Why would the wealthy buy a product when some already have millions of dollars in their net worth? Let’s start by distinguishing between the two types of life insurance.
Term insurance works best for finite debt management e.g. bank loans for a 5 year term, mortgage, or credit line. It usually renews every 5, 10, or 20 years at a higher rate, and most policies expire at age 85. There is no cash value or equity; only a death benefit, and no living benefits.
Permanent insurance, (e.g. Whole life or Universal life), have rates which are, in most cases, guaranteed for life. In permanent insurance is where the joys of life insurance really start to take shape.
Charitable Giving & Life Insurance
Planned giving using life insurance is for those who have achieved a degree of financial success, a desire to support a charitable organization, or an interest in off-setting current or future tax obligations. Charitable giving allows you to assist your favorite charitable organization in a significant way.
You can conserve the value of your estate and still allow you to benefit your favorite charity. It is a tax-advantaged insurance program that allows you to accumulate growth inside a permanent life insurance policy, within certain legislative limits, without paying income tax on the growth. Cash withdrawals are subject to taxation based on the rates and rules in effect at the time you withdraw funds. The death benefit is paid to your beneficiaries of choice tax-free upon death.
Planned giving using life insurance allows you to decide how your estate will be distributed. You have the option to distribute your assets to two of the following: your children/ grandchildren, your favorite charity, or the Taxman. Consider this:
FIND JOY WITH CHARITABLE GIVING
The Joyful Living Benefits of Life Insurance
Many Canadians look at life insurance and see the sadness of having to collect on the death benefits yet few truly understand the great joyful living benefits. The ones that do, as co-incidence would have it, are in the top 20% of income earners in Canada. The biggest purchasers of life insurance are the wealthy.