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Whole-life Insurance FAQs
How does the cash value work in whole life insurance?
With each premium payment, your policy builds cash value over time. This amount grows tax-deferred and can be accessed during your lifetime through withdrawals or policy loans, giving you an additional financial resource if needed.
Is whole life insurance more expensive than other types?
Yes, whole life insurance typically has higher premiums compared to term life insurance. However, it provides lifelong protection, stable premiums, and a guaranteed death benefit which offers long-term financial security.
Can I use the cash value while I’m still alive?
Yes. You can access the cash value by making a withdrawal or taking a policy loan. Keep in mind that unpaid amounts will reduce both the policy’s death benefit and its surrender value.
Are premiums fixed with whole life insurance?
Yes. Whole life insurance comes with level premiums that remain the same for the life of the policy, regardless of changes in your age or health.
Universal-life Insurance FAQs
How does the investment component work?
Your policy includes an investment feature that allows your cash value to grow on a tax-deferred basis. This means your earnings are not taxed until funds are withdrawn, helping your savings accumulate more efficiently over time.
Can I withdraw money from my policy?
Yes. You can withdraw from the cash value of your policy. However, doing so will reduce the death benefit available to your beneficiaries.
Is this policy useful for estate planning?
Yes. Whole life insurance can be an effective estate planning tool, offering tax advantages and enabling a smoother transfer of wealth to your heirs.
What happens if I stop paying premiums?
If you stop making premium payments, your policy’s accumulated cash value may be used to keep the coverage in force. That said, prolonged non-payment could reduce your cash value and death benefit over time.
Term-life Insurance FAQs
What happens when the term expires?
When your term ends, you typically have three options: renew the coverage, convert it to a permanent life insurance policy, or allow it to end.
Who is term life insurance best suited for?
Term life insurance is a practical choice for individuals seeking simple, cost-effective protection, often to cover financial responsibilities such as income replacement, a mortgage, or raising children.
Is a medical exam required?
Some term policies require a medical exam, while others offer simplified or no-medical-exam options depending on the coverage amount and provider.
Can I convert my term policy to permanent insurance?
Yes. Most term policies include a conversion option, allowing you to transition to permanent insurance without the need for a new medical exam.
Registered investment FAQs
Who is eligible for a registered investment account?
Canadians who meet the basic account criteria can open a registered investment plan.
Why consider registered investments?
Registered accounts allow your savings to grow with valuable tax advantages. Depending on the plan, you may benefit from tax-deferred growth, tax-free withdrawals, or even immediate tax deductions or credits—helping your money work harder over time.
How do registered and non-registered investments differ?
Registered accounts come with tax benefits such as tax-deferred or tax-free growth. Non-registered accounts, while more flexible, do not offer these tax advantages, and earnings are taxable each year.
How do I choose the right registered plan?
The best plan depends on your goals, time horizon, and comfort with risk. A financial advisor can help you align the right account with your needs, whether that’s retirement planning, buying a first home, or general wealth building.
Can I withdraw money from a registered investment account?
Yes, withdrawals are possible, but the rules vary by account type. For example, TFSA and FHSA withdrawals are typically tax-free, while RRSP withdrawals are subject to tax. We can help you understand the withdrawal rules for your specific plan.
Are withdrawals taxed?
Yes. Earnings such as capital gains, interest, and dividends are taxable. Capital gains, however, benefit from a lower inclusion rate compared to other income.
Non-registered investment FAQs
How does this differ from an RRSP?
Unlike an RRSP, non-registered accounts have no annual contribution limits and allow you to withdraw funds at any time without penalties, giving you more flexibility.
Can I invest in different asset types?
Absolutely. Non-registered accounts support a wide range of investments, including stocks, bonds, ETFs, and mutual or segregated funds, making it easy to diversify your portfolio.
Who is this suitable for?
Non-registered investments are well-suited for individuals who have maximized their RRSP and TFSA contributions or who want flexible access to funds before retirement.