ANNUITIES

An annuity is an investment vehicle sold primarily by insurance companies. It is a contract that guarantees a series of payments in exchange for a lump sum investment. Annuities can provide individuals with payment options which begin almost immediately or deferred payments where payouts start at a specified date in the future.

Income Replacement Insurance is the cornerstone of any sound financial plan. Income replacement is intended to replace your income in the event you are unable to work as a result of an accident or sickness. This coverage is important to you because, when you are disabled your income may stop immediately while the expenses continue and may be higher as a result of the disability. The chances of you becoming disabled during your working years are far greater than of you dying. Although the need for income replacement insurance is obvious, it is often the overlooked insurance.

Many Canadians are unaware of the statistics concerning disability and the importance of disability insurance. Most are concerned with life insurance coverage even though the probability of death in a given year for an individual is lower than the probability of becoming disabled. There is over 50% chance of a 30year old becoming disabled for over 90 days.

Disability insurance replaces a portion of an individual's income when they are unable to work due to an illness or injury. Where life insurance usually pays a lump-sum benefit, disability insurance pays a monthly benefit. By being covered for accident and illness an individual ensures that their finances are somewhat protected if faced with a disability.

Whole Life Insurance provides coverage for an individual's whole life, rather than a specified term. This type of insurance has a savings component, called cash value which builds over time and can be used for wealth accumulation. The insurance company essentially makes all of the decisions regarding the policy. Regular premiums pay both insurance costs and cause equity to accrue in a savings account. A fixed death benefit is paid to the beneficiary along with the balance of the savings account. Premiums are fixed throughout the life of the policy even though the breakdown between insurance and savings swings toward the insurance over time. The insurance company will invest money primarily in fixed-income investments.

Universal life insurance is a type of whole life insurance. Universal life differs from other whole life policies in that it allows the policy owner to vary, with limits, the amount and timing of premium payments and the death benefits. These changes can be made while the policy is in effect. This type of insurance was created to provide individuals with more flexibility than whole life by allowing the holder to move money between the insurance and savings components of the policy.

Term Life Insurance is a form of temporary life insurance which covers an individual for a specific length of time.

Term Life Insurance is one of the key components to most people's financial plan. Term life provides financial security from the uncertainties of daily living, at a low cost compared to other forms of life insurance products. Term life insurance is the most effective way to minimize financial strain on family members if you die prematurely. It is a necessity to protect family members who rely upon your income, who could be financially devastated unless sufficient term life insurance is available upon your passing.