While there are many variations, there are two main types of life insurance: term insurance and permanent insurance.

Permanent, whole life, or cash-value insurance. Permanent insurance provides protection as long as you live provided that you continue to pay the premiums. The premiums are usually a set amount so permanent insurance is more expensive than term insurance in the early years but less expensive in later years. The “cash value” that usually develops from the higher early premiums is given to you if you terminate the policy, or you can borrow it to meet your other financial needs. “Universal life” is a popular type of permanent insurance that typically provides you with some flexibility with the level of premium payments and some options for the investment of the cash value.

As a general rule, people purchase permanent insurance to cover the costs of funeral expenses, capital gains taxes and long-term needs of a disabled dependant; while temporary needs such as mortgage payments and education costs for dependants should be covered with term insurance.

For information on term insurance, visit answer 5001 or click here.

For more information on life insurance, contact an insurance provider or visit canada.ca.

								
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