Search Blog
  • Alan Fustey
  • Becky Wong
  • Bert Griffin
  • Blair MacDougall
  • Blake Goldring
  • Brett Baughman
  • Camillo Lento
  • Chris Delaney
  • Cynthia Kett
  • Darren Long
  • Desmond Jordan
  • Don Shaughnessy
  • Doug Lamb
  • Ed Olkovich
  • Eva Sachs
  • Evelyn Jacks
  • Gail Bebee
  • Gerald Trites
  • Gordon Brock
  • Guy Conger
  • Guy Ward
  • Heather Phillips
  • Ian Burns
  • Ian R. Whiting
  • Ian Telfer
  • Jack Comeau
  • James Dean
  • James West
  • Jeffrey Lipton Fairmont Gloucester
  • Jim Ruta
  • Jim Yih
  • Joe White
  • Jonathan Chevreau
  • Kenneth Eng
  • Larry Weltman
  • Malvin Spooner
  • Mark Borkowski
  • Marty Gunderson
  • Michael Kavanagh
  • Monty Loree
  • Nick Papapanos
  • Norma Walton
  • Pat Bolland
  • Patrick O’Meara
  • Paul Brent
  • Peter Deeb
  • Peter Lantos
  • Riaz Mamdani
  • Richard Crenian
  • Richard Warke
  • Rick Atkinson
  • Rob Peers
  • Robert Bird
  • Robert Gignac
  • Sam Albanese
  • Stephane Ruah
  • Steve Nyvik
  • Steve Selengut
  • Tammy Johnston
  • Terry Cutler
  • Trade With Kavan
  • Trevor Parry
  • Trindent Consulting
  • Wayne Wile
  • Categories
    August 2012
    M T W T F S S
    « Jul   Sep »


    Life Insurance as an Estate Investment

    Gordon Brock

    Many people understand that permanent Life Insurance provides guaranteed estate liquidity which can be used to pay immediate last expenses and taxes as well as fund any desirable estate equalization objectives. It is not unusual to see a poorly planned estate suffer significant loss due to income tax liabilities payable at death as well as losses incurred through the forced sale of desirable assets—assets which have to be sold to create the cash needed to pay the liabilities. Permanent life insurance provides the guaranteed cash at the time it is needed—the event (death) that creates the need also creates the solution. And the proceeds of a Life Insurance policy death benefit are Income Tax Free!
    But what about permanent Life Insurance as an investment for the estate? Is paying Life Insurance premiums a good investment decision?
    A current (August 2012) survey shows us that a healthy couple aged 65 each (assume they are both non smokers) could insure themselves for ‘Joint Last to Die’ permanent Life Insurance at a stand by cost of less than 2% per annum. This cost would be guaranteed for life and the insured amount would also be guaranteed payable at the second death. The Insurance amount would be fully payable whether the second death took place several months later or 30 years (or more) later. Based on an annual stand by fee (premium) of 1.8% the effective rate of return on the premiums after 20 years would be about 9% Tax Free! After 25 years the return would be about 5.7% Tax Free. After 30 years the return would be about 3.7% Tax Free. (This compares to the current Government of Canada 30 year bond yield of about 2.33% –which is not Tax Free).
    The numbers speak for themselves. Permanent Life Insurance provides guaranteed estate liquidity protecting estate assets and it also provides an excellent immediate and long term guaranteed investment for the estate.

    The MONEY® Network