Universal Life (UL) insurance has three key advantages
Tax-deferred growth, potentially permanently
Tax-free retirement income through leveraging
Tax-free death benefit
Unfortunately, most Canadians are unaware or sceptical. There's a widespread belief that it’s better to buy-term-and-invest-the-difference. Affluent Canadians take advantage of UL with the endorsement of their accountants.Buy Term and Invest the DifferenceThis seems like a great idea. Term insurance is cheaper than permanent insurance. So there’s more money to invest outside. Yet astute investors like Warren Buffett buy permanent insurance, especially UL.Why is term insurance cheaper? Because it’s worth less! Coverage expires before most people do. So term insurance is well-suited for folks with young families and debts like mortgages. Term insurance is used for estate creation by people with little money. They buy term but don’t have money to “invest the difference”. They probably have unused contribution room in their RRSPs.
Life insurance was created to be an instant estate in the event of the premature death of the breadwinner. --- Herb Perone
In contrast, permanent insurance is used for estate preservation and tax planning by people with money.The Math of Compounding
“The most powerful force in the universe is compound interest.” --- Albert Einstein
Tax cripples investment growth. Conventional investments earn
interest (taxed at 46.41% in Ontario)
dividends (taxed at 24.64% or 31.34%) or
capital gains (taxed at 23.20%)
(the above figures may be outdated consult current tax year)
As with an RRSP, the tax rate on growth inside UL is 0% until withdrawals are made (then taxed your marginal tax rate). Tax deferred is tax saved --- a huge benefit.Here’s a simple example that shows the consequences of tax: What does $1 growing at 100% per year become after 20 years? $1,048,576. Suppose growth is taxed at 35%. The after-tax accumulation shrinks to a minuscule $22,371. With sheltering, tax is applied to the ending accumulated value, giving $681,574. For the math, see the table in $1,000,000 After Taxes on Investment Growth. For another example, read Do You Understand Compound Interest?, which has a live calculator
Tax-deferred Growth
You saw the power of tax-deferred growth above.UL lets you make deposits well above the RRSP contribution limits (the maximum is limited by the death benefit, which you select). Because withdrawals are not mandated, the savings can be paid out as part of the tax-free death benefit.Tax-deferred growth has another advantage. Insurance charges are partially paid by investment growth that was never taxed --- the government helps pay your premiums. This can't happen with term insurance because there's no tax-favoured savings elementTax-free Retirement IncomeIf you need retirement income, you have the option of getting tax-free income by using the savings as collateral for a bank loan. You can skip the loan payments and have the loan repaid with the tax-free death benefit.BonusIf you’re accumulating large sums, do you want to risk losing it to creditors? When properly-structured, life insurance can be creditor-protected.The advantages of universal life insurance lead to many creative strategies
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Life Insurance Products I Offer
Life Insurance
Life insurance is essential to all good planning—whether it be to protect your family against a sudden loss of income, insure a key company employee or plan your estate. We have developed a variety of products to meet your specific needs and your financial situation.
Universal Life Insurance
Obtain life insurance coverage and accumulate additional tax-sheltered sums.
Adapt your financial program to your changing needs.
Term Insurance
Enjoy affordable financial security for a defined period.
10 years, 15 years, 20 years, 30 years or 100 years
Permanent Life Insurance
Obtain enhanced financial protection with guaranteed cash surrender values and guaranteed premiums.
Life insurance is essential to all good planning—whether it be to protect your family against a sudden loss of income, insure a key company employee or plan your estate. We have developed a variety of products to meet your specific needs and your financial situation.
Universal Life Insurance
Obtain life insurance coverage and accumulate additional tax-sheltered sums.
Adapt your financial program to your changing needs.
Term Insurance
Enjoy affordable financial security for a defined period.
10 years, 15 years, 20 years, 30 years or 100 years
Permanent Life Insurance
Obtain enhanced financial protection with guaranteed cash surrender values and guaranteed premiums.
Critical Illness Insurance Plans I Offer
Critical Illness Insurance provides you with a lump sum payment after a critical illness is diagnosed. As a result, you can devote 100% of your energies to your recovery, without worrying about the financial impacts of the illness.
Who Should Consider Critical Illness Insurance?
Anyone who wishes to be protected against financial concerns resulting from a critical illness:
-persons who would like to obtain specific medical treatments;
-parents who would have to temporarily leave their jobs to devote themselves to the recovery of their child;
-persons who would like to have home nursing care or to go on a trip to assist in their recovery;
-business owners or self-employed workers who would have to compensate for the loss of productivity or clients after an illness.
Features and Advantages of Owning a Critical Illness Plan
You obtain a tax-free lump sum payment after a diagnosis of a critical illness. This payment may be used in any way you wish, without restriction.
Your premiums and protections are guaranteed renewable every 10 years or level up to the age of 75 years or for your lifetime. Depending on your product choice.
You can obtain protection of between $10,000 and $2 million.
You may be reimbursed all premiums in the event of the insured's death if the insured was not entitled to payment of the Critical Illness benefit.
You may surrender your insurance and obtain a refund of your premiums.*
Additional benefits are available.
You may insure up to nine persons under the same contract.
*Certain conditions apply.
Who Should Consider Critical Illness Insurance?
Anyone who wishes to be protected against financial concerns resulting from a critical illness:
-persons who would like to obtain specific medical treatments;
-parents who would have to temporarily leave their jobs to devote themselves to the recovery of their child;
-persons who would like to have home nursing care or to go on a trip to assist in their recovery;
-business owners or self-employed workers who would have to compensate for the loss of productivity or clients after an illness.
Features and Advantages of Owning a Critical Illness Plan
You obtain a tax-free lump sum payment after a diagnosis of a critical illness. This payment may be used in any way you wish, without restriction.
Your premiums and protections are guaranteed renewable every 10 years or level up to the age of 75 years or for your lifetime. Depending on your product choice.
You can obtain protection of between $10,000 and $2 million.
You may be reimbursed all premiums in the event of the insured's death if the insured was not entitled to payment of the Critical Illness benefit.
You may surrender your insurance and obtain a refund of your premiums.*
Additional benefits are available.
You may insure up to nine persons under the same contract.
*Certain conditions apply.
Health Insurance Plans I Offer
Flexcare® & FollowMe™
If you are not covered by a group health plan or not satisfied with the health coverage you have today, the Flexcare® health and dental plan may be the answer for you.
Flexcare is designed to fill the gaps left in your government health insurance plan. Whether your focus is prescription drugs, dental care, or a combination of both, Flexcare offers a selection of health plans and levels of coverage from which you can choose: DrugPlus™, DentalPlus™ and ComboPlus™.
Worried about losing your group health and dental benefits? Concerned about the many medical expenses you’ll have to start paying for out-of-pocket because of the increasing gaps in your provincial health insurance coverage?
The FollowMe™ health and dental plan can give you that security. With four different levels of affordable health insurance coverage to choose from, you’re certain to find the plan that meets your specific needs and budget.
