Life insurance is a solid foundation for any financial plan, providing protection for you and your family in the event of a disastrous situation. It is regarded as a necessary expense that hedges the risk of future financial loss.

But have you ever considered life insurance as simply another asset class within your overall investment portfolio?

What is tax-exempt insurance?

We all have the same pools of capital within which to invest our wealth - our pension, RSP, and non-registered assets, such as equities, fixed income, mutual funds and real estate. Income derived from each of these pools of capital is taxable, as is often the annual growth and any residual value upon your death.

There is, however, another pool of capital that allows for:

• tax-deferred growth, just like within your registered pool of capital
• potential for tax-free income during retirement
• tax-free distribution upon your death

This pool of capital is known as tax-exempt life insurance.

Under section 148(3) of the federal Income Tax Act, assets accumulate within a tax-exempt life insurance contract free of annual accrual taxation. When you pass away, any proceeds of the policy distributed to beneficiaries, including the initial insurance coverage and any accumulated assets, are done so on a tax-free basis, outside the scope of your estate.

Through the use of tax-exempt life insurance, you may be able to significantly enhance the value of your estate by passing along more assets than you could otherwise achieve through a purely investment-driven strategy.

To learn more about tax-exempt life insurance, please contact a life-licensed Investment Advisor or ask a life-licensed Investment Advisor to contact you.