My name is Mark Goodfield. Welcome to The Blunt Bean Counter ™, a blog that shares my thoughts on income taxes, finance and the psychology of money. I am a Chartered Professional Accountant. This blog is meant for everyone, but in particular for high net worth individuals and owners of private corporations. My posts are blunt, opinionated and even have a twist of humour/sarcasm. You've been warned. Please note the blog posts are time sensitive and subject to changes in legislation or law.

Monday, January 30, 2023

Some of the Tough Questions to ask When Considering a Permanent Life Insurance Policy - Podcast and Blog

On December 12th, I posted a blog on Permanent Life Insurance for High-Net-Worth Individuals and Corporate Business Owners. This blog was based on a podcast on which I was a panelist. In the blog, I expanded on the podcast discussion, to review in greater detail what exactly is permanent insurance and why you may wish to use permanent insurance for estate planning or asset diversification purposes.

I noted in the post, that we intended to have a follow-up podcast on some of the hard questions to ask when you are considering entering into a permanent life insurance policy. That podcast is now available here.

Both podcasts were moderated by Simon Kay of IPS Insurance (email: Simon specializes in Life Insurance for HNW individuals and corporate business owners and is the pioneer of Private Underwriting. Jay Hershfield was my fellow panelist on both podcasts. Jay is a highly regarded tax and estate specialist with an insurance expertise and is currently a director with Scotia Wealth Management.

Some of the tough questions we covered in this podcast include:
  • Are there any income tax rules that make the payment of a tax-free capital dividend not effectively 100% tax-free to the final estate?
  • If a permanent policy has a cash surrender value (“CSV”), are there any circumstances the CSV can increase the value of shares on death, thereby increasing the estate’s tax liability?
  • Can a change in dividend scale affect future premiums or policy values?
  • How can your children’s plans for your Holdco upon the passing of the last surviving parent affect your tax planning?
  • What are the risks and advantages of leveraged insurance?
  • If you are younger married person, should your policy be a last-to-die policy?
If you are considering purchasing a permanent life insurance policy or currently reviewing a proposal, I would suggest this podcast is a must listen. Personally, I do not recall reading an article or listening to a podcast that discusses these hard questions in such detail.

This site provides general information on various tax issues and other matters. The information is not intended to constitute professional advice and may not be appropriate for a specific individual or fact situation. It is written by the author solely in their personal capacity and cannot be attributed to the accounting firm with which they are affiliated. It is not intended to constitute professional advice, and neither the author nor the firm with which the author is associated shall accept any liability in respect of any reliance on the information contained herein. Readers should always consult with their professional advisors in respect of their particular situation. Please note the blog post is time sensitive and subject to changes in legislation or law.

No comments:

Post a Comment