PI Financial Services

Strategy: Tax Sheltered Wealth Accumulation


Most people are aware that life insurance plans offer a death benefit payout in the event that the life insured passes away. However, a little known but extremely valuable feature available with Whole Life and Universal Life permanent plans is that they provide you with the opportunity to create significant tax-sheltered wealth accumulation.

In essence, you would submit additional funding to the policy than what is required to satisfy the actual cost of insurance, and the money invested inside the plan accumulates tax-free. If you wish to access the cash inside the policy at some point in the future (i.e. to provide retirement income), you have the option of either withdrawing it or using a collateral bank loan. If you withdraw the funds, the amount of the withdrawal is fully taxable as income. However, in using a collateral bank loan, you can access this cash on a tax-free basis.


Who It Works For:

  • You are 35-50 and in high tax-bracket.
  • You have maximized your RRSP and TFSA, and want additional opportunities for tax-sheltered investments.
  • You want to leave more money to your family at death.