Executive Summary:
Most people think of permanent life insurance as money paid when someone dies. They know it’s a great solution for paying a tax liability at death, providing an estate for loved ones or leaving a gift to a charity. But what about planning for retirement? Without careful planning, you may not have enough savings when you retire to maintain the standard of living that you’re enjoying now. Permanent life insurance provides an opportunity to receive tax-free growth inside a tax-exempt insurance policy and the ability to access that growth tax-free.
The Details:
People typically think of RRSP’s and other registered plans when they think of retirement. Many rely on these registered plans as their main source of retirement income. The problem is that the amount you can contribute to these plans is limited. This means the base amount might not be large enough to provide the retirement income you desire.
One solution is the Insured Retirement Program. It uses a permanent life insurance policy to provide you with the insurance protection you need plus a unique additional feature…access to tax-free cash during your retirement years.
Under current tax law, the cash value in a life insurance policy accumulates tax-free, up to certain limits. The insured retirement program lets you use that cash value at a point in the future. Whether you want to supplement retirement income, purchase a vacation property or go on a trip, the insured retirement program lets you use your policy’s cash value as collateral for a bank loan.
This bank loan provides the cash you desire…and you receive it tax-free. The loan doesn’t have to be repaid until the life insured dies. When the insured dies, the tax-free death benefit is used to repay the loan and the interest. Once the loan is repaid, any remaining death benefit is then paid to the policy’s beneficiary.