subject: Participating Life Insurance Vs Non-participating Life Insurance Which One Is Best? [print this page] Planning for your future can be both an exciting and a stressful time. Figuring out what you need to do to plan for the years ahead can be tough, and sifting through the countless different things you need to choose from in order to protect and plan for the future may seem daunting. Like many of these things, life insurance, a necessary purchase whatever your situation, is very important.
There are so many different types of insurance out there that choosing between plans can be one of the biggest challenges to overcome. However, understanding the differences between the diverse plans will allow you to make an informed decision and get the most from whichever policy you choose.
Two of the most common types of insurance are participating life insurance and non-participating life insurance. Both have many benefits, and choosing one over the other is really just a matter of asking yourself what you want from your insurance policy.
What is participating life insurance? A participating life insurance plan is a policy that combines an insurance policy with a low-maintenance investment plan. These plans offer you the benefits of both a whole life insurance policy, providing guaranteed, tax-free, death benefits PLUS regular investment dividends paid out to you. You get the freedom of investing through the policy while all of the leg work is left to the professionals. Little risk - great reward!
The dividends paid out to you are based on the financial results of the Canadian Participating Fund. This investment fund is set up and reserved for participating policyholders only. Carrying a guaranteed cash value that increases each year, your investments can only increase.
What is non-participating life insurance? A non-participating life insurance plan is basically a life insurance plan without all of the added frills. The main difference between a non-participating and a participating life insurance policy is that non-participating insurance has no cash value and doesn't pay dividends to the policy holder.
Both of these policies can be held for life - meaning that instead of ending after a term, they remain guaranteed until age 100. This means that your family remains protected. Also important, with both, premiums are set for the life of the policy. Although the premiums are a bit higher for a whole life insurance policy than a term life insurance policy, the benefits in the end are often worth it.
When you are thinking about planning for the future, both participating and non-participating life insurance policies carry important benefits while still protecting you and your loved ones. Both participating life insurance and non-participating life insurance policies can be customized to meet your individual needs. Whatever your financial situation, there is a plan the fits your current and future needs and goals.
by: Gary Mandel
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