Volume 9 • 2022 • Issue 2

Make Life Insurance an Active Asset “You’re not just protecting an asset. You’re building one too. You can do both at the same time,” says Shan Janmohamed, an Investment Planning Advisor at CDSPI Advisory Services Inc. Who’s the ideal candidate for permanent insurance? Anyone who has met their primary financial goals, and who is now looking for a flexible diversification vehicle. It’s not a matter of age, but of the stage. Consider a scenario where the mortgage on your home is paid off, you’ve maxed out your RRSP and TFSA allowances, and you have money growing in your professional corporation. You may still have insurance needs, but you’re also seeking a wealth-building tool that provides multiple benefits and flexibility. When dentists are looking at life insurance, it’s prudent to look at two questions: what if , and when . Michael Tyler, an Investment Planning Advisor for CDSPI Advisory Services Inc., calls term policies “what if” insurance. What happens if I die too soon? How will my family’s needs be met? That’s vital to address. Later come the “when” questions. When I retire, how will I manage my income? When I die, how will my beneficiaries deal with a tax burden? Permanent insurance provides a death benefit to handle the “what if” questions, and also grows in value to address the “when” questions. Policyholders build wealth through the tax-sheltered growth of an investment component. That complements the death benefit, which is paid out tax-free. Let’s say you have excess cash and buy a $500,000 permanent life insurance policy at age 50. Premiums will be about $35,000 per year for only 10 years. So, by age 60, your policy is paid up. Unlike term insurance, you get to keep the policy for life. Because the policy continues to grow, in this case the death benefit will increase to over $850,000 by age 70 (based on the insurer’s current dividend scale less 1%). Better yet, you don’t have to die to access the value built up in permanent insurance. Need cash for your children’s education or another property? You can Life insurance is often viewed as a passive asset. You purchase it and down the road, your beneficiaries get the payout. That’s true with term insurance, which plays a valuable but specific role. Life insurance can serve other goals too, as in permanent life policies. Universal and whole life combine typical insurance coverage with tax-advantaged savings and investment components 40 | 2022 | Issue 2