Tax Exempt Life Insurance

Investing using Life Insurance is essential for any Integrated Wealth Management Strategy that seeks to both grow and protect your money.

The Benefits of Investing through Insurance

Tax-exempt life insurance offers two separate components of insurance and investments, along with providing the entire spectrum of wealth planning. These insurance solutions can help with risk management, tax and financial strategies, along with wealth transfer.

The key difference between tax-exempt life insurance and other forms of insurance (such as term insurance) is that these policies include a cash investment component.

The two main types of tax-exempt life insurance policies are Whole Life Insurance and Universal Life Insurance policies. The key differences between these two solutions centre on their flexibility and their investment objectives.


Investing through Whole Life Insurance

With whole life insurance, the insurance company sets the mix in which the investment portion of your premium is invested. The investment mix varies with the insurance company but it is typically set across bonds, equities, mortgages, and real estate. Once the asset mix has been determined, whole life insurance policies are relatively maintenance-free from then on.


Investing through Universal life Insurance

With universal life insurance, the investment component is completely separate and the policyholder can choose the investments directly. The choice typically includes a variety of domestic and foreign equities, fixed income funds, GICs, or balanced funds. The selected investment vehicles will provide the same market risks as any other investment vehicle held in RSPs and non-registered accounts. This insurance solution provides a great deal of flexibility throughout the life of the policy as policyholders can increase or decrease the amount of the premiums and the death benefit.


Choosing the Right Insurance Solution for You

As with any form of investing, the choice will depend on your investing personality along with your time horizon, tax situation, risk tolerance, and return objectives.  For these reasons, your Optimize Advisor* is ready to help you decide on the optimal tax exempt insurance solution for your particular situation.

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If you are looking for holistic advice which covers your entire financial situation, we would be keen to discuss how we could work with you and your family. An Optimize Advisor is always ready to take that step with you and design a financial solution specific to your particular goals and objectives.

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