In a participating policy, the insurance company shares the excess profits called dividends with the policyholder. Typically these dividends are not taxable because they are considered an overcharge of premium. The greater the overcharge by the company, the greater the refund/dividend. For a mutual life insurance company, participation also implies a degree of ownership of the mutuality.
At least 2 factors impact suitability. They are age and budget. Typically, the earlier you apply for permanent insurance the lower the price. You’ll want to have this coverage in place permanently, but may not want to keep paying forever. As a rule of thumb we suggest younger than 5 or older than 55. You may want to consider converting some of your existing Term insurance to Permanent Policy if this is an option on your existing policy.
Generally, you pay into a permanent plan for 20 years to life, and while you pay, you may earn dividends which may purchase additional insurance, create a cash value or even make the payments for you. This is known as "premium flexibility".
Ready to speak with an adviser, get a quote or simply need someone to answer a question?
Contact Us and a licensed life agent serving Cobourg will take time to ensure you clearly understand all your options.
Not in Cobourg?
We are here to help, even if it is as simple as finding the right phone number for that policy you bought when you got married.
Life Income Fund (LIF): A LIF is a payout option for locked-in monies from pension plans and is designed to generate a lifetime income combining the features of a RRIF and an annuity. It operates like a RRIF (except that a LIF has limits on payouts in any year) up to age 80, when it must be converted to a life annuity. Most provinces now permit this new payout option under their pension legislation.