At Allan Bush Investment Team, we use whole life insurance as an effective wealth management strategy in Canada due to its unique features and benefits. Here's a look into how it's used as part of a comprehensive wealth management plan:

What Whole Life Insurance Offers

1. Permanent Coverage:
   • Provides lifelong insurance protection, ensuring a death benefit is paid out regardless of when the policyholder passes away.
2. Cash Value Accumulation:
   • Part of the premium payments go into a cash value account, which grows over time on a tax-deferred basis.
   • The cash value can be accessed through policy loans or withdrawals.
3. Fixed Premiums:
   • Premiums are typically fixed for the life of the policy, providing predictable costs.
4. Dividends:
   • Participating whole life policies may pay dividends, which can be used to purchase additional coverage, reduce premiums, or be taken as cash.

Wealth Management Strategies

1. Tax-Deferred Growth:
   • The cash value grows on a tax-deferred basis, which means the policyholder does not pay taxes on the growth until the money is withdrawn.
   • This can be advantageous for long-term savings and wealth accumulation.
2. Tax-Free Death Benefit:
   • The death benefit is generally paid out tax-free to beneficiaries, providing a significant financial legacy without the burden of taxes.
   • This can help cover estate taxes and other liabilities, ensuring more of the estate's value is preserved for heirs.
3. Estate Planning and Wealth Transfer:
   • Whole life insurance can be an effective tool for estate planning by providing liquidity to pay estate taxes, debts, and other expenses.
   • It ensures that assets do not need to be liquidated quickly to cover these costs, preserving the estate's value.
   • It can also facilitate equal distribution of wealth among heirs, especially if the estate includes illiquid assets like real estate or a business.
4. Access to Cash Value:
   • Policyholders can borrow against the policy's cash value for various needs, such as emergencies, investment opportunities, or supplemental retirement income.
   • Loans against the policy are typically at lower interest rates than other types of borrowing and do not require credit checks.
   • Withdrawals from the cash value are generally tax-free up to the amount of premiums paid.
5. Dividend Options:
   • Dividends from participating policies can be used in several ways: purchasing paid-up additions (increasing the death benefit and cash value), reducing premiums, or taken as cash.
   • Using dividends to purchase paid-up additions can significantly enhance the policy's value over time.
6. Business Uses:
   • Whole life insurance can be used in business succession planning, key person insurance, or as a funding mechanism for buy-sell agreements.
   • It provides financial stability and assurance for the continuity of the business.
7. Charitable Giving:
   • Policyholders can use whole life insurance to make significant charitable contributions by naming a charity as the beneficiary or gifting the policy to the charity.
   • This can provide tax benefits and support philanthropic goals.

Things to Consider

1. Cost:
   • Whole life insurance premiums are higher than term insurance premiums. It's important to evaluate the affordability within the context of overall financial planning.
2. Long-Term Commitment:
   • Whole life insurance requires a long-term commitment to realize its full benefits. Policyholders should be prepared for the ongoing premium payments.
3. Policy Performance:
   • The performance of the cash value component can vary based on the insurer's performance and economic conditions. Choosing a reputable insurance company is crucial.

At Allan Bush Investment Team CIBC Private Wealth Wood Gundy Waterloo, we implement a whole life insurance wealth strategy for our clients because it offers a versatile and robust tool for wealth management. Its benefits of tax-deferred growth, tax-free death benefits, access to cash value, and flexibility in estate planning make it a valuable component of a comprehensive financial strategy. By leveraging these features, individuals can enhance their financial security, ensure efficient wealth transfer, and meet both personal and philanthropic goals. We help tailor the strategy to your specific needs, circumstances and goals and ensure you can live fully invested in life.