P L A I N T A L K about

L I F E I N S U R A N C E

2

Having the right life insurance protection

can have an enormous effect on your

life and the lives of those you love. A proper

financial security plan can mean the

difference between leaving your loved ones

well positioned financially and leaving behind

debts and an inadequate income.

3

The basics of life insurance in easily understood terms .................................. 4

What life insurance does for you ................................................................... 4

The advantages of life insurance ................................................................... 6

An instant estate .................................................................................... 6

Money in hand – quickly ........................................................................ 6

Financial benefits you enjoy ................................................................... 6

Other advantages .................................................................................. 6

Who needs life insurance? ............................................................................8

People with responsibility for others ...................................................... 8

People without family ties ...................................................................... 8

People with estates to protect ................................................................8

Business owners ..................................................................................... 8

People who want to leave a legacy ...................................................... 10

People starting a child’s or grandchild’s insurance program .................10

When should you buy life insurance?.......................................................... 10

How much life insurance do you need? ...................................................... 10

What type of insurance can you buy? ......................................................... 12

Permanent life insurance ...................................................................... 12

Universal life .................................................................................. 12

Permanent participating insurance ................................................ 12

Term life insurance ............................................................................... 13

A combination of permanent and term life in one policy ..................... 13

Other types of term insurance ............................................................. 14

Decreasing term ............................................................................14

Group insurance ............................................................................14

The right insurance for your needs – value for your money ......................... 16

Get professional advice ........................................................................ 16

New isn’t always better .............................................................................. 17

Tailoring your life insurance ........................................................................ 17

Choosing the right company ...................................................................... 18

Let us help you ........................................................................................... 18

Glossary of life insurance terms .................................................................. 20

P L A I N T A L K about

L I F E I N S U R A N C E

4

The basics of life insurancein easily understood termsCanadians generally agree that life insurance should be part of a soundfinancial security plan, but many aren’t sure what type to buy or where topurchase it.

Plain talk about life insurance presents the basics of life insurance ineasy to understand terms. This information will help you find the answersto such questions as:

• Do you need life insurance?

• How much life insurance do you need?

• What kind of life insurance should you buy?

Your financial security advisor can assist you with all of your personalfinancial security needs and goals. A financial security plan shouldconsider life insurance, savings, other assets such as your home, cottageor business and other forms of insurance. All of the pieces should fittogether and be tailored specifically for you.

What life insurance does for youLife insurance helps to create security for you and your family. If youshould die unexpectedly, it can be used to:

• pay final expenses and any debts you may have

• provide an income for your family

• ensure your family has the resources to maintain a comfortablestandard of living

• leave a legacy to your favourite charity

While you are still living, some life insurance policies can:

• build a tax-advantaged savings fund which you can draw upon asneeded for personal or business opportunities, to supplement yourretirement income, or to provide for long term care or home care fora family member (ask your financial security advisor for a copy ofOptions for gaining access to policy cash values for all the options andtax considerations).

However you look at it, life insurance is a valuable part of your financialsecurity plan.

5

Your dreams and goals are

the foundation of the financial

security program tailored just

for you.

6

The advantagesof life insuranceAn instant estateFew individuals, particularly thosewith the responsibility of a youngfamily, have sufficient savings toadequately protect their loved onesshould the main income earner die.Life insurance can help create anestate at a time when funds may beneeded most. This is a low-cost wayto ensure your family’s continuedfinancial well being.

Money in hand – quicklyYour beneficiary, the person(s) youname to receive the insurance money,will be paid within a few days of theinsurance company receiving therequired information. By contrast,savings and other assets may be tiedup legally for some time after death.

Financial benefits you enjoySome people have the impressionthat insurance pays only if you die.That’s not the case. Manypermanent insurance policies (i.e.participating and universal life) buildcash values that you can accessduring your lifetime. The cash valueis the equity you have built up inyour policy. Cash values canaccumulate within your policy on atax-advantaged basis. The growth inthe cash value is generally onlysubject to income tax when it iswithdrawn from the policy. Yourpolicy’s cash surrender value can beused to:

• provide funds in an emergency

• finance a downpayment on ahome or cottage

• launch or expand a business

• act as collateral for a loan from athird-party lending institution

• supplement your retirementincome

• provide income for long-term careor home care for you or yourspouse

How you use the money is reallyup to you.

For more information on policiesthat build cash values, ask yourfinancial security advisor for a copy ofWhat’s the best life insurance. It’scustomized for each of the followingstages of your life: early career,concerned family, or empty nest.What’s the best life insurance is alsoavailable in a customized formataccording to your needs as an affluentand established individual or yourneeds as a business owner.

Other advantages• the death benefit is not subject to

income taxes

• probate costs can be avoided ifyou name a beneficiary other thanyour estate

• unlike a will, informationregarding your life insurance canremain private

• in many instances, life insurancemay be protected againstcreditors.

7

An insurance policy can play a

key role in providing a lifetime of

financial security for your family.

8

Who needs lifeinsurance?People with responsibilityfor othersFor people who depend on you forsupport, a spouse, children ordependent adults, life insurance canplay a fundamental role in theircontinued financial well being. Inaddition to making up for the loss ofyour income, the proceeds from a lifeinsurance policy can be used to takecare of funeral expenses and othercosts such as a mortgage, loans orcredit card payments. If you’re astay-at-home parent, the role youplay also needs to be covered becauseof the additional expenses associatedwith childcare if something happensto you.

People without family tiesOver the course of a lifetime,situations and responsibilities change.You’ve probably imagined how yourlife will look as you go through themany life transitions. Are youprepared financially for the changes?Have you considered how lifeinsurance can help keep your life plansintact? Life insurance protection offersconsiderable flexibility and optionsduring your life. Even if you are single,or you and your partner both workbut don’t have a family, life insurancecan still play an important role in yourfinancial security plans.

A life insurance policy can providean efficient and cost-effective way totake care of any expenses or unpaidbills you might leave behind, such aslegal fees and taxes, medicalexpenses, funeral costs, mortgagedebt or car loans. It can also be usedto leave a gift to a loved one or a

favourite charity or to provide asupplemental income while youare alive.

People with estatesto protectMany people believe as they get olderand become more financiallyindependent, their need for lifeinsurance decreases. However, over alifetime, estate values tend to rise. Lifeinsurance can help pay the inevitabletaxes that are due on an estate upondeath. This can ensure as much ofyour estate as possible is passed on toyour beneficiaries. Ask your financialsecurity advisor for a copy ofProtecting your estate.

Business ownersIf you’re a business owner, either onyour own or with a partner, youprobably have personal liability for thedebts of your business. In fact, thevast majority of your wealth is likelytied up in the business. You have agreater need to protect what youhave built against unforeseencircumstances such as death anddisability or to ensure liquidity for avariety of reasons including fundsfor retirement.

In case of death, it is importantthat you have adequate insurance.Otherwise, the claims of businesscreditors could significantly reduceyour personal estate and leave yourbeneficiaries without the financialsecurity you had intended.

Equally important is the smoothtransition of ownership of the businessto a family member, partners or a keyemployee. A life insurance policy canmake this possible.

Your business is an asset thatprovides income for your family, bothwhile you are alive and after yourdeath. It is also likely your largest asset

9

If you are in business, either on

your own or with a partner, you

will have unique life insurance

needs that depend on your

immediate priorities and at which

stage of growth your business is

in today as well as your long-term

goals for yourself, your family

and your business.

10

and will provide you with aretirement income. Life insurancecan ensure your family receives fairvalue for this asset at your death.

People who want toleave a legacyYou may wish to leave money to afavourite charity. Life insurancecoverage allows you to leave a lastingpersonal legacy and provide yourfavourite charity with stable fundingover the long term without reducingthe estate available to your family orjeopardizing your future financialindependence. A carefully arrangedplanned gift can be tax effective, andat the same time balance your finalneeds and the needs of your family.Ask your financial security advisor fora copy of Bring planned giving intofocus.

People starting a child’sor grandchild’s insuranceprogramLife insurance provides a powerfulfoundation for building your child’s orgrandchild’s financial security plan.Insurance can work as a flexible assetthat grows along with your child.

Premiums are relatively low forchildren and this low premium can bemaintained throughout their lives.

When should you buylife insurance?The best way to buy insurance at areasonable price is to buy it when youdon’t appear to need it; that is, whenyou’re healthy. However, it is seldomtoo late, or the wrong time to buy lifeinsurance.

You should review your lifeinsurance protection with a financialsecurity advisor annually or wheneverthere are changes in your life, such asthe birth or adoption of a child or achange in marital status. The purchaseof a home or cottage, or a new job orlaunching your own business are alsocircumstances which should prompt areview of your insurance protection.

How much lifeinsurance do youneed?The key to understanding yourinsurance needs is to determine whatprotection you need today, and keepin mind what may be importanttomorrow.

How much coverage you need,combined with your cash flow, andthe length of time you need thecoverage, are all used to determinethe type and how much life insuranceyou should buy.

11

Quite possibly, the largest burden

on your estate could be the taxes

owing on your assets.

12

What type ofinsurance can youbuy?There are two types of life insurance:permanent and term. They are twodifferent types of protection thatsatisfy many different life insuranceneeds. Term may be all the lifeinsurance you’ll ever need, or it maybe used as an interim step beforepurchasing permanent insurance.Possibly, a combination of term andpermanent in the same policy may bethe best solution for you. Yourfinancial security advisor can showyou the strengths of each and theirdifferences.

Permanent life insurancePermanent life insurance – as thename implies – protects you for yourlifetime. It can build cash surrendervalues and provide a death benefit.Some permanent policies paypolicyowner dividends (participatingor par), and others don’t (non-participating). If the permanent policyyou are considering has a cashsurrender value, you should reviewthe product guide provided by theinsurance company to betterunderstand how the assets backingthe policy are managed and howthese assets are used to accumulatevalue within the policy.

Universal lifeUniversal life provides permanentlife insurance with a tax-advantagedinvestment component. As cashvalues accumulate, they can beused to pay part or all of the cost ofyour insurance or to increase thedeath benefit. You select aninvestment mix that is as individualas you are – taking into account the

amount of investment risk you arecomfortable with, and your financialgoals and circumstances. This typeof policy is generally non-participating and is attractive forpeople who want to activelymanage their life insurance policy.

Permanent participatinginsurancePermanent participating insurancepolicies have potential for earningpolicyowner dividends. Favourableinvestment returns, mortality andexpense experience generateearnings in the par account - aportion of which can then be paidto policyowners in the form ofdividends. (See the glossary for adetailed definition of policyownerdividends.)

You choose how you want yourdividends to be used. The mostpopular dividend options are eitherto use dividends to buy additionalpermanent coverage each year or tobuy a combination of term andpermanent insurance, which canmake a larger amount of coveragemore affordable. The first optionprovides an increasing death benefitthat can offset the effect of inflationover the longer term. Higherpremium options generally providehigher long-term growth (i.e.paying a high premium may meanyou will receive higher values overthe longer term). The insurancecompany manages the investmentportion of a participating policy, soit doesn’t require hands-onmanagement by the policyowner.Assets in the participating accountare managed in a diversifiedportfolio and are invested primarilyin bonds, mortgages, equities andreal estate.

13

For more information aboutuniversal life or participating insuranceproducts from various companies,ask for their product guides. Theguide should explain how theinsurance product works and thecompany’s record for providing valueto policyowners.

Term life insuranceTerm life insurance is well suited tomeeting high, short-term protectionneeds for the lowest initial cost. Forexample, a couple with youngchildren and/or a mortgage mightselect term insurance as an affordableway to obtain the full coverage theyneed today. Many term insuranceplans do a good job of meetingimmediate needs and provide thefreedom to later move, or convert to apermanent product without providingproof of health. However, this abilityto convert to permanent insuranceoften expires around age 65 or 70.When purchasing term insurance, it’simportant to understand whatconversion options you have. Somecompanies impose significantrestrictions or have a very limitedchoice of permanent plans forconversion.

Many term plans are renewableafter five, 10 or 20 years withoutproviding proof of health. The pricewill increase to be appropriate foryour age at renewal, and the increasein premium can become substantial inlater years. Coverage ceases for themajority of term contracts once youreach the age of 75 or 80.

When reflecting on the cost of terminsurance, be sure to consider thefollowing factors impacting yourtotal cost:

• the initial premium,

• the renewal rate and whetherevidence of insurability is requiredat time of renewal,

• how long you’ll need theprotection, and

• how much flexibility you wantin case your needs change inthe future.

A combination of permanentand term life in one policyMany people have both short- andlong-term insurance needs andrequire varying amounts of coverageover different periods of time. Acombination of permanent and termlife insurance features can be availablein one policy. Most permanentpolicies allow for the addition oflow-cost term coverage without anadditional policy fee. This provides away to obtain the right amount ofcoverage at a more economical price,giving you a base of permanentcoverage that won’t increase in cost.

14

Other types ofterm insuranceDecreasing term (also known ascreditor insurance or mortgage lifeinsurance)Most lending institutions offer creditoror mortgage life insurance as part oftheir lending or mortgage packaging.Its primary purpose is to protect thelender. Creditor or mortgageinsurance from a lending institution isgenerally non-convertible terminsurance (you can’t move to apermanent insurance plan if yourneeds change) – there are no cashsurrender values and no premiumflexibility. A personal life insurancepolicy has distinct advantages overtypical creditor or mortgage insurancesuch as:

• you can control the amount ofcoverage, because it’s not tied tothe balance of your loan ormortgage.

• your beneficiaries can choose howto use the funds – to pay off theloan or mortgage, provide amonthly income or take care ofother immediate needs. It’s theirchoice, not the lender’s.

• you choose the type of insurancethat best suits your needs withpremiums to suit your budget –the cost may be lower thancreditor or mortgage insurancefrom a lender.

• you own the policy, not yourlender. You have the freedom toswitch your loan or mortgage toanother lending institutionwithout jeopardizing your lifeinsurance coverage.

It pays to compare. Insure yourself,not the lender.

Group insuranceIf you’re working, there is a goodchance your employer offers grouplife insurance. You may also obtain lifeinsurance coverage as a member of anassociation, professional body, unionor club.

Group coverage provides simple,low-cost insurance protection;however, it can have some drawbackswhen compared to an individual lifeinsurance policy.

Group coverage doesn’t offer thelevel of control, portability or choicesthat can be obtained with yourpersonal life insurance policy. Withmany group or association plans, youare insured only as long as you remainpart of the group. Employment-related group coverage is owned byyour employer and is subject tochange at their discretion based on anannual review. With a group lifeinsurance plan, you have the right toconvert to an individual plan whenyou leave the group or retire, but thisis not always practical. Depending onyour age when you retire or leave thecompany, converting to personally-owned permanent life insurance couldbe expensive or may not be possible.

15

Life insurance – an asset which

can play a variety of key financial

security roles throughout your

lifetime.

16

The right insurancefor your needs –value for your moneyLife insurance is one of your mostpersonal and important buyingdecisions. A carefully consideredpurchase today can benefit you andthose you care about for the rest ofyour life. There are several variablesaffecting the cost of life insurance andthat’s why value doesn’t necessarilyrest with the lowest-priced policy. It’simportant to understand the factorsthat affect the cost of your lifeinsurance policy.

• Gender – women pay less thanmen because statistics show thaton average they live longer

• Age – the younger you are, thelower the premium you’ll pay

• Health and lifestyle – good healthand sound lifestyle habits usuallymean you qualify for the bestrates. Non-smokers get a discount.

• Type of policy

• you pay less initially for terminsurance

• you pay more for a policy thatbuilds cash surrender valuesbecause it provides benefitsbeyond the basic insuranceprotection

• Method of payment – you’ll payless if you choose to pay yourpremium on an annual basis ratherthan monthly

Other factors that may impactthe premium you’ll pay

• Occupation or avocation – someoccupations or hobbies/sports areriskier than others from both ahealth and accident standpointwhich may impact the premiumyou’ll pay

• Foreign residence – Canadianinsurance policies are based onCanadian mortality experience. Ifyou live outside of Canada, youmay be exposed to an increasedmortality risk which may impactthe premium you’ll pay

Your best buy is a policy withfeatures that suit your situation todaywith flexibility to meet changingneeds in the future.

Get professional advicePurchasing life insurance that meetsyour needs now and in the future canbe complex. That’s why it’s essentialto get professional advice from aknowledgeable financial securityadvisor, supported by a team ofexperts.

Life insurance is definitely not aone-size-fits-all product. Your financialsecurity advisor will take the time tounderstand your financial goals andinsurance needs, your risk tolerance,and the control you want inmanaging your policy. Then heor she will help you to consider youroptions and ensure your life insuranceis a good fit for you now, and in thefuture.

Finally, you need to be certainyour policy is backed by an insurancecompany that is established, reputableand secure.

17

New isn’talways betterYour life insurance policy representsan important part of your financialsecurity. If anyone suggests cancelingyour policy, ask for a written proposalto provide you with complete andaccurate information. Most provinceshave regulations or guidelines underthe Office of Superintendent ofFinancial Institutions that requireadvisors to provide a writtencomparison statement when theyreplace an existing life insurancepolicy.

Get in touch with the companythat issued your existing policy toconfirm and double-check the detailspresented in the comparisonstatement to enable you to make yourdecision based on all the facts.

Factors to compare whenconsidering replacing your current lifeinsurance policy with a new one:

• death benefit

• cash surrender values

• premiums

• tax considerations

• guarantees, and

• any extra contract benefits orriders in the policies

Always compare the entire policyand not just one or two features. Also,be sure to compare it over the longterm as well as the short term.

Remember that the policyoriginally recommended to you wasprobably designed to be flexible. Ifyour needs have altered, your existingpolicy may be adaptable to suit yournew requirements.

If you do decide to give up anexisting policy, don’t leave yourselfunprotected. Keep your presentcoverage in place until you have anew policy safely in hand.

Tailoring yourlife insuranceHere are some of the ways you cantailor your life insurance policy.

Protection in the eventof disabilityThe insurance company will pay yourpremiums if an accident or illnessprevents you from working. Ensureyou understand a few things: theinsurance company’s definition ofdisability, the waiting period beforepremiums are paid, and anyadditional benefits you will receivewhile disabled.Reserve the rightto buy more insuranceThis is a valuable feature if sickness oran accident means you can’t buymore insurance, or to do so you mustpay a higher premium because youdon’t qualify for standard rates. Thecost of this benefit is minimal and itguarantees the right to buy moreinsurance without a medicalexamination.Accidental death benefit (ADB)For a small premium, you can have anadditional death benefit that pays inthe case of a fatal accident.Occasionally, you may receive an offerto buy accidental death coveragethrough the mail. While this mayappear to provide high coverage at avery low cost, it’s important tounderstand that if you die from anyother means there would be no

18

payment. (A recent report byStatistics Canada showed that only28 out of 100,000 died ofunintentional injuries in 1996.) Wedon’t recommend relying onaccidental death benefit coverage toprotect your family or business.

Talk to your financial securityadvisor to learn about other ways totailor your life insurance policy.

Choosing theright companyWhen it comes to choosing acompany to meet your personal lifeinsurance needs, there are severalconsiderations:

• highly trained and qualifiedprofessionals

• known reputation for customerservice – when you need help,they’re very accessible – withanswers at their fingertips

• be sure to check the company’sfinancial security rating and itstrack record for providing value

Let us help youThrough this booklet, we’ve outlinedthe basics of life insurance.

You may want to know more aboutthe other financial products andservices we offer:

• Individual life insurance

• Segregated funds, RRSPs

• Annuities, RRIFs, LIFs

• Individual disability insurance

• Individual critical illness insurance

• Individual health and dentalinsurance

• Business insurance

• Group insurance

• Group retirement plans

Perhaps you now need specificinformation about what life insurancecan do for you and how you canbenefit from owning a policy. Callyour nearest Great-West Life office.You’ll find a listing in your telephonedirectory, or you can visit our Website, http:/www.gwl.ca to locate theGreat-West office nearest you.

19

Take advantage of our experience

to achieve a secure financial

future for yourself and your family.

20

BeneficiaryThe person named in the policy to

receive the insurance proceeds uponthe death of the insured.Cash surrender value (CSV)

The cash value paid to thepolicyowner if he or she cancels thepolicy or withdraws some funds fromthe policy (partial surrender). Forexample, the cash surrender value fora universal life policy is the totalaccount value less current applicablesurrender charges, any market valueadjustments, withdrawal fees andoutstanding loans. If the policy issurrendered or partially surrenderedfor its cash value, there may be taximplications.Convertible term insurance

A type of term insurance thatallows the policyowner to changethe term insurance policy to apermanent life policy withoutproviding evidence of insurability.The premium amount for the newpermanent policy is usually based onthe age of the insured at the time ofthe conversion.Cost of insurance (COI)

COI is the insurance charge withina universal life policy (usuallydeducted monthly). These charges aretypically based on guaranteed ratesper $1,000 of insurance and vary byage, sex, smoking status, medicalrating and the amount of insurance.Death benefit

The amount of money paid or dueto be paid when a person insuredunder a life insurance policy dies.Decreasing term insurance

A type of term life insurance inwhich the amount of coveragedecreases during the term ofcoverage.

DividendsSee policyowner dividends.

Evidence of insurabilityMedical, financial and lifestyle

information that is needed as part ofthe underwriting process to assess theapplicant’s risk in approving the lifeinsurance application. Thepolicyowner, the insured person orboth may be asked to provide thisinformation depending on thecoverages selected.Increasing death benefit

A death benefit option within auniversal life policy where the total(investment) account value is addedto the basic coverage to determinethe basic death benefit.Insured person

The person on whom the premiumand coverage is based. Theapplication for coverage is filled outbased on this person. This person mayor may not be the policyowner.Investment options

Universal life policies typically offera range of investment account optionsbased on short-term, long-term andindex-linked investments. Index-linkedinvestment options are determined inrelation to the changes in the valuesof the underlying index and may beeither positive or negative dependingon actual performance. Generally, youcan change from one investmentoption to another when you want,but you may be subject to a cost fortransferring the funds.

Glossary of life insurance terms

21

LapseThe termination of an insurance

policy because premiums were notpaid when they came due and therewere insufficient funds availablewithin the policy to keep the policy inforce. Therefore, the policy coverageis suspended and could bepermanently terminated if unpaidpremiums are not paid within anallotted time.Level death benefit

A universal life insurance deathbenefit option in which the deathbenefit of the policy remains level.The insurance amount decreases asthe total account value in the policyincreases. The account value in thepolicy is used to reduce the cost ofinsurance.Non-participating (non-par)

A type of life insurance policy orannuity in which the policyownerdoes not receive policyownerdividends. Also called a non-parpolicy.Participating life insurance:A type of permanent life insurancethat is eligible for dividends which aredependent on a variety of factors,including investment returns,mortality and expense experience.Permanent insurance

Type of life insurance productintended to provide protection for thelifetime of the insured and may beparticipating or non-participating.Most permanent products have a cashsurrender value at some point.Policyowner

The person who owns the policy.Unless the policy is assigned or has anirrevocable beneficiary, this person hasthe ability to request changes to thepolicy.

Policyowner dividendsIf the actual investment returns,

mortality and expense experience inthe par account are collectively morefavourable than the assumptionssupporting the guaranteed values,earnings are generated in the paraccount that become part of the paraccount surplus (retained earnings).Each year, the company distributes aportion of the earnings topolicyowner as approved by theBoard of Directors.Policy illustration

A presentation which is used tohelp explain how an insuranceproduct works and should clearlyshow what is guaranteed and what isnot guaranteed.Policy loan

A loan from an insurance companyto a policyowner that is secured bythe cash surrender value of a lifeinsurance policy. You pay an interestcharge for the use of this money. Thenet cost of the loan is the differencebetween what your policy is earningcompared to the loan interestcharged. Taking a policy loan maycreate taxable income and repaying aloan may create a tax credit.Premium amount

The payment you pay in exchangefor insurance coverage.Premium loan

This is often the standard defaultoption to prevent a policy fromlapsing in a permanent, participatingpolicy that has a cash surrender value.It is initiated when a premiumpayment is missed and there is a cashsurrender value to cover the amountof the premium. It is intended to keepa policy in force as long as the policycash surrender value is adequate tocover the cost of the loan.

22

Premium scheduleThis is the amount of premium

that you elect to pay within theparameters specified in the contract.Some policies provide considerableflexibility in selecting a premiumschedule. For others, the premiumschedule is specified in the contract –guaranteed premium levels aregenerally specified in the contract.Renewable

Most term policies are renewableor can be continued withoutproviding evidence of insurability untilthe expiry date of the policy. Thereare non-renewable and non-convertible term policies sold in themarketplace, so these features shouldbe verified.Risk tolerance

Your ability or willingness toendure declines in the value of yourpolicy investments or increases inpremiums. A financial security advisorshould assess your risk tolerance priorto recommending a life insuranceproduct.Term insurance

Life insurance that providescoverage for a specified period oftime. The premium will generallyincrease at each renewal. There isgenerally no cash surrender valueassociated with term insurance.Total account value

The total of all the investmentaccounts within a universal life policybefore considering surrender charges,market value adjustments andwithdrawal fees.

Universal lifeA type of permanent insurance

protection that has two components:insurance, also called the insuranceamount, and an investmentcomponent which provides the cashor total account value. It offers greaterchoice and flexibility than traditionalpermanent insurance in terms ofpaying premiums and changing theamount of the basic death benefit.However, it also requires moredecision making on the part of thepolicyowner and there are morefluctuation in the returns on theinvestment component. Universal lifealso offers choices in type of deathbenefit and cost of insurance.Whole life insurance

See permanent insurance.Withdrawals

Withdrawals may be made fromthe cash surrender values of thepolicy, but are subject to tax underthe rules set out by the CanadaCustoms and Revenue Agency. Cashwithdrawals will generally reduce thetotal death benefit. A cash withdrawalis different from a policy loan in thatno interest is charged on the amountwithdrawn and the growth of the cashsurrender value is hindered by theamount withdrawn.Yearly renewable term (YRT)insurance

Term life insurance that gives thepolicyowner the right to continuethe coverage at the end of eachyear. This renewal right continuesfor a specified number of years oruntil the insured reaches the agespecified in the contract. Also calledannually renewable term (ART)insurance. The premium willgenerally increase every year.

23

“It is a life saver. Without it, I don’tknow where I would be right now. Youhave to have life insurance.”

Anne ThususkaLondon Life client, Toronto

Great-West Life and the key design are trademarks of The Great-West Life Assurance Company. 47-1285 -10-03