Whole Life Insurance and Its Importance in Estate Planning

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How do you protect the legacy you leave for your loved ones?  The answer is simple; estate planning.

 

You have taken the time to plan for your future, to make sure you have enough income for retirement, but planning shouldn’t stop there.  You should also plan for what happens next.

 

Without proper estate planning the value of your estate may be reduced significantly due to taxes, probate fees and other costs before it passes to your heirs.  Life insurance is an excellent tool to incorporate in an estate plan, offering income growth opportunities for yourself as well as passing on assets while minimizing tax implications.

 

Did you know that assets are deemed disposed of immediately before death and taxes are payable on all capital gains, RRSPs and RRIFs?

 

 

estate planning

 

Which scenario would you prefer?

 

If you avoid estate planning you can simply let your heirs deal with the looming liability and they can sell assets or take out a loan.  Unfortunately if this is the case the sentimental value of some assets may be destroyed or proceeds from the sale may be less than the asset’s fair market value.  They may have to consider borrowing the funds needed to pay final taxes and costs before they can receive anything from the estate.   Other considerations include:

 

  • Will an institution be willing to lend enough money?
  • Where will the money come from to repay the loan?
  • What will the cost of borrowing be? Including interest?

 

Do you really want to force your heirs to do this?  If you want to be proactive you can pre-fund the liability by saving up extra funds or by purchasing insurance.  If you choose to build a fund to pay final taxes and other associated costs, consider the following:

 

  • Since life expectancy is unpredictable you may not have enough time to save enough funds to cover all taxes and costs
  • Setting aside cash today may impact your current lifestyle
  • Growth on the funds may attract annual taxes during the accumulation period

 

Instead the most cost effective option is to purchase life insurance.  It is an immediate tax-free payout.  The annual cost is pennies on the dollar and the proceeds are not subject to probate if there is a named beneficiary.  Assets do not need to be sold preserving their financial and sentimental values.

 

whole life insuranceWhole Life insurance is an excellent solution for the estate planning needs outlined above.  It has the comfort of guaranteed premiums and the advantages of built-in savings and the ability to earn dividends.  Dividends can be paid out to you in cash, accumulated on deposit for future use, used to purchase additional paid up insurance or used to help pay premiums.

 

Whole life insurance offers guaranteed, reliable coverage to last your entire lifetime. It provides permanent protection you can count on and guaranteed cash values that grow over time. It makes sense.   It is an excellent choice and the most cost effective and convenient solution to meet your estate planning needs.

 

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