250-953-2307You Establish a Permanent Life Insurance Policy
A properly structured permanent life insurance policy is established with an appropriate level of insurance protection and funded over a long term time horizon.
Insured Retirement
Strategy
Insured Retirement Strategy
Build Tax Advantaged Wealth Today, Create Additional Retirement Cash Flow Tomorrow
For successful individuals who have already built substantial retirement savings, the challenge is often no longer simply how to save more. The more important question becomes how to build additional wealth efficiently while preserving more for the future.
Once RRSP and TFSA opportunities have been maximized, additional personal savings are generally invested in non-registered accounts where interest, dividends and realized capital gains may be taxed each year as income is earned.
An Insured Retirement Strategy offers another approach. By combining permanent life insurance with long term wealth accumulation and future borrowing, the strategy can provide life insurance protection today, tax advantaged growth within the policy, potential access to retirement cash flow, and an estate benefit for the people you ultimately want to protect.
Why Consider an Insured Retirement Strategy?
- Traditional retirement vehicles remain important. An Insured Retirement Strategy is generally not intended to replace RRSPs, TFSAs, pensions or conventional investments.
- Instead, it can become an additional planning layer for individuals who have surplus cash flow and are looking for another tax efficient way to build long term wealth.
- The strategy is particularly attractive when there is also a genuine need or desire for permanent life insurance, because one asset can potentially serve both retirement and estate planning objectives.
How the Strategy Works
You Build Value Within the Policy
In addition to providing life insurance protection, the policy can accumulate value over time. Subject to Canadian tax rules governing exempt life insurance policies, growth within the policy can occur on a tax advantaged basis.
The Policy Becomes a Significant Financial Asset
Over time, the accumulated cash value can become a meaningful part of your overall financial position.
Use the Policy as Collateral During Retirement
Later in life, rather than surrendering the policy and withdrawing its value directly, the policy may be assigned as collateral for borrowing from a third party financial institution.
Supplement Your Retirement Cash Flow
The borrowed funds can be used to supplement other sources of retirement income, creating additional retirement cash flow.
Preserve an Estate Benefit
At death, the life insurance proceeds are paid to the designated beneficiary. Any outstanding borrowing secured by the policy would generally need to be repaid.
One Strategy, Several Objectives
- Build additional long term wealth after maximizing traditional registered savings opportunities
- Accumulate value on a tax advantaged basis within an exempt life insurance policy
- Diversify retirement assets beyond RRSPs, TFSAs and conventional investments
- Create potential access to future retirement liquidity through third party borrowing
- Maintain permanent life insurance protection
- Reduce the need to liquidate other assets solely to generate retirement cash flow
- Provide estate liquidity for family, beneficiaries or charitable objectives
Who Should Consider an Insured Retirement Strategy?
This strategy is not intended for everyone. It is generally most appropriate for individuals who:
- Have strong and consistent personal cash flow
- Have already maximized, or are consistently maximizing, their RRSP and TFSA opportunities
- Have a long term investment horizon
- Have a need or desire for permanent life insurance
- Want to accumulate additional assets for retirement
- Expect to have assets that are unlikely to spend in their lifetime
- Want to leave a meaningful estate to family, beneficiaries or charity
Why Planning Matters
An Insured Retirement Strategy is not simply about purchasing permanent life insurance and borrowing against it later. The outcome depends heavily on how the strategy is designed from the beginning, important considerations include:
- The amount you contribute and how long you plan to fund the policy
- The type and amount of permanent life insurance selected
- The balance between insurance protection and long term accumulation
- The policy's projected and actual cash values
- When borrowing may become appropriate
- Future lender requirements and available loan to value ratios
- Interest rates and the cost of borrowing
- Your other retirement cash flow sources
- How much retirement cash flow you actually require
- The amount of insurance benefit you want to preserve for your estate
Policy values are not the only variable. Interest rates, lender requirements, tax rules and personal circumstances can change over time. A sound strategy should therefore be designed to remain viable under a range of assumptions rather than relying solely on the most attractive illustration.
Insured Retirement Planning With InsureBizz
At InsureBizz Financial Inc., we look beyond the insurance policy itself. We begin by examining your existing retirement assets, available cash flow, tax position, future income needs, insurance requirements and estate objectives. We can then model different funding levels and policy structures to determine whether an Insured Retirement Strategy provides a meaningful advantage as part of your overall retirement plan.
Retirement planning is not simply about accumulating the largest possible account balance. It is about determining how efficiently your assets can grow, how effectively you can access them, and what remains for the people and causes that matter to you.
Contact InsureBizz Financial Inc. to explore whether an Insured Retirement Strategy should form part of your retirement and estate planning.