How life insurance work as an Investment

Updated: Aug 20, 2018

While non-registered investments are an option, the income and gains from these investments could be taxable,

which would dramatically decrease their returns.

The Insured Retirement Strategy from ivari uses a universal life (UL) insurance policy so your client can:

• Accumulate growth inside the policy, within tax-exempt limits, without paying income tax on the growth

• Have tax-deferred cash flow to supplement their retirement lifestyle

• Continue to have the added benefit that a universal life policy provides, including:

– Protection should they pass away or be diagnosed with an “occupational disability” or “critical condition disability” including the need for long term care

– Creditor protection

– Choice of interest options

– Flexibility to customize their UL policy with term life riders and a critical illness rider

An Insured Retirement Strategy works with an ivari Universal Life insurance policy.

This policy will serve two objectives:

1) Need to replace income or protect the value of an estate*;

2) To accumulate cash on a tax-deferred basis for future applications.

Once the optimal balance of these two objective are determined, the Insured Retirement Strategy can be best suited for those clients who:

• Have maximized their RRSP, TFSA and other registered investments and

are looking to shelter additional funds in a tax-efficient manner

• Have a long-term investment horizon (i.e. 10 years or more)

• Are generally in good health

• Are taxed in a higher tax bracket

• Are able to maintain a good credit rating

How much can a client borrow against their UL policy?

The lending institution will use other factors in underwriting the loan application. On approval; depending upon the interest options selected for where the policy cash value is invested; the maximum loan amount usually consider will be as follows:

a) up to 90% on fixed rate UL investment options,

b) up to 60% on variable interest options (i.e. equity-linked interest options).

Investment component

Accumulating fund

Cash surrender value (CSV)

Premium loan