Life Insurance

It is true that, ”buying life insurance can be one of the most selfless acts you will ever do”.
Setting money aside, instead of spending it today, is called saving. Whole Life Insurance is exactly that: a secure and guaranteed savings account, but its primary purpose is usually designed to fulfill our savings plans if our lives are cut short, so that we do not leave this world with unfulfilled responsibilities.
For individuals who have already saved more than they need, life insurance should not be ignored. In fact, it is most often the case that investors buy more life insurance after age 65 than they ever did before.  WHY?  Because life insurance offers guaranteed income, guaranteed diversification, guaranteed creditor-protection, and fully guaranteed confidentiality with no probate fee or tax to your estate.
Some of this planning seems complicated, but we have the experience to safely and comfortably walk our clients through this process.

 

Budget 2016 Follow Up

What can wealthy Canadians do to stay wealthy?
Historically speaking,,,
When Canada was small, government was small and taxation was low.  There was no Capital Gains Tax until 1972.  There was no GST until the 80’s and income tax has come back in high gear with this first Liberal Budget.  The government is plugging every loophole and tax-planning advantage.  What is left?

Basic Life Insurance Planning:

  • Within the Canadian Income Tax Act are specific sections dealing with life insurance. It is not a Capital Asset, nor does it fit into any “Investment” box or classification.  Simply, it is Life Insurance.
  • The tax rules around life insurance have been in place with very little change for over 35 years. The investment growth inside life insurance is tax exempt.  It grows tax free for life.  On death, the full life insurance benefit is paid to the beneficiary tax free.  These are certainties within the Canadian Income Tax Act.
  • Corporate life insurance policies are treated much the same way as personal insurance. Growth is tax free and the death benefit is paid tax free to the company.  Then the money is paid out to shareholders tax free via a separate account created to pay out all death benefits less the policy’s Adjusted Cost Base (usually zero at life expectancy).  This treatment is unique to life insurance.
  • Life insurance creates liquidity. Whole Life insurance, and specifically the cash value component, is absolutely guaranteed once the dividend has been declared.  It cannot go down.  This helps make life insurance a very good source of security for immediate loans for personal emergencies and for long term investment loans.
  • Canada remains the only country in the world that still offers a true level cost, guaranteed for life, insurance policy. Canadians are among the people who live the longest in the world, so our insurance premiums are some of the lowest.
  • Canadian life insurance companies are the most stable companies in Canada. They have never failed to pay dividends, are over 100 years old, and many are in the top 100 insurance companies in the world based on size.  In short:  They are safe.
It is my belief that Whole Life Insurance, purchased in Canada, is and will remain the safest and most stable assets class that any client can own.  If you have wealth, and a percentage of that wealth is not invested in Life Insurance, there is likely a better way to invest your safest and most secure funds in your portfolio.