Apart from market performance, tax is the single largest factor not only eroding our pools of capital but also the size of them. The income from your non-registered savings, specifically, interest, is exposed to ongoing taxation. While the income generated within your registered plans grows on a tax-deferred basis, the income is taxable when withdrawn.

You are able to use another pool of capital that also provide substantial tax benefits, such as tax-sheltered growth, tax-free income, and a tax-free benefit for your beneficiaries. This pool is called tax-exempt life insurance. As with your RSP, your contributions in a tax-exempt life insurance policy accumulate without exposure to taxation; access to the pool may be achieved on a tax-preferred basis.

Individual Wealth Management Strategies

Maximize Your Estate

When you have specific assets that you intend to pass on to the next generation, you benefit from the two key tax advantages of tax-exempt life insurance. Savings are sheltered from tax, and the entire value of the policy – including the insurance and investment components – are received tax-free by your beneficiaries.

Supplement Your Retirement Income

The savings you accumulate in a tax-exempt life insurance policy can be used to supplement your retirement income, either through withdrawals or a tax-free loan program.

Preserve Your Estate

The assets your heirs will inherit also come with a significant tax bill. Capital gains tax is payable on such assets as non-registered investments and the family cottage, and almost half of the value of your RRSP or Registered Retirement Income Fund (RRIF) will be paid in income taxes. Tax-exempt life insurance can provide beneficiaries with an insurance benefit that offsets these taxes, leaving the estate intact.

Leave a Legacy to a Charity

You can leave a larger charitable gift with tax-exempt life insurance than through other means, thanks to tax-sheltered growth and a tax-free payout to the charity. In addition, you receive tax advantages – either by reducing your tax annually, or providing tax relief to your estate.