A client visits our office for a ‘get-to-know-you’ meeting. He’s looking for a way to protect his assets and perhaps take advantage of alternatives to conventional banking products. He’s done a bit of research on the Infinite Banking Concept, but he’s not sure if life insurance is the right vehicle for getting to where he wants to go.
We have a great process to help them figure it out. After a few formalities and some basic background questions, we need to ask 2 questions that will tell us whether life insurance is really right for him:
Q 1: “If something happened to you and you couldn't earn an income, would someone else be negatively affected?”
He nods yes – frowning a bit as he thinks it over.
Q 2: “Do you care?”
“Sorry, say that again?” he asks.
“If that person is negatively affected – do you care? Would you want to provide for them?”
His frown gets deeper and his face goes red. “Of course I want to make sure my family is taken care of if I get sick or if I am not here!"
With those two questions, we can tell if someone is a good fit. If you have people you care about – and they would be negatively affected if something happened to you, then the right life insurance plan can solve a lot of problems.
Who needs life insurance?
There are many reasons to get life insurance – and very often, a single individual will have plenty of good reasons to get it.
Business people. If you own your own business or are a professional with heavy responsibilities, and your organization would be seriously impacted if you aren't there, then life insurance is right for you. This is called Key Man Insurance and your accountant or lawyer should tell you to get it. If he / she hasn't, ask us about it.
Anyone with High Income. When it comes to taxes, the worst kind of income to receive is salary. You can also get taxed on capital gains and other kinds of income. Using a whole life dividend-paying insurance policy is a way to create a tax-deferred pool of money that’s accessible when you need it. It can solve the capital gains problem for your family later on.
Homeowners. If you own property and want to ensure that the people who live in your home will be able to cover mortgage payments and will be able to live there after your death, life insurance provides that security guarantee. There are some options for this so make sure you know how mortgage life insurance works before you sign all your mortgage papers at the bank.
Young Families. It is very important for young families to have the insurance discussion with a trusted advisor. You've just had a new baby and bought a home - your responsibilities and liabilities have dramatically increased! If anything happens to you know it could be a big disaster for your family. Insurance can help provide some peace of mind that the home gets paid off and your kids will have enough money to grow up and go to a good school if they choose.
Parents who Want to Leave Their Family with Something – without putting them through a giant hassle. A will might get paid out in anywhere from 6 months to two years after probate, depending on where assets lie and whether it is contested. In contrast, an insurance policy is private an the benefit gets paid out tax-free, almost immediately on the death of the policy holder. This provides money quickly, when it's needed the most.
Why Should Younger People Get Life Insurance Now?
Every year that you get older, the more expensive premiums will be. It’s also easier to get insurance when you are younger because you are younger and healthier – so it's easier to get insurance. It used to be that most folks would not even think about life or critical illness insurance until they were in their 50s, but we see more and more of our clients realizing that it makes sense to get this insurance coverage earlier, when it’s more affordable and they are able to get it.
Are you thinking about getting life insurance to take care of your family and take advantage of a wide range of benefits to your financial picture? Did your accountant, lawyer, wife, husband or parents tell you to find a good insurance advisor? Contact us today at Safe Pacific Financial and we're happy to help you.
Contact Us
At Safe Pacific Financial, we specialize in helping Canadian business owners, incorporated professionals, and investors structure life insurance for maximum wealth protection, tax savings, and business growth.
If you would like to discuss whole life insurance or investments, we’re happy to chat and see if we can be a good fit to work with you. Fill out our contact form and we will get back to you within 24 hours on business days.
Related Insights
Infinite Banking: The Truth Behind the Hype
Executive Summary The mechanics of infinite banking are completely real, borrowing against the cash value of a participating whole life policy is a legitimate strategy...
The Trapped-Cash Problem
Executive Summary Surplus profit sitting in a corporate bank or investment account is quietly taxed twice, once on the investment income at close to 50%...
Right-Sizing: Why the Best Strategy Isn't Always the Biggest or the Smallest One
Executive Summary The right strategy is the one correctly sized to what you're actually trying to accomplish, which sometimes means less than what's on the...
The Corporate Asset Your Accountant Isn't Talking About
Executive Summary A properly structured corporate-owned participating whole life policy functions less like insurance and more like a tax-sheltered fixed-income allocation on your corporate balance...
If Something Happened to You Tomorrow… Would Your Plan Actually Work?
Executive Summary: Probably not the way you think, because most business owners have the components of a plan rather than a plan designed to function...
You’re Not Paying Too Much Tax — You Just Don’t Have a Strategy
Executive Summary The tax bill that frustrates incorporated Canadians usually isn't caused by the rates, it's caused by the absence of a coordinated strategy across...
The Silent Risk in Your Portfolio
Executive Summary The silent risk is real estate concentration, where 60% to 80% of a successful Canadian's net worth sits in property that can't be...
Why High Income Isn't the Same as Financial Security
Executive Summary A high income is a resource, not a financial plan, and on its own it can hide real structural fragility behind lifestyle creep,...
Your Corporation Has Accounts You've Probably Never Seen
Executive Summary Your corporation tracks three notional accounts, the Capital Dividend Account, RDTOH, and GRIP, that never appear on a statement but directly determine how...
What Happens After You Reach Out to Safe Pacific?
Executive Summary When you reach out to Safe Pacific, a real person from our team emails you within 24 hours with a link to book...
The Protection Playbook for High-Income Employees
Here's something that surprises a lot of people. Some of the most financially fragile households we see are actually very high-income families. Not because they're...
Whole Life Insurance: The Strategy Most People Miss
Most investment portfolios are built around three pillars. You have equities, you have fixed income, and here in Canada, a lot of people have real...
