Saving money for your children or grandchildren is smart financial planning. A key requirement is a solution that offers access to money when it is needed. Participating life insurance provides permanent life insurance protection with a cash value component that can grow tax-advantaged inside the policy. This can be accessed once, or several times during your child’s or grandchild’s lifetime.
Participating life insurance pays out an annual dividend. This dividend grows tax-free and has the ability to accumulate significantly, especially at current dividend scales available. The favourable taxation law for tax-exempt investments within an insurance policy allows for this strategy to work.
Participating life insurance can provide the following:
Savings plan alternative that offers stability, security and growth of assets.
- Savings plan alternative that offers stability, security and growth of assets.
- Ability to access money when needed.
- Favourable taxation.
- Locking in insurability early on when your child or grandchild is healthy.
- It’s a great complement to RESP’s.
A tax-free rollover is available when the transfer of a life insurance policy is from a living parent (or grandparent) to a child (or grandchild) of the existing policy owner, and a child (or grandchild) is the only life insured. Any taxable income from subsequent dispositions is taxable to the original policy owner (the parent or grandparent) if the new policy owner is under 18 when the disposition occurs. A tax-free rollover is also available on a transfer due to the death of the deceased parent (or grandparent) to a child (or grandchild) of the existing policy owner who is the contingent owner and the only life insured.