ESTATE BOND

July 2011

Using Life Insurance to accumulate and transfer wealth

Life Insurance can be used as an effective way of accumulating and transferring wealth. An Estate Bond is a financial planning strategy that transfers non registered savings from a tax exposed investment to an exempt life insurance policy. This policy provides immediate life insurance protection as well as an investment within the policy that accumulates on a tax deferred basis. On the death of the life insured, both the death benefit and the investment component are paid tax free to the beneficiaries.

      Benefits
  • Create a large and immediate estate value
  • Take advantage of tax-sheltered growth of cash values
  • Have a tax-free maturity value at death
  • Reduce estate settlement costs and offer a potential for creditor protection if you have named and made an appropriate beneficiary designation
  • Provide liquidity if you require it.

Who can benefit?

  • Create a large and immediate estate value
  • Take advantage of tax-sheltered growth of cash values

How does it work?

 Permanent life insurance products, such as Whole Life or Universal Life, are usually used. These products allow the owner to contribute funds in excess of the amount required for the cost of insurance. These excess contributions accumulate tax-free throughout the remainder of the insured’s life. On the death of the life insured, the death benefits (including the excess contributions) are paid out tax free. Depending on which permanent product you choose, the additional funds can be deposited into investments fully managed by the insurance company or you can choose a wide choice of flexible investments such as GIC’s, Bond Funds, Index Funds or Mutual Funds that can be managed at your discretion.

If you are looking for ways to transfer wealth to the next generation and grow your estate value in a tax efficient manner, an Estate Bond strategy should be considered.

    

For more information on this strategy, or if you wish to receive our free publication Estate Bond, please contact your Richardson GMP Investment Advisor.

 


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2011

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