High net worth Canadians know that insurance is a creative tool that protects their wealth, and provides cash when needed most.
It can help you in the same way, if you take the time to understand some of the secrets the wealthy know about life insurance:
Secret #1 Life Insurance is a business tool
If you are a business owner insurance can add value to your business in 2 ways:
· Key person insurance- your business would suffer greatly should you (or a key employee) become seriously ill or suddenly die. Life insurance provides an infusion of cash that could allow your business to survive and give it the opportunity to continue should you (or a key employee) not be around for a period of time.
· Tax Free Payout of Corporate Funds: when insurance policies are owned by your corporation it creates a tax free dividend payout upon your death, allowing shareholders to receive otherwise trapped corporate funds tax free.
Secret #2 Life Insurance is an investment tool
Permanent life insurance also acts as a stable, guaranteed investment. It’s used by the wealthy as part of a diversified portfolio; all funds invested within the policy grow tax free and are paid out tax free at death. There are options in certain cases to borrow against an insurance policy for business purposes or for retirement needs.
Secret #3 Life Insurance is a financial planning tool
Many Canadians are asset rich but cash poor.
You’d be amazed at the stories I can tell you of successful professionals and business owners who passed away unexpectedly, leaving their families with debt and no cash. The new piece of equipment they just bought, the bank loan they needed, the deal they lost- timing is never good when someone gets sick or dies.
Life insurance gives your loved ones the money they need to pay off debt (business debt or mortgage debt) and to continue to have the income they need for years to come.
Want to find out more about how you can use life insurance as a creative planning tool? Contact me today!
Aviva Abraham is a group benefits and insurance advisor at Creative Planning. She has been providing healthcare solutions for self employed and business owners since 2010. You can reach her at email@example.com or 416-545-5310.