Permanent Life Insurance: Unlike term life insurance, permanent life insurance coverage never expires (you cannot outlive the coverage) and combines a death benefit with a savings component. Permanent life insurance policies also include tax-sheltering properties.
- Universal Life: Permanent coverage with a level premium for life and the ability to “over-fund” the policy. Overfunding is essentially investing money inside the policy in various investment choices (equities, bonds, GICs, cash, etc), where it can grow tax-sheltered and ultimately pay-out tax-free at death to the beneficiary(ies). There are options to stop paying in the future, with the policy self-funding thereafter.
- Whole Life: Permanent coverage with a level premium for life. The policy death benefit and cash values will grow and compound as the policy reinvests dividends it earns. Policy growth is not taxed as earned and the total death benefit is paid tax-free to the beneficiary(ies). Dividends may also be used to pay future premiums, allowing the policy owner to stop paying premiums in the future.
- Term to 100: Level premium for life.No cash value or investment component. Pure life insurance that will not expire.