Term vs Permanent (Life Insurance)

I have many conversations with Canadians during my work week. A lot of conversations have been had regarding Life Insurance. Most commonly is understanding the difference between Permanent and Term Insurance. I have discovered a trend in the insurance space. This trend is the promotion of Permanent Insurance policies as the best solution for young families. The way these permanent policies are being marketed is a way to ‘own’ your insurance vs ‘renting’ your insurance. This is not exactly an in-depth comparison of the two products. I believe there is more to understanding a household’s insurance need. This type of marketing is misleading. There is a due process in Canada, specifically in each province to how insurance agents must conduct themselves when marketing products.

Understand that, technically speaking, all insurance agents are required to understand your insurance needs. They are required to complete a full needs analysis in conjunction with a comparison of your current net worth and potential group or personal insurance coverages. Beyond that, they need a deep understanding of the pros and cons of both Permanent Insurance and Term Insurance. Each of these products have a place in the marketplace. What is anecdotal in my conversations is the pushing of a permanent solution where term may be the better option. I encourage you to know your options before making a decision.

I bring this to your attention as another reminder to seek the advice of an advisor before making a final decision if you are considering insurance coverage. Most of you know that insurance should be covered when creating your individual plan; even if insurance coverage is not a priority. Beware those who claim that Permanent insurance is the only option. As always, I am happy to clarify any of the above on a personal level. Reach out to us and we will answer all of your questions.

Thank you,

Alexander Philipp BA CFP