What is Participating Life Insurance
Today I’m going to discuss one of the oldest types of life insurance.
Participating insurance is a form of permanent insurance, so you’re covered for life.
On the other hand, premiums, which are paid monthly or annually, are often paid for a limited time, rather than for life.
Starting out, premium payments fund your policy’s cash value, which grows tax-free in a professionally managed account. Part of that money is used to pay annual insurance costs, taxes, and expenses. But often, most become cash value, which grows with an annual dividend. Those compounding policy dividends grow tax-free. And the higher cash value becomes locked-in guaranteed each year – like a one-way ratchet that protects your capital.
That capital growth allows the policy owner to progressively buy more insurance, shut off premiums, or even withdraw as cash.
Who is participating life insurance for?
Participating insurance works best for professionals and business owners that are earning peak incomes or have excess liquidity available. They can purchase a guaranteed lifelong asset during their best earning years and ensure no future cash flow hit in retirement or when their income becomes more uncertain.
It’s also an excellent tool for parents or grandparents who want to offer their children or grandchildren a solid, guaranteed, and tax-efficient financial legacy.
What are the advantages?
For one, it is a stable asset
The oldest Canadian participating life insurance accounts have a 165-year track record of paying an annual dividend. Plus, when your policy’s cash value grows, the new total is automatically guaranteed and is protected from declines, unless you use it for some other purpose.
Next, the participating insurance is flexible.
You can access your policy’s cash value in several ways: Borrow from your policy, use it as collateral for a third-party loan or withdraw cash value.
Lastly, it is a tool for advanced planning
Unity optimizes the stability and flexibility of participating life insurance policies to create advanced planning strategies customized to you, your family, or your business.
Unity is an independent advisory group, so we have access to the full market to find the best participating life insurance policy for your unique needs. Talk to an advisor about how Unity can begin helping you realize your planning goals.