CLHIA-ACCAP - Consumer Information

A guide to life insurance

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3 LIFE INSURANCE POLICIES 2 Though it seems there is a bewildering array of policy types and names, they all boil down to two basic forms of life insurance: permanent and term. As a rule, permanent needs should be covered with permanent insurance, temporary needs with term insurance. Often, a combination of policy types does the best job for you. So, what is a temporary need? A mortgage; high needs for continuing income when your children are young; some business obligations; and so on. Permanent needs? Funeral expenses; supplementing a survivor's income; covering capital gains taxes at death, especially if family property is to be passed on to the next generation; and children who remain dependent for their lifetimes, often due to a disability. What different policies will do for you TIP: Before withdrawing any or all of the available cash value, ask if there are any tax implications. A portion of the cash value may represent earnings that become taxable on withdrawal.

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