Tag Archives: tax-advantaged life insurance policy

Taxation of Life Insurance

Posted on: February 7th, 2013 by Peter Choma

How is Life Insurance Taxed?

Life insurance can be divided into two types: term and permanent. Term insurance has no investment component and pays out a tax-free death benefit. Generally universal life or whole-life is designed to last throughout your life time. It often has an investment component allowing you to build up cash values inside the policy in a tax-sheltered manner.

The laws regarding the taxation of life insurance in Canada are anything but straight forward and can be a complex topic; the best possible advice will come from a tax professional that can assess your own individual circumstances. The subject of taxes and life insurance are basically broken down into two main areas; the payments that are made at death,

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Are you thinking about leaving an inheritance for your children and grandchildren?

Posted on: April 5th, 2012 by Peter Choma

You’ve worked hard to achieve a degree of financial success and have set aside non-registered investment funds as an inheritance for an adult child or a grandchild. You don’t want the tax burden and probate fees to reduce the legacy you’ll leave behind. Although you’re unlikely to ever need the money yourself, you’re concerned about the safety of your investments and having access to the funds should your circumstances change. Also, you’re in a high marginal tax bracket and are frustrated with paying significant annual taxes on the growth of these assets.

Purchase a tax-advantaged permanent life insurance policy with your adult child as the life insured and the designated contingent owner. Your grandchild (the child of the life insured) is named as the beneficiary of the policy.

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