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Empire Life’s Peter Wouters helps Money Sense answer key questions about life insurance

Helpful Tips, Insurance

Posted by Empire Life

Apr 15, 2021 8:00:00 AM

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For the average consumer, getting the unbiased facts about life insurance in Canada can be challenging. When Money Sense magazine decided to put together a series of articles answering some of the key questions Canadians should consider when looking for life insurance, one of the first people they turned to was Empire Life’s own Peter Wouters, Director of Tax, Retirement and Estate Planning.

In a series of in-depth interviews, Peter provided many great insights for consumers. Here are some highlights from the articles with links to read the full text:

How much does life insurance cost in Canada?

Regardless which kind of insurance you buy, the price is based on the net cost of pure insurance. “Specifically, what the risk of dying is at any given time for [individuals in your age group]—that risk goes up with age,” says Wouters. “Then you factor in acquisition and administration costs, including underwriting and servicing the policy.”

The insurance company must also set aside reserves against future claims and invest that money conservatively, making long-term predictions of rates of return. “The higher [your] risk of dying, the higher the premium,” says Wouters.

Read the full article: www.moneysense.ca/spend/insurance/life-insurance/how-much-does-life-insurance-cost-in-canada/

Life insurance vs. mortgage insurance: Which is right for you?

Individually owned life insurance tends to be cheaper than mortgage insurance. In some cases, it’s significantly less expensive than mortgage protection insurance from a lender. “The tax-free proceeds can remove a huge financial burden from the shoulders of the family you leave behind,” says Wouters.

Plus, people often have other needs besides paying off a mortgage, like providing income for a surviving spouse, home maintenance, education for your kids—all of which life insurance can cover. “If you have plenty of other assets and investments that wouldn’t trigger any taxes on your death, your spouse is working and earns even more than you do, and your survivor would move to a less-expensive home if you passed away, then having extra life insurance may not be as important,” says Wouters.

Read the full article: www.moneysense.ca/spend/insurance/life-insurance/life-insurance-vs-mortgage-insurance/

Term vs. whole life insurance: Which type of policy is best?

Term or whole life insurance? That is the question. But we have two more questions: What is the difference between these two types of policy? And which one is best for your needs?

Generally speaking, term life insurance is best for those seeking a low-cost, short-term solution. Whole life insurance may be best for you if you’re seeking a long-term solution with locked-in rates.

Read the full article: www.moneysense.ca/spend/insurance/life-insurance/term-life-insurance-vs-whole-life-insurance/

Is life insurance taxable in Canada?

Most of the money received from a life insurance policy is not subject to income tax. The death benefit paid from a life insurance policy is a tax-free, lump-sum amount for the beneficiary that can be used to finance a number of things. This includes paying off debts, including a mortgage, so your family can remain in the same home and community. It can also be used to replace income, so your family can maintain their standard of living without you… Your spouse, child or anyone else you’ve named as a beneficiary would not have to report life insurance proceeds as taxable income on their Canadian tax return. It doesn’t matter whether the life insurance policy was term insurance or whole insurance, or how big the policy was.

Now, we said “most” of the money isn’t taxable for the beneficiaries. So, what is? How complicated is it?

Read the full article: www.moneysense.ca/spend/insurance/life-insurance/life-insurance-taxes-canada/

Keep up with the latest from Peter by following him on LinkedIn at linkedin.com/in/peter-wouters-14ab76.


The information in this document is for general information purposes only. Please seek professional advice before making any decision.

This blog reflects the views of the author as of the date stated. This information should not be considered a recommendation to buy or sell nor should it be relied upon as investment, tax or legal advice. Empire Life and its affiliates does not warrant or make any representations regarding the use or the results of the information contained herein in terms of its correctness, accuracy, timeliness, reliability, or otherwise, and does not accept any responsibility for any loss or damage that results from its use.

April 2021