Some of you may be aware that permanent life insurance policies are an investment vehicle and work as a tax-shelter just like an RRSP. The main difference with life insurance is on the front end there is no tax deduction HOWEVER on the back end the tax consequences are minimal.
With investments inside a RRSP, the government mandates that you must start withdrawing from your RRSP by age 71. This means that any money withdrawn from the account is subject to Income Tax. So depending on your level of income, you could lose almost half of your investment money to tax (47%).
With Life Insurance on the other hand, there is no requirement to withdraw the funds AND generally when you do start to withdraw money from the cash value in your policy, you do it via a collateral loan. Therefore, there are minimal tax consequences and in fact the interest owed on the loan is tax deductible.
Top 7 reasons you should consider owning permanent Whole LIfe, Life Insurance:
- the cash value inside the policy grows, just like equity inside a RRSP, home, or other investment vehicle
- with a whole life policy, growth is based on Dividends from the Insurance company and will never be less than zero, this is a safe, guaranteed investment and should be a part of any portfolio
- it is an asset so the policy can be borrowed/leveraged against to support retirement, to purchase other assets, properties, businesses (similar to a reverse mortgage)
- the policy can be completely paid off in 20yrs (or earlier) just like a mortgage. After it is paid off it continues to grow indefinitely
- the policy can be cancelled and cashed out at anytime (with a RRSP there are tax consequences)
- and of course, you have life insurance coverage so if something happens to you, your family will be taken care of financially and not have to worry about selling your home or cashing out any assets (rrsps, etc).
- the money (cash value) inside of a whole life policy grows TAX-FREE and can be used to subsidize retirement with very little tax consequences
For more information, please call Desiree 778 245 2262