Quote:
Originally Posted by tiger_handheld
@ Speed2k:
I've heard of policies where you pay the premiums for 20 years or whatever, and you get some cash back at the end. Afterward, it is up to you what you want to do with that cash.
Is this type of policy available in Canada? If it is, can you provide some details?
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Quote:
Originally Posted by radioman
@Tiger what you're talking about is a participating whole life plan. There are a lot of insurance companies in Canada and many offer this type of product. Some are better than others.
Many have different payment lengths like 10/15/20.
These products pay a dividend every year and you have different options on what you would like to do with this dividend. You can take it in cash, or buy more insurance. The most popular option I see is buying more insurance which makes the death benefit grow over time.
The cash value growth is tax deferred and you can take it out when you wish. If you do so and you had originally wanted the dividends to buy more insurance that portion will go down as you start taking cash out.
This type of plan is expensive and it really becomes a growing 'asset class'. Many people who have large partiicpating life polices are those who want to leave a legacy for their family and this is a great way to do so.
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To expand on what radioman wrote, the "get some cash back at the end" is referred to as Cash Value. There is a lot of misconceptions about the cash values though, sometimes people "hear" things from their friends, but their friends only remember bits and pieces. Once a policy is paid up (i.e. finish paying the premium for 20 years) if someone withdrew ALL their cash values they would essentially be cancelling their life insurance policy. Of course this is a simplistic way of looking at it because there are a lot of other variables.