Money Back Insurance
Paying for life insurance can sometimes feel like paying for an intangible. In fact, that’s exactly why some people are so hesitant to buy. You’re paying for something that won’t take effect until you can’t take advantage of it. Some forms of insurance however, provide a living benefit as well as providing that essential protection your family needs.
How can you make money with Whole Life Insurance
Participating whole life insurance uses the higher premium payments as a form of investment that pays returns based on the profit that your policy makes for your insurance company. In general, the more you pay into your policy, the more you stand to receive back as a benefit in the long term. This cash benefit can be used at any time and be provided in a variety of ways, including:
- Direct cash loan, borrowing against your policy.
- Lowering your premiums that you will pay in the future.
- Receiving a higher coverage amount than was initially applied for.
Who wants to pay more for life insurance?
Participating whole life policies, allow for far more financial flexibility than other kinds of life insurance. As whole life policies remain in-force for your entire life, having the ability to change what you pay or what you receive can offer unparalleled freedom and choice.
As of 2014, RRSP contribution limits have risen to $24,270 per year. This figure is how much you can pay into your retirement plan before facing taxation. Participating whole life and RRSPs share one unique characteristic: they are both effective tax shelters. Investing into your insurance is one way to build more funds for retirement while lowering your tax bracket year to year.
Do I Need A Participating Whole Life Policy?
Participating whole life is better for some groups than others.
The most obvious is wealthier families. The higher cost of participating whole life means that lower-income families may find difficult to fund. And the benefit of contributing to your policy as a retirement and tax scheme is far greater to those with the means to max out their RRSP contributions as opposed to those who can’t.
Another demographic often missed is younger families just having kids or just starting out with a home. For young families, the ability to secure low rates for life while allowing your insurance to adapt over the years means it can provide excellent protection while avoiding the need to plan for the short-term that complicates buying insurance.
For entrepreneurs, participating whole life can create an excellent buffer for new costs, new developments in the business, and account for large growth over the years.
While participating whole life insurance is more expensive, like most things in live, you pay for what you get. Don’t discount the power of a flexible policy that can provide for your retirement. Nowhere else in finance can you find a plan that covers debt today while providing benefits tomorrow.