Within each of these two insurance categories, there are various types of policies. The type of policy you select will depend on your specific needs and goals.
"When you're buying life insurance, you've got to think long term," says Mark Coutts, a CFP, CHS, CFDS, RPA, FCSI and president of Coutts Financial Services Inc. in Toronto. “So, you're looking farther down the road when deciding whether term insurance is always going to be right for you, whether permanent insurance is the right choice, or whether it's a combination of the two."
Let’s explore the features of each type of life insurance. Here’s what you can expect from life insurance today and decades from now.
Who needs term life insurance?
Term life insurance can be a great choice for people who want affordable, short-term coverage. It’s ideal for young families, homeowners with a mortgage and business owners.
As an example, let’s say you bought a 30-year term policy because you wanted your family to have financial protection for a few decades. If you died during this 30-year period, your family would receive a death benefit. The death benefit is the tax-free payment that your beneficiaries receive after you die. They can then use the money from the death benefit for any reason, such as paying off debts, mortgage/rent, the cost of child care, etc.