Volume 9 • 2022 • Issue 2

CDSPI was created over 60 years ago by the dental community with the sole purpose of arranging programs for the benefit of dentists who are members of CDSPI’s member associations. CDSPI is a not-for-profit organization that exclusively serves the dental community with expert advice and investment and insurance solutions. tap into the investment account at any time through taxable withdrawals. Want to supplement retirement income? You can generate it via tax-free loans, secured against the value of the policy’s investment account. The loans and interest are repaid from the permanent insurance policy’s death benefit. In the example of a $500,000 policy that grows, you could receive an additional tax-efficient income of $26,000 a year from ages 70-90, and still leave a death benefit of over $700,000 to your heirs. (Growth of the cash value is based on the insurer’s current dividend scale less 1%. Income payments are based on a bank loan rate of 6%. The death benefit is based on a life expectancy of age 90.) There are other advantages. Purchase the policy in your corporation and you’d pay for it with lower-taxed corporate income and have the added benefit of tax- sheltered growth. That also helps to preserve your small business deduction eligibility. Having a permanent insurance policy can also save your heirs a tax burden. For instance, do you have a family cottage that has been around for a few generations? Your beneficiaries can hang onto it by applying the insurance proceeds to offset your estate’s tax liability. Those tax savings can also be applied to gains on other real estate or investment properties, as well as to non-registered investments, and RRSP or RRIF assets. So permanent life insurance can be a smart estate strategy. Moreover, the insurance proceeds are distributed tax-free to your beneficiaries; no delays, and no probate/estate fees on those proceeds. Permanent insurance isn’t a secret, but it is an often- overlooked active asset, says Janmohamed. Any financial discussion around tax issues and life goals can touch on this insurance solution. “Don’t forget insurance as part of a financial plan to protect the plan and also enhance it,” Janmohamed says. “If you have that conversation with an advisor, it will pay dividends.” This information should not be considered investment, tax or legal professional advice. For specific advice about your situation, please consult a tax, accounting, legal or financial professional. To learn more about how permanent insurance can offer you protection and tax advantages, visit cdspi.com and book a meeting with an advisor at CDSPI Advisory Services Inc. 41 Issue 2 | 2022 | SupportingYour Practice