When people think about life insurance, they often picture it as something only needed to protect young families or pay off a mortgage. But what might surprise you is how many wealthy individuals continue to carry large life insurance policies.
In fact, high-net-worth individuals have taken out life insurance policies worth tens — even hundreds — of millions of dollars. Why? Because they understand something crucial: life insurance isn’t just about protection — it’s a powerful financial tool.
For the wealthy, life insurance plays a key role in managing taxes, transferring wealth efficiently, and supporting philanthropic goals. In Canada, for example, taxes on capital gains and registered accounts are triggered at death. Life insurance can be a smart, cost-effective way to cover these tax bills, preserving more of the estate for loved ones or charities.
But this strategy isn’t only for the ultra-wealthy.
If you have assets that will be taxed at death — like RRSPs, a cottage, investment properties, or an investment portfolio — life insurance can make a real difference. It can provide the cash your family will need, right when they need it, without forcing the sale of investments or property.
Life insurance also offers unique tax advantages:
- The death benefit is tax-free.
- Policies like Participating Whole Life or Universal Life grow tax-deferred and can significantly outperform other taxable investments over time.
- It can be structured to support a charitable giving strategy, creating a legacy that lives on.
Life insurance offers one of the most efficient ways to pass wealth on to your loved ones — not just for the wealthy but for everyday Canadians looking to make the most of what they leave behind.
If you’d like to explore how life insurance could fit into your financial or estate plan, let’s have a conversation. It may be one of the most impactful planning decisions you make.
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