Riscario

Life Insurance receives special treatment in the Canadian taxation system both for individuals and private corporations.

• tax-free death benefit
  • the beneficiaries receive the death benefit tax-free
  • if the beneficiary is a corporation, the death benefit less the ACB can be paid to shareholders tax-free through the Capital Dividend Account
• tax-free investment growth
  • deposits above those used for insurance charges grow tax-free and are paid out tax-free as death benefits
  • RRSPs also give tax-free growth, but there is tax on death and minimum withdrawals are mandated
• tax-free retirement income
  • the savings in the contract (the "cash value") can be used as collateral for loans ("leveraging")
  • financial institutions treat the cash value like commercial paper and loan up to 90% of the cash value

Many individuals and businesses face financial risks related to

• taxation
• investments
• retirement
• estate

Life insurance can be used to structure many innovative solutions. Examples:

• provide tax-free retirement income
• increase cash flows over using interest for retirement income so that the capital can pass to the next generation.
• provide liquidity to pay capital gains tax on real estate (including the family cottage)
• enhance investment returns by 2-3% per year for individuals or corporations in the highest tax brackets
• transfer retained corporate earnings to next generation tax-free