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LIFE INSURANCE
Universal Life
Maximize your
retirement income
with a tax-sheltered
financial vehicle
The situation
An effective solution
The Insured Retirement financial
strategy is a very effective solution.
Once it becomes part of your financial
planning process, this strategy will
maximize your retirement savings,
your retirement income and the value
of your estate.
This concept uses a flexible,
tax-sheltered financial vehicle:
a Universal Life policy
Your current financial position affords you a comfortable lifestyle, and
you’d like to maintain this same lifestyle when you retire. You wish you
could contribute more than the maximum to your RRSPs, or to another
tax-sheltered vehicle.
The problem
Because of the systematic taxation applied to traditional investments like
GICs* and mutual funds, these types of investments are not tax-effective.
During the accumulation period, these investments generate taxable
investment income, which considerably slows down your accumulation of
retirement savings. So during retirement, your income is not optimized.
*Guaranteed Investment Certificates
The insured retirement financial strategy in 4 steps
Step 1: Implementation
— The accumulation fund therefore gives you access to
non-taxable retirement income!
— You take out a Universal Life insurance policy.
— You keep your investments for several more years, and they
continue to grow tax-free in order to increase your additional
non-taxable retirement income!
— You are the insured, and you can also use joint coverage to
reduce the costs.
— You are the policyowner, and you can designate the
beneficiaries of your choice.
— You use the contract to make investments over and above your
registered retirement savings.
— With the help of your advisor, you determine the premium
payment period, how much money you need to achieve your
financial retirement goals and how much coverage you want.
— You choose from a variety of excellent investment options:
Market Index Accounts, Active Management Accounts,
Diversified Investment Portfolios and Guaranteed Interest
Accounts. Some of these options even offer a death benefit
of up to 100%.
Step 2: Accumulation Period
— A Universal Life insurance policy offers a significant return
potential on investments.
— The investments accumulate tax-free because the tax on the
investment income is deferred.
About collateral loans
The credit terms are not established when you take out the
insurance, but when you officially apply for the loan. You then
choose the banking institution you wish to use, and this institution
establishes the rules and conditions that will apply to the
leveraging, the capitalization of accrued interest on the loans and
the specific repayment terms. As a result, the conditions may
evolve over time based on periodic changes to the institution’s
lending policies. Under certain conditions, you could obtain loans
that vary between 50% and 90% of the cash surrender value of the
contract.
Step 4: Repayment Period
— The death benefit is made up of the following 2 components:
— The face amount
— The total value of the accumulation fund, including returns
that have never been taxed!
— The amounts owed to the financial institution are not repaid
until death, using the death benefit.
Step 3: Payout Period During Retirement
(If the loan had to be repaid during the insured’s lifetime using the contract’s
— You access the value of your accumulated assets by borrowing
the amount of money you wish to receive from a financial
institution of your choice.
— The amount left over after repaying the loan is then paid to your
heirs tax-free, thereby increasing the value of your estate.
accumulation fund, there could be considerable tax consequences, which
should be discussed with your advisor.)
— In exchange, you assign your insurance policy’s accumulation
fund as collateral to the lending institution. Because this
strategy uses the concept of leveraging, it is best suited to
investors with superior finance and investment knowledge.
End Result
The Insured Retirement financial strategy can substantially increase the value of your investment portfolio, boost your retirement
income and maximize the value of your estate.
Talk to your advisor about how this strategy can work for you.
iA Financial Group is a business name and trademark of
Industrial Alliance Insurance and Financial Services Inc.
ia.ca
F13-642A(16-07)
Find out more today!