The 3 Types of People Who Buy Life Insurance

Estimated reading time: 90 seconds

Life insurance is the most effective way to make sure your family is taken care of financially.  In my experience, there are three types of people who buy life insurance:
  1. They love someone and don’t want to burden them with debts or cash flow concerns
  2. They hate the government and don’t want to pay 25-50% of their assets as estate taxes
  3. They don’t like paying lots of taxes and would prefer to grow their assets on a tax free basis, access them tax- free while alive or pass them along tax-free to their family or favourite charities.

Today’s post will focus on point #3 and how to keep more of your money.

Participating Whole Life Insurance (Par Life) has been one of the oldest and most conservative asset classes available for over 100 years.  It is often thought of as an expense because people do not understand what it can really do for them.  Par Life offers guaranteed premiums, tax free cash value growth and annual dividends which can be taken in a number of ways.  It has a long history of steady and “boring” returns.

As an example, one of the large Canadian Insurance companies has a dividend scale interest rate that has averaged close to 9% over the last 60 years with less volatility (standard deviation) than the 10 year government bond and the average 5 year GIC.

Most investment advisors recommend a portfolio diversified over different asset classes to fit your goals and risk tolerance.  Why not consider one of the oldest and most proven asset classes available to compliment your portfolio?  Consider replacing just a small percentage of your fixed income assets (eg Fixed Income-bonds, mortgages) to a participating whole life insurance policy to receive market-like returns versus low fixed income returns and lots of tax.
The cash value in these assets is also available for you in case of emergencies, opportunities or to help supplement your retirement plans because the cash values cannot decrease.  On death, the life insurance benefit and growth pass tax free to your heirs.

Par Life can be used for the same purpose for excess cash in your corporation.  You can pay the premiums with your corporate cheque book and through the use of the company’s Capital Dividend account, these assets can pass through the Corporation to your heir’s tax free as well.

The government is changing the rules on how much money can be tax sheltered in these policies and how much can be passed tax free from your corporation effective January 1st, 2017.  So, if you are interested in this strategy, you should consider exploring it right away.

Please contact us for additional information and a fuller explanation of what Par Life can do for you and your family by sending an e-mail to info@curryfinancialgroup.com or calling 1-866-445-4424.

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I look forward to continue helping you and your family.

All the best,
Joe