This article is sponsored by Donsky & Donsky Wealth Management Inc. Find out more about this strategy and other ways to minimize your taxes — book a free no obligation consultation with a Donsky & Donsky Wealth Management Inc. advisor today.
Maybe you aren’t thinking about life insurance, but you might be if you knew having corporately owned life insurance could actually help you grow and preserve your wealth, tax effectively.
Here’s how it works: let’s say you have retained profits, either from your business or investments, in your corporation. That’s great! But there’s a problem: those profits are tax-exposed - up to 50.17% on any gains and 47.74% when distributed as a dividend.
The Solution: If you invest in a corporate owned life insurance policy, you are moving taxable assets into a tax-exempt solution. This is a major financial win which allows you to protect and grow your wealth, enjoy tax deductions, and reap the following benefits:
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Your retained earnings will grow tax-free within the policy and avoid 50.17% tax on gains.
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Your funds can be accessed tax-free while your policy continues to grow (even after you stop funding the policy).
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And when you pass away, the proceeds of the policy can be paid out to your estate tax-free through a capital dividend.
A common misconception is that all the value of your policy is locked away during your lifetime — this is not the case.
A corporate owned life insurance policy is a win-win, it actually gives you access to your money, as needed, throughout your life as well.
That’s because tax exempt Permanent Cash Value Life Insurance has an investment component with guaranteed growth, and you can access your money while alive, to use however you wish, in three ways.
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Take out a policy loan from the insurance company.
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Use your insurance policy as collateral for a loan from most banks.
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Make a policy withdrawal
Not only does having a corporate owned life insurance policy provide protection over the course of your life, but it can also reduce your tax liability, grow and protect the value of your estate, enhance your philanthropic giving and provide flexible access to your hard earned income during your lifetime.
This article is sponsored by Donsky & Donsky Wealth Management Inc. Find out more about this strategy and other ways to minimize your taxes — book a free no obligation consultation with a Donsky & Donsky Wealth Management Inc. advisor today.