When people think of Life insurance, they normally associate it with providing the financial support your family will need if you are no longer around to take care of them.  However, life insurance can also help you and/or estate preserve wealth, here are four examples how. 

Pay the Tax Man

Taxes are usually owed upon death for assets such as a family cottage or non-registered investments, as they are ‘deemed sold’ when the owner dies, and capital gains are realized.  The tax liability might occur when the owner of the asset dies, or when his/her spouse dies.  Since life insurance proceeds are paid at death, they provide the cash needed to pay the taxes owing; that way, your beneficiaries won’t have to sell the cottage to pay the tax man.

Fund a Charitable Gift and Trigger a Tax Receipt

Life insurance can fund a charitable donation and trigger a large tax receipt when you pass away.  You can name the charity of choice as your beneficiary, so the insurance proceeds will be paid to the charity directly, instead of into your estate.  Your estate will receive a large tax receipt to off-set taxes owing on your final tax return.

Insure Your Children to Protect the Wealth Transfer to Your Grandchildren

Afraid the kids are going to spend all the money and leave nothing for your grandchildren?  Take out a life insurance policy on your children with your grandchildren as the beneficiaries.  This is a common way to transfer wealth efficiently and effectively through the generations.  You can set it up so the premiums are fully paid up by the time you pass; this way your grandchildren aren’t stuck paying the premiums after you’re gone.

Use Life Insurance for Retirement Planning

The tax-exempt accumulation of cash in a Universal Life Insurance policy can provide you with extra money during retirement. When you retire, you can access the funds through a collateral assignment of the policy to a lending institution (put the bank as the beneficiary of the life insurance policy) in exchange for a tax-free loan to supplement your retirement income needs.

To learn more ways to use Life Insurance to create and/or your preserve wealth give me a call.

Have a great week,

Tracey

Please note: Insurance is not a business of Security Financial Services but is placed through Qualified Financial Services. MT 08-15017,2019-02-20,2021-10-01

Insurance sales are not conducted through Security Financial nor are they the business of Security Financial. Insurance sales are conducted through Qualified Financial Services (QFS), a Managing General Agency.

Products or services related to investments, investment recommendations, financial planning, retirement planning, and investment reviews are provided through our mutual fund dealer Security Financial Services and Investment Corp. 4665 Yonge Street, Suite 309, Toronto, ON M2N 0B4 t 416.964.0440