How Life Insurance can be Used as a Living Benefit

Estate Bond

• What is it?
  • A tool which increases the value of funds earmarked for your heirs.
     
• How does it work?
  • Funds have been designated to be passed onto your heirs.
     
  • These funds are deposited into an insurance contract.
     
  • Funds grow on a tax-sheltered basis in addition to the insurance death benefit.
     
  • Upon death, the proceeds are paid out to your designated beneficiary tax free.
     
  • The proceeds, as a result of tax-sheltering are in excess of the amount they would have grown to had they been invested outside the insurance policy.
     

Joint Last to Die

• What is it?
  • A tool to maximize the value of your estate asset.
     
• How does it work?
  • An insurance amount is purchased equal to your tax liability.
     
  • Upon second death, insurance pays tax liability.
     
  • Heirs can maintain the assets and are not forced to liquidate the assets to pay taxes (ie. cottage, stocks).
     
  • Insurance cost is lower on two lives vs. one life.
     

Charitable Gifting Life Insurance

• What is it?
  • An opportunity to provide a donation to a chosen charity and provide tax relief for you either today, or in the future.
     
• How does it work?
  • An insurance contract is purchased equal to your chosen donation amount.
     
  • Depending on structure, tax credits can be made either annually on the insurance premium or at death on the insurance death benefit.
     
  • Tax credits are used to reduce taxes paid.
     
  • Upon death of the insured, insurance proceeds are paid to the charity named as the beneficiary.

Insured Retirement Program

• What is it?
  • A tax-effective way to provide a future income stream.
     
• How does it work?
  • Deposits are made to an insurance contract.
     
  • Funds grow on a tax-sheltered basis.
     
  • Contract is assigned to the bank in exchange for advances.
     
  • Loan advances provide tax-free income.
     
  • Upon death, the loan is paid with tax-free proceeds.
     
  • Net insurance proceeds are then paid to named beneficiary.

Pension Maximizer

• What is it?
  • A tool to maximize the value of your pension for both you and your spouse.
     
• How does it work?
  • A 100% pension option is chosen our of your pension plan.
     
  • An insurance contract is purchased on the pensioner.
     
  • Pension income is maximized.
     
  • Insurance proceeds provide larger survivor pension.
     
  • Heirs receive the residual of the proceeds after death of second spouse, and therefore do not get excluded from pension proceeds.

RRIF Insurance

• What is it?
  • A tool to maximize the value of your registered assets left in your estate.
     
• How does it work?
  • Upon death of last spouse, Revenue Canada is entitled to tax on your registered assets.
     
  • An insurance policy is purchased for an amount equal to your tax liability.
     
  • Insurance is on a Joint Last to Die basis for cost effectiveness.
     
  • Upon second death, the insurance pays out your tax liability.
     
  • Because the insurance costs less than your liability, more assets are left in your estate for your heirs.