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Creditor Insurance
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Individual Life Insurance
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With a group creditor plan, an increase in the Capital Dividend Account of the debtor is not allowed since the proceeds are paid to the lending institution as a beneficiary or as a policy holder.
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In the majority of cases, most of the proceeds at death, which are received by a private Canadian corporation from a life insurance policy, are added to its Capital Dividend Account.
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- The loan is covered under a group policy which is owned and controlled by the lender.
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- The loan is covered by an individual life insurance policy which the company owns and has complete control over.
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- The group policy may be cancelled by the lender or insurer at any time.
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- An individual policy can not be cancelled, except by you.
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- Group coverage is decreasing term insurance with coverage reducing as the loan reduces.
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- Any kind of life insurance (either term or permanent) and any amount of coverage can be purchased.
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- Re-qualification may be required upon renewal of loan.
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- Re-qualification is not required as long as premiums are paid.
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- Coverage ends if you change lending institutions.
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- Coverage continues if you change lending institutions.
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- Group coverage will terminate if:
- loan is repaid
- loan is in default
- group policy terminates
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- Individual life insurance may be continued for as long as needed; even after the loan is paid off it’s a portable plan that can be used to cover any loan anywhere.
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- Coverage is not convertible to permanent insurance.
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- Coverage is convertible to permanent insurance.
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- Generally, there is no difference in rates between smokers and non-smokers.
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- Rates may vary depending on your smoker status. Non-smokers receive lower rates.
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- Many companies restrict loan insurance to age 65 or younger and coverage terminates at age 70.
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- Policies can be obtained beyond age 65.
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