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A Life Insurance policy is a contract which promises to pay a benefit on the death of the life insured. The benefit may be a fixed amount or a variable amount. The amount is often called the Face Amount because it is printed on the first or face page of the contract. If the contract pays a different amount it will be stated in the contract.

Who owns the contract and what difference does it make?

The ownership of a life insurance contract gives the owner certain rights. Normally the owner is also the person insured, but this might be different if there is more than one person insured under the contract, or if the person insured is a child or a person who is not legally competent to own the contract. The owner is the only one who can make changes to the contract such as naming the beneficiary, changing the payment method, applying for changes in the benefits, or canceling the contract. If there is more than one owner, then these rights are jointly shared and no one owner can act without the consent of the other owners.

When is the benefit payable?

The benefit is payable on the death of the life insured. Most companies today will also make an advance payment (often called a Living Benefit) if the insured is terminally ill and subject to company requirements regarding the total amount of benefit and appropriate evidence that the insured's condition is terminal.

How much tax will I pay?

Life insurance benefits are tax-free unless the contract was being paid with money for which a tax deduction was being claimed (which would not normally happen unless the contract was owned by a company or registered as an RRSP.)

What Types of Life Insurance Are There?

There are only two types of life insurance. Companies can use any name they want for it, and they can combine these two types together in one policy, but that does not change the fact that there are only two types.

The two types are: Term Insurance Permanent Insurance

Your Best Insurance Is An Insurance Broker