What is Term Insurance?

Term insurance is life insurance for a specific period of time. The time period can be as short as one year or up to age 85. Term insurance is often the cheapest form of insurance initially, depending on the renewable, guaranteed, and conversion options included. It is ideal for young adults who do not want or have the funds to purchase permanent insurance, whole-life or universal-life insurance.

What is Universal Life Insurance?

Universal Life Insurance is an interest-rate-sensitive policy that is a unique combination of insurance and investment. It is a combination of insurance and investment vehicle, which allows the insured to establish life insurance without sacrificing the opportunity to invest available capital in a variety of securities. As a highly flexible product, a UL policy offers investments that can be changed to address economic and business activity. Deposit amounts can be changed, the face amount of insurance can be changed, and the insured can be altered as well. There is a choice of death benefits that are available only with UL policies.

What is a Registered Retirement Savings Plan (RRSP)?

An RRSP is a registered savings plan that defers tax to assist individuals in saving for their retirement years. RRSP contributions are tax-deductible for the tax year in which they were made or, if contributed during the first 60 days of a subsequent year, can be claimed for the current year or for the previous tax year. Contributions are limited to the lesser of an annual dollar amount or 18% of the previous year’s earned income. An RRSP can continue until the end of the year the annuitant reaches age 71. Special options under this plan include a spousal RRSP and contribution carry-forward provisions.

What is a Tax-free Savings Account (TFSA)?

A TFSA is an account in which contributions are not tax-deductible, but growth on investments and withdrawals are tax-free and are not treated as income. When a TFSA owner dies, the assets of the TFSA account can be rolled over to a spouse as an exempt contribution, which does not affect the spouse’s TFSA contribution room. Other beneficiaries will receive the balance tax-free on the date of death of the TFSA owner.