What is a Participating Whole Life Insurance Policy?
We have a lot of videos about how we use this policy in the to become your own bank and this infinite banking strategy
But you may not know what a participating, whole life insurance is.
What are the types of Life Insurance?
Participating whole life insurance is a type of permanent life insurance.
Now there are 2 types of life insurance - permanent life insurance and term life insurance.
Term life insurance is only for a certain amount of time, they would call it a term 10, term 20, etc. For a term of that many years.
There is also Universal life insurance which is a type of permanent life insurance as well.
Similar to whole life, it covers you until you die but the premium rates can fluctuate and there’s more moving parts which can lead to higher risk compared to whole life.
Now, participating whole life insurance provides you with guaranteed coverage for your entire life as long as you pay the premiums.
You can even set it up to pay for a certain period and then stop.
You can do Pay 10 for 10 years or Pay 20 for 20 year or you can put the policy in offset – there's some flexibility.
With whole life insurance Your Premiums will stay the same for the duration of the policy, so as you get older or experience health issues the cost doesn’t change.
In addition to the insurance protection, it comes with a tax-advantaged investment component as well.
You can build a large cash value inside the whole life policy which can grow your life insurance amount.
Benefits of a Participating Whole life Policy
The main one being the death benefit when you pass. The life insurance pays out tax free and privately to your beneficiaries.
There’s also annual vesting in which when the policy dividends are used to purchase additional paid-up insurance in your policy, this forms a new larger cash value “floor”.
Once those dividends are vested they are guaranteed and your cash value can never go down.
Another big benefit is that your policy cash values and dividends grow with a huge tax advantage. The cash value grows with the dividend tax deferred until you withdraw.
But we show you how to use your cash values, and never withdraw so that taxable event never occurs.
You can essentially grow your cash values with the dividend compounded inside the policy for your entire lifetime tax-free.
And the big one that we talk about a lot when it comes to using the infinite banking concept, is that you have access to that accumulated cash value of your policy at any time.
There’s multiple ways you can access your cash value at anytime. You can take a policy loan, you can withdraw cash or use your policy as collateral for guaranteed lines of credit at a bank.
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.
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