Different Types of Life Insurance
The two major categories of life insurance products are Term and Permanent. Term insurance is designed to address temporary needs and buys you protection for a specified period of time or "term", usually one to twenty-five years to age 75 or 80. Premiums usually remain level during the specified term, but increase if the policy is renewed.
Permanent insurance is generally used for permanent needs, such as providing an income for survivors, funeral expenses, capital gains taxes on investments, real estate and RRSPs at death, charitable gifts or passing a business to the next generation.
Most permanent policies can be split into two categories: those that have cash value and those that do not. The cash value reflects the money that a policy holder puts into the policy in excess of the actual cost of the insurance. Whole and Universal Life policies have cash values while Term to 100 policies generally do not.
