Very few people know about the living benefits of life insurance. Did you know that certain life insurance can be used as an investment vehicle?
Here is another kicker! Money that grows inside the life insurance policy is TAX-FREE. Yes, you don’t pay taxes when you have a capital gain from the investments inside this policy.
There are many different life insurance providers in Canada and each has different premiums. Aaa Life Insurance agent is an independent financial broker than can help you find the best policy with the lowest premium.
What types of Life Insurances are Available in Canada?
There are two types of life insurance available: term insurance or permanent insurance plan. Both have a death benefit that will be given out to your beneficiaries if you die. That money is tax-free, but there is more behind life insurances. Consider the living benefits of life insurance.
What is term life insurance?
The term insurance policy only gives you coverage for a certain period of time, 5, 10, 15 or even 20 years. They usually contain very low premiums at younger ages. The drawback is there is no cash value inside this policy. That means there is no money that grows inside a term life insurance. When it expires, the policy is worthless.
It only gives you protection when the policy is still valid. So when you die your beneficiaries will receive a lump sump money tax-free. This is called the death benefit.
So how much death benefit do you need? It depends on your financial situation. For example, how much mortgage do you have? How much income do you earn? Ask an independent AHA Life Insurance Advisor to give you the best term life insurance.
What is so great about Permanent Life Insurance?
Permanent life insurance gives your coverage for the entire life. There are two types of permanent life insurance: Whole Life and Universal Life
Both contain cash value, either as a savings or investment component. That is money that you can access TAX-FREE while you are alive!
This cash value will grow every year and the growth rate depends on which type of permanent life insurance you have chosen.
For some people, the saving component of this life insurance might be even bigger than your RRSP contribution limit. It’s even more attractive when you can use this life insurance as a Tax Shelter
How Whole Life Insurance Can Grow Your Money as a Tax Shelter?
This type of life insurance contract provides insurance coverage of the contract holder for his or her entire life. If the contract holder dies, the insurance payout is made to the contract’s beneficiaries.
The beauty of this policy is the savings component, which accumulates a cash value. This cash value is the most attractive living benefit of whole life insurance.
Insurance companies pay out dividends into whole life insurance every year. So the cash value will grow and it’s tax-free. If you need money you can access this cash value while you are alive. How?
–> Ask AHA Life Insurance Agent
How Universal Life Insurance Can Grow Your Money Even Faster Tax-FREE?
Same as whole life insurance you will get coverage for the entire life. There is also cash value inside this policy that can grow tax-free. The biggest difference is the investment type.
Now you can select a number of different investments (stocks or bonds, as an example), based upon your own risk tolerance. The cash value can grow much faster than in whole life insurance.
How To Take the Money Out of Whole Life or Universal Life Insurance?
Please be aware that the insurance fees aren’t tax-deductible, but the cash value is tax-sheltered and it can used as an additional income.
If you draw funds through your life, there some Tax restrictions. And if you cancel the insurance policy you might have to pay tax. So before you make any changes please contact AHA Life Insurance Agent.
Who needs Life Insurance?
Here are the top reasons why people buy life insurance to protect their family or parents:
– Income protection
– Mortgage insurance
– Tax Saving Strategies
– Eliminate Capital Gains from investments
– Avoid the probates fees
– Estate Planning
– Wealth transfer to their kids or siblings
– Credit Loan Protection
Are you ready to get the Tax benefits of this type of Life Insurance?
Do you want to grow your money passively and tax-free?
Ask AHA Life Insurance Agent Here