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Life insurance has unlimited tactical financial uses.
Life Insurance includes cash benefit payouts arising from personal life insurance, disability insurance, group life and group disability insurance; and income from annuity payments, which together have risen to approximately 40 billion dollars per year in the first decade of the new millennium.
For a person running a business, a disability insurance policy can replace up to 75% or more of the value of a disabled person’s normal working paycheque.
“Life insurance is the first foundation of wealth preservation.”
Personally owned individual life and/or disability insurance can:
Pay off a home mortgage if the family breadwinner dies.
Pay debts and taxes accrued in larger estates leaving heirs with financial stability.
Help small businesses using agreements pass the baton to new leaders.
Fund key-man insurance to replace a leader in a small business.
Help family businesses and farms stay in the family through succession planning while passing wealth (and paying off liabilities) to the next generation.
Pay off capital gains taxes on second properties such as a cottage.
Cover taxes due when remaining Registered Retirement Savings Plan (RRSP) or Registered Retirement Income Fund (RRIF) holdings.
Pay off large capital gains on investments at home and abroad.
Equalize estates divided amongst siblings whose parents own significant business assets, where some work outside the firm.
The use of life insurance is increasingly creative the more wealth preservation becomes necessary and can assist in this important strategic area of fiscal protection. It can pass substantial sums of cash to future generations using techniques such as estate bonds.
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Commissions, trailing commissions, management fees and expenses all may be
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Life Insurance and Segregated Funds Disclaimer
Life Insurance policies vary according to contract terms. Please read any
Life Insurance policy contract provided, or the segregated fund summary
information folder prospectus before the time of purchase. Full details of
coverage, including limitations and exclusions that apply, are set out in
the policy of insurance. Commissions, trailing commissions, management fees
and expenses may be associated with segregated fund investments which may
not be guaranteed and their market value changes daily and past performance
is not indicative of future results. A description of the key features of a
life insurance policy, a segregated fund; and any applicable individual
variable annuity contract is contained in information provided by the
company from which it is purchased. Talk to your advisor before making any
financial decision. For specific situations, advice should be obtained from
the appropriate legal, accounting, tax or other professional advisors. The
information provided is accurate to the best of our knowledge as of the date
of publication and is general in nature, intended for educational purposes
only, and should not be relied upon as a substitute for advice in any
specific situation. For specific situations, advice should be obtained from
the appropriate legal, accounting, tax or other professional advisors.
Rules and their interpretation may change, affecting the accuracy of the
information.
