taking out a loan, then the only option is to cancel the policy and there may be tax owning on the cash value that is paid out. You should check with the insurance company to confirm the tax consequences of collapsing or cashing in a whole life policy.
Another advantage offered by most whole life policies is that the policyholders can stop paying monthly premiums for a time when financial difficulties arise. The cash value of the policy itself is then used to pay the monthly premiums in this case.