Helpful tips for first-time life insurance buyers

Buying life insurance doesn’t have to be difficult

Buying life insurance for the first time can seem daunting. It’s a big decision, there are many options to consider and it can be stressful to think about what might happen if you’re no longer there to support your loved ones.

Getting insurance coverage that’s right for you is one of the most important ways you can financially protect those you care for from the unexpected. Buying life insurance is essential at any age and there are key advantages to starting early.

Here are some helpful tips to make the whole process easier for you.

Remember why you need insurance

Insurance can help financially protect those you care about when you’re no longer there to support them. It means there could be money available when it’s needed the most, so your loved ones can spend more time helping each other through a difficult time, and less time focused on how to pay the bills.

Life insurance can help:

  • Cover everyday living expenses
  • Settle debts
  • Keep the family home
  • Continue plans you’ve made for your loved ones, like an education fund

Once you know what type of life insurance you want, you’ll then want to determine how much your family will need to continue their lifestyle after you’re gone.

Life insurance that’s right for your needs and budget

There are two kinds of life insurance:

Term life insurance – temporary, lower-cost insurance coverage (at least initially) which you buy for a set period of Life Insurancetime. When that time’s up, your coverage can be renewed or you can convert to permanent, lifelong, coverage without having to answer further health questions.

Permanent life insurance – typically costs more, but lasts a lifetime and includes features that can grow money inside your policy over time (called cash value). You can access this money while you’re still alive or leave a larger legacy for those you care about.

Once you know what type of life insurance you want, you’ll then want to determine how much your family will need to continue their lifestyle after you’re gone.

To start, calculate:

  • Monthly household expenses – groceries, bills, mortgage, loan payments, etc
  • Planned expenses – RRSP or contributions to your children’s education, for example
  • Expected one-time costs – for instance, funeral expenses

You should figure out how much these expenses will cost for a full year, then how many years your loved ones would need to rely on this income. It’s a good starting point, so you have an idea of your insurance needs, which you can finalize with the help from me.

Don’t forget to insure your health

Did you know you’re much more likely to experience a serious illness or injury before you retire than you are to die? Ask yourself: if you were too sick or injured and couldn’t work for a month, six months or even a year, would you need an income source (that’s not your own) to support yourself and your family? If your answer is yes, critical illness and disability insurance may be valuable additions to your financial security plan that can protect what you’ve planned for and help ensure your loved ones are taken care of.

Consult a financial professional

I can help you create a plan – including life, critical illness and disability insurance – to help protect yourself and your family from any financial or non-financial issues that might come up.

What’s the Best Life Insurance for You?

To build the right financial plan for you, it’s important to know:

What are your life insurance options?

When it comes to life insurance, you have two choices: term life insurance and permanent life insurance. Both are great choices that protect you and your family, but each has different features. Deciding what’s Life Insurance for Familyright for you depends on what you need.

Term life insurance is temporary, lower-cost insurance coverage initially, where your payments stay the same for a set period of time. When that time’s up you can renew your coverage or convert it to permanent life insurance without having to answer further health questions.

Permanent life insurance also helps protect those you care about and provides you with more security because it lasts a lifetime.1 Initially, it costs more than term life insurance but includes features that can grow money inside your policy over time (called cash value). You can access this money while you’re still alive to help you achieve what you’ve always wanted – more retirement income or perhaps to start your own business – or leave a larger legacy for those you care about.

Deciding which option is right for you can be difficult. Here’s some information to help you make a decision.

So which option do you feel best suits your needs: term insurance, permanent insurance or a combination of both?

No one knows your situation better than you do. However, I’m here to help you. I can review your needs, help you choose the right insurance option and work with you to build a financial security plan to protect what matters most.

All-in-One Life Insurance Guide

What can life insurance do for you?

  • Protect the people who rely on you
  • Build value you can access during your lifetime

What types of life insurance are available?

  • Term life insurance
  • Permanent life insurance

Who needs life insurance?

  • People who are supporting others financially
  • Young and healthy people
  • Single people
  • People with assets or an estate to protect
  • People who want to leave something to charity
  • Parents who want to set up their children for success
  • Business owners

When should you buy insurance?

What about other types of life insurance?

  • Mortgage or creditor protection
  • Group life insurance

How do you select the right life insurance for you?

  • Professional advice

Read this guide, and talk things over with me to better understand the choices you have with life insurance. Making the right life insurance choice today can help both you and the people you care about most in the future.

Life Insurance Planning Solutions

Help protect the people who rely on you

Life insurance is one of the best ways to help protect the people who rely on you. Buying life insurance shows you are Life Insurance Guidecommitted to creating a positive future for your loved ones and can reassure them that they will be taken care of.

When someone dies, loved ones left behind have to make important – and often difficult – decisions at a stressful time. Life insurance provides options for the people you care about, allowing them the time and financial help needed to make decisions. Insurance proceeds can be received within days. This money can be used to cover funeral costs and other expenses, such as:

  • Legal fees
  • Taxes
  • Outstanding medical expenses
  • Mortgage payments
  • Loan payments
  • Credit card bills
  • Child care

Life insurance can also help replace the loss of your income and help fulfill your future plans in your absence, such as funding a child’s education or your spouse’s retirement plans.

Build value you can access during your lifetime

Permanent life insurance provides an opportunity to grow cash value over time. You can use it to help you achieve your big goals in life: to supplement your retirement income, to help pay for your children’s education, to go towards starting a business, or leave as a larger legacy to those you care about. **

You can access this cash value in your life insurance policy several ways**:

  • Take out a loan
  • Make a cash withdrawal
  • Use it as collateral to help obtain a bank loan

What types of life insurance are available?

Term life insurance is temporary, low-cost coverage where your payments stay the same for a set period of time. When that time’s up you can renew your coverage at a higher cost or convert it to permanent life insurance without having to answer further health questions.

Permanent life insurance provides you with more security because it lasts a lifetime, as long as payments are made. It costs more than term insurance, but can grow money tax-free inside your policy over time (called cash value), which you can access while you’re still alive.*

Who needs life insurance?

Life insurance can help you, no matter what stage of life you’re in.

People who are supporting others financially

Whether it’s your spouse, partner, children, another family member or a friend, life insurance is a great way to help provide for the people who rely on you.

Young and healthy people

You may not think you need to have insurance if you’re young and healthy, but there are many advantages to buying it at this stage of your life.

  • Your payments for insurance will be lower when you’re younger, meaning you can afford more coverage. And that means a larger legacy for loved ones, or a charity you choose.
  • With permanent life insurance, it means more time to build up cash value.
  • Buying life insurance when you’re young ensures you have coverage if you later develop health issues. Single people Life insurance is an important part of your financial security plan. During your lifetime
  • You can use permanent life insurance to supplement your retirement income or support your long term goals.** After death
  • Proceeds from a life insurance policy can take care of final expenses, unpaid bills and other debts, or be left as a gift to a friend or loved one.

As a parent, you want the best for your children, but sometimes big dreams come with big costs.

People with assets or an estate to protect

Life insurance can play a very important role in preserving the estate you’ve built over your lifetime and can help you leave the most assets possible to your heirs. But as your estate grows, so can the burden of taxes and fees that may have to be paid when you die. Life insurance can help cover these costs, allowing you to pass on your estate as planned.

People who want to leave something to charity

Life insurance gives you the opportunity to leave a personal contribution to your favourite charity or nonprofit organization.

Parents who want to set up their children for success

As a parent, you want the best for your children, but sometimes big dreams come with big costs. Imagine being able to say yes to your child buying a car, traveling, having a dream wedding or purchasing a home because you’ve bought them permanent life insurance today. **

  • Any cash value that grows within the policy can be accessed during your child’s lifetime** and if it isn’t needed right away, your child can use it later to supplement their own retirement income.**
  • Buying your children life insurance now can help provide a lifetime of protection.

Business owners

When you own a business, your most valuable asset is your ability to create revenue. But what would happen if you or one of your essential employees suddenly died, creating a risk to your business? The ripple effect could be significant, jeopardizing your lifestyle and even those of other employees.

Protecting your business means more than just protecting its physical assets—it also means thinking about what will happen after you die. Will your heirs and any surviving owners be able to work together? Will your heirs need to sell the business to cover capital gains, probate fees and other costs?

Insuring yourself and your key people can help protect the business you’ve worked so hard to build. * If the accumulation stays within prescribed limits, the cash value is only subject to income tax when it’s withdrawn. **Borrowing or withdrawing money from your policy will reduce the policy’s death benefit and cash value.

When should you buy insurance?

Whether you’re just starting your career, supporting a growing family or preparing for retirement, life insurance helps you meet different needs at different stages of your life.

In particular, there are some key times when you should be thinking about your insurance needs, such as when:

  • Purchasing your first home or cottage
  • A child or grandchild is born
  • Starting a business
  • Succession planning
  • Taking on a new job
  • Getting married or divorced
  • A parent or spouse dies
  • A child leaves home
  • You’re approaching retirement

Mortgage or creditor protection

These are types of term insurance offered by lending institutions as part of their mortgage loan or line of credit products. They provide simple, low-cost insurance to cover the balance owing if you die before the mortgage or line of credit is paid off.

However, there are some important differences between mortgage, creditor and individual life insurance. When it comes to mortgage or creditor insurance:

  • The lender or mortgage broker owns the policy
  • Your coverage typically decreases as your mortgage is paid down
  • The insurance money can only be used towards the balance of your mortgage
  • Often, you can’t make changes to your coverage as your needs change
  • Your coverage ends when your mortgage or debt is paid off

Group life insurance

If you’re working, there’s a good chance your employer offers group life insurance. You may also have group life insurance through an association, professional body, union or club.

While this form of insurance provides simple, low-cost coverage, there are some important differences between group and individual life insurance.

  • Group life insurance normally provides basic protection or benefits. Unless you get added coverage, your insurance could be significantly short of your actual needs
  • Group insurance benefits are pre-set and not personalized to your specific situation
  • You’re often only insured as long as you’re part of the group
  • Employers own their employees’ coverage and can change it at their discretion, based on an annual review

What about other types of life insurance?

Get professional advice

Life insurance is definitely not one-size-fits-all and buying coverage that meets your current and future needs can be complex. That’s why professional advice is essential. I can advise you by:

  • Take the time to understand your personal financial goals, insurance needs, risk tolerance, and how hands-on you want to be in managing your insurance
  • Help you evaluate your options and select the type of insurance that’s a good fit for you now, and in the future

Help Insure Your Child Get’s Off to a Head Start

Tuition costs have nearly tripled over the past quarter-century ­– good enough reason to start planning for your child’s university or college education.

With the average cost of a post-secondary education in 2010-2011 at $58,000 – and climbing – and with the maximum contribution to registered education savings plans (RESPs) set at $50,000, you may be looking for other ways to fund your child’s education. Life insurance can help your children fund their post-secondary education if you or your partner die unexpectedly.

Child Life Insurance

Insure Your Child

How does it work? Most permanent life insurance products offer a guaranteed cash value accumulation component that allows the cash value to grow tax-free (within limits).

When it’s time to withdraw funds for your child’s education, you can either withdraw the accumulated cash value or take out a loan against the policy’s accumulation. If you take out a loan, your cash value can continue to grow, provided you repay the loan. Alternatively, you can surrender your insurance policy if coverage is no longer required and apply this money to your child’s education needs (tax may apply).

Purchasing participating life insurance for your child or grandchild is a gift that keeps on giving. A participating life insurance policy has cash value that can grow over time and can be accessed to pay for things like tuition, a new car, or a down payment on a house. With their insurance needs taken care of for life, they can focus on other key priorities.

I can help you make sense of using permanent life insurance to pay for tuition.

Choice of Participating Life Insurance Dividend Options

Your participating life insurance dividend options give you considerable flexibility now and in the future. You can use your dividends to:

  • Buy additional insurance, on a tax-advantaged basis, without evidence of insurability
  • Lower your out-of-pocket premiums

This means you can choose how to balance affordability today and growth tomorrow. Historically, dividend scales increase and decrease over the life of a policy. Keep this in mind as you consider these dividend options. The reduced example in the life insurance illustration shows you the effect of a decrease in the dividend scale on the non-guaranteed values. Actual proportions for paid-up additions and Econolife vary by such factors as age, risk class, amount of life insurance, out-of-pocket premium payments and declared dividends.

Paid-up additions

With this dividend option, you use your dividends to buy additional, fully paid-up life insurance. Here are some advantages of paid-up additions:

  • Your coverage increases annually, with no need to prove insurability. This gives you a way to offset inflation, so your coverage doesn’t erode over time.
  • You buy the additional coverage on a pre-tax basis. Dividends used immediately to pay premiums in the same policy don’t incur income tax.
  • Paid-up additions generate further dividends, similar to your base policy.
  • The cash value of your paid-up additions, once credited to your policy, is vested and cannot be reduced or used in any way without your authorization, other than to pay premiums. Most contracts allow dividends, including those already applied, to be used to help keep the policy from lapsing if a premium is unpaid, for example by the use of an automatic premium loan.

Econolife

With the Econolife dividend option, you use your dividends to buy a combination of permanent life insurance and term life insurance. This gives you access to the coverage you need today, at a very affordable price. Econolife coverage offers these advantages:

  • You buy the Econolife term life insurance with pre-tax dollars. Dividends used immediately to pay premiums in the same policy don’t incur income tax.
  • In years when your dividend is larger than the cost of the Econolife term life insurance, some of the dividend buys permanent paid-up life insurance. Over time, this permanent life insurance can completely replace the temporary life insurance. After that, your death benefit begins to increase. You can use Econolife to strike a balance between affordability today and growth in cash value and death benefit tomorrow.
  • You can convert the temporary Econolife term life insurance component to a separate permanent policy any time before reaching age 65.

Econolife gurantee

  • With the Econolife guarantee (lifetime or 10-year), if your current dividends can’t pay for the Econolife term life insurance, London Life won’t ask for extra out-of-pocket premiums or surrender existing dividends to cover any shortfall while the guarantee is in effect.
  • If the guarantee expires or is forfeited, you may need to make additional premium payments to pay for any shortfall, or reduce your Econolife coverage.
  • Some options will end or forfeit the Econolife guarantee. If you use dividends for a Premium Vacation or withdraw them from the policy, the Econolife guarantee ends. Policy loans don’t affect the Econolife guarantee.
  • If the dividend scale increases, permanent paid-up insurance can replace the Econolife term life insurance even faster.

Accumulation

With this dividend option, your dividends accumulate with interest. The accumulated amount increases the death benefit. The interest rate is adjusted from time to time and interest is credited on each policy anniversary.
Interest on the accumulated dividends is taxable. Some or all of the dividends may be taxable.

Cash payment

With this dividend option, you take your dividends in cash. Some or all of these dividends may be taxable.

Loan reduction

With this option, you apply your dividends to any outstanding policy loan. Other uses for dividends

Premium Vacation

With the Premium Vacation option, you use current and accumulated dividends to pay some or all of your premiums, rather than paying them out of pocket. This flexibility is useful if you have a short-term need for cash, like a career change, tuition or new mortgage, or a long-term need like retirement. It’s a convenient way to balance your cash flow with your need for continuing coverage.

Premium Vacation relies on the dividends earned and retained in your policy. Over the life of the policy, increases and decreases in dividends affect how much is available to pay premiums, how much of each premium you can pay with dividends and how long you can take a Premium Vacation.

Cash payout

With this dividend option, you withdraw dividends to take advantage of an opportunity or meet cash flow needs. This reduces the policy’s death benefit and cash value. Policy illustrations demonstrate how this works.

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Policy illustrations

I can provide an illustration to show how your policy works. It shows which values and benefits are guaranteed and how dividends affect the growth of non-guaranteed values and benefits, depending on your dividend option. The illustrated growth of non-guaranteed values and benefits assumes the dividend scale continues unchanged over the life of the policy.

While policy illustrations are useful, the illustrated dividends aren’t guaranteed and aren’t an estimate or prediction of future performance. To better understand the sensitivity of the policy values to changes in dividends, compare the illustration’s primary example to its reduced example. For more information on policy illustrations, ask me for a copy of Your guide to life insurance illustrations.

Choice of additional benefits

You can customize your participating life insurance policy by adding a variety of optional benefits. Consult your policy for full details of your benefits. These descriptions cover the main points.

Supplementary term life insurance

You can add term life insurance to the total coverage, without paying the annual policy fee for a separate policy. This is useful if you need additional coverage and affordability is an issue or the need is temporary. This term life insurance is renewable, and the renewal premium rates are guaranteed. You can convert this temporary life insurance to permanent life insurance from London Life.

This conversion option expires on the date shown in your policy.

Total disability waiver of insurance

London Life pays the premium in the event of the insured person’s total disability as defined in your policy.

Premium waiver insurance

In the event of death or disability, as defined in your policy, of the person with premium waiver insurance (usually the premium payor), London Life waives all future premiums, to the end of the specified period. An alternative option simply covers the death, but not disability, of the person with premium waiver insurance.

Accidental death insurance

If the insured person dies as a result of an accident, as defined in your policy, this benefit provides additional insurance. The accident must occur before the policy anniversary when the insured person turns 70.

Guaranteed insurability benefit (GIB)

This benefit gives you the right to buy additional life insurance at certain future dates, without evidence of insurability. You can exercise this option up to two years before or after each option date. The new policy can be for permanent or term life insurance from London Life, subject to administrative rules then in effect.

Where to get more information

  • You can find out more about London Life participating life insurance by calling me (519-860-4223). You can also ask me for an updated policy illustration.
  • Each year on the anniversary of your policy, you receive a statement that updates you on the status
    of your policy.
  • If you have a question about your policy or would like a copy of the most recent London Life
    participating life insurance financial facts (form 41-4031), call the client service centre at 1-877-566-5433.
  • Visit us on the Internet at www.londonlife.com.

Notes:

  • Performance data is provided for illustrative purposes only and represents past performance, which is not necessarily indicative of future performance.
  • The tax information in this guide is based on Canadian legislation at the time of printing and is subject to change. This information is of a general nature only. For further information, discuss the tax implications of your policy with your accountant or tax advisor

Flexibility of a Participating Life Insurance Policy

Choice of basic participating life insurance policy

All three of these basic policies give you permanent life insurance protection. The policy doesn’t terminate at a certain age, as long as you pay premiums as described in the policy.

20-Pay Life

This policy gives you lifetime protection with premiums payable for 20 years. After that, your basic coverage is fully paid up and no further premiums are due. 20-Pay Life gives you the highest early cash surrender values, compared to the other two products. It also gives you excellent long-term cash value and growth of the death benefit.

Life Premiums to 65

This policy gives you lifetime protection with premiums payable to age 65. After that, your basic coverage is fully paid up and no further premiums are due. Life Premiums to 65 is available for issue ages up to and including age 45.

Jubilee Whole Life

This policy gives you lifetime protection with premiums payable to age 100. This popular policy gives you the lowest annual premium of the three basic policies.

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Choice of death benefit

The death benefit is the money a beneficiary is eligible to receive on the death of the insured person. Jubilee Whole Life and 20-Pay Life are available as single- or joint-life protection. Life Premiums to 65 is available only as single-life protection.

Single life

The policy insures the life of one individual. The death benefit is payable when the insured person dies.

Joint first-to-die

The policy insures the lives of two individuals. The death benefit is payable when the first insured person dies. Depending on risk, class and age, the policy may include other features, such as:

  • Exchange option – You can exchange the original policy for two single-life policies, each up to 60 per cent of the original death benefit, for any reason during the first five years. There are some limitations after five years.
  • Interim insurance benefit – If both insured people die within 60 days of each other, there’s an additional death benefit payable.
  • Survivorship option – The surviving insured person can purchase insurance, within 60 days of the death of the first insured person, without evidence of insurability.

A joint first-to-die policy lets you cost-effectively:

  • Replace income
  • Insure a mortgage
  • Fund a buy-sell agreement for a business

Joint last-to-die

The policy insures the lives of two individuals. The total death benefit is payable only when the second insured person dies. This means you shouldn’t buy a joint last-to-die policy if you need the funds on the first death. A joint last-to-die policy usually costs considerably less than two single-life policies.

There are two types of joint last-to-die policies:

  • Pay premiums to the first death
  • Pay premiums to the last death

You can use a joint last-to-die policy to:

  • Pay taxes on the last death
  • Preserve your estate for your heirs
  • Give a gift to your favourite cause or charity

Value of Participating Life Insurance

Here is more information on the key components that determine the value of your participating life insurance policy.

Policy cash values

The cash value of your policy is composed of guaranteed cash values, as stated in your policy, plus non-guaranteed cash values generated by dividends credited to your policy. If you surrender your policy, you receive the total cash value, less any indebtedness.

Investment performance for the long term

Participating life insurance is, first and foremost, life insurance. However, the investment performance of the participating account is an important component in the long-term value of your policy. The participating account assets are managed by London Life’s investment division. This is the experienced group of professionals who manages assets for London Life. The assets in the participating account include publicly traded government and corporate bonds, residential and commercial mortgages, corporate lending, real estate, equity-related investments, short-term investments and policy loans. The investment returns associated with the participating account are reflected in the dividend scale through the dividend scale interest rate. Historically, even during times of rapid economic change, the participating account’s dividend scale interest rate has been relatively stable.

The high quality of investments, and the long-term investment strategy help stabilize the variation in the investment returns used to determine policyowner dividends.

London-Life

If you’re looking for life insurance built on a foundation of guaranteed values with an established history of proven performance, London Life participating life insurance may be right for you.

London Life participating life insurance policies have an excellent track record of
investment performance.

As with any financial vehicle, a small change in investment returns can have a significant long-term impact on the dividends, values and features in your policy. To better understand this sensitivity for your specific policy, refer to the policy illustration your financial security advisor gave you and compare the reduced example to the primary example.

For more information on the investment returns of the participating account, ask your financial security advisor for a copy of London Life participating life insurance financial facts.

Increasing life expectancy

This is a unique feature of participating life insurance. As people live longer, positive mortality experience is passed to policyowners through dividends. In general, every decade of the last century has shown continuous mortality improvement based on data from Statistics Canada. Each year we review our mortality experience and take it into account in determining policyowner dividends.

Expense management

London Life has the largest Canadian participating account, as measured by assets. This provides economies of scale for expenses and investments. Expense management focuses on controlling expenses for the benefit of participating policyowners and shareholders.

Dividends

One of the unique benefits of participating life insurance is the opportunity to earn policyowner dividends. As a participating policyowner, you benefit from the success of the pool of participating policies, through the receipt of policyowner dividends. Dividends are not guaranteed and vary up or down from those illustrated, depending on future dividend scales. The dividend scale is affected by investment returns, mortality experience, expenses, taxes and other factors associated with the participating account.

The dividends credited to your policy have a cash value. Once credited, this cash value is vested and cannot be reduced or used in any way without your authorization, other than to pay premiums. Before the first dividend is credited, the premium due on the first policy anniversary must be paid. A policy loan, including a premium loan, doesn’t reduce your dividend. Your policy continues to receive dividends as if the loan didn’t exist. Any outstanding loan, including interest, is repaid from the cash value if you surrender the policy, or from the death benefit when the insured person dies. When determining the net cost of your policy, you should consider both the premiums charged and the dividends returned over time. The philosophy behind London Life participating life insurance is to provide participating policyowners with life insurance at a cost that takes into account the long-term performance of the participating account.

Strength of London Life

Life insurance is a promise that may not be put to the test for 30, 40, 50 years or more. This means the long-term financial strength and claims-paying ability of your insurance company are vitally important.

  • London Life – a vital Canadian business since 1874
  • London Life has helped Canadians meet their financial security needs since 1874.
  • London Life has distributed policyowner dividends, providing value to its participating policyowners, every year since 1886. The participating account has experienced more than a century of sound management, and that dependable management approach still applies.

London Life is a subsidiary of The Great-West Life Assurance Company. Together, Great-West Life and its subsidiaries, London Life and Canada Life, serve the financial security needs of more than 12 million people across Canada. Great-West Life, London Life and Canada Life are members of the Power Financial Corporation group of companies.

Participating Life Insurance at a Glance

London Life participating life insurance gives you a foundation of guaranteed values and tax-advantaged growth. It also gives you the opportunity to receive policyowner dividends, based on your participation in a pool with other participating life insurance policies. It gives you stability and flexibility in a permanent life insurance solution.

Foundation of guaranteed values

  • Guaranteed premiums
  • Guaranteed death benefit
  • Guaranteed cash value

Tax-advantaged growth

  • Cash value grows on a tax-advantaged basis.
  • The death benefit is not subject to income tax.

Strength of London Life’s participating account

  • Largest participating account in Canada, as measured by assets
  • Long track record of stable investment returns
  • Strong history of dividend payments

Choices to match your needs

  • Fund your policy in 20 years or pay premiums to age 65 or age 100.
  • Use your policyowner dividends to buy more insurance, reduce premiums or take a Premium Vacation™.
  • Access your cash value through policy loans.
  • Select from a wide range of riders and benefits.

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How participating life insurance works

  • When you purchase participating insurance, the premiums you pay go into an account called the participating account, together with funds from other London Life participating policies.
  • To determine your guaranteed premiums, guaranteed cash values and guaranteed death benefits, London Life uses long-term assumptions for factors such as investment returns, mortality, expenses, lapses and taxes.
  • If the actual and expected future results in the participating account are collectively more favourable than the assumptions supporting the guaranteed values, earnings are generated and become part of the participating account surplus (retained earnings).
  • Each year, London Life may distribute a portion of the earnings as participating policyowner dividends, as approved by the board of directors.
  • Surplus is held in the participating account to maintain the strength and stability of the participating account into the future.

Value, strength and choice

Each section of this guide deals with an aspect of participating life insurance that clients have identified as important. Here’s an overview of each section.

Value of participating life insurance

In this section you learn about the key components that contribute to the performance of your policy, the long-term benefits and the cost of your coverage. You also learn how you and over one million other participating London Life policyowners share in the results.

Strength of London Life

In this section you learn about the company that stands behind your participating life insurance coverage. It’s important to select a strong company and a strong participating account. Here you learn about London Life’s strength and stability over the long term.

Choice and flexibility

In this section you learn about the different features and options that are available to tailor your coverage to your specific needs. Participating life insurance is not one-size-fits-all. You can choose how you want to balance affordability with future growth and flexibility. You can combine permanent and term life insurance to meet long- and short-term needs.

I can help you make the best choices to meet your needs and goals.