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Financial Strategies
1. Affordable lifetime insurance protection. As your assets grow, obtaining affordable lifetime protection becomes essential. Yet as time passes the cost of insurance usually goes up. TD Universal Life offers you economical insurance protection, together with a tax-efficient investment vehicle. You can modify the plan as your savings or insurance needs change and borrow against the policy's cash value. It's the simple, convenient and affordable solution to your family's insurance and investment needs. Let's look at an example. David and Mary Lee both age 45 are married with two children, Trevor and Anita. Since both David and Mary have company pension plans, they are limited in what they can put into their RSPs. They could benefit from supplementing their term life insurance with individual permanent insurance protection. But they are especially interested in a tax efficient investment vehicle to put aside some additional funds for retirement. They also want to be able to access some of these funds before their retirement should the need arise. TD Universal Life offers economical cost of insurance protection, together with a tax-efficient investment vehicle. While premiums are not tax deductible, investment growth held within the policy is not taxed and the death benefit (including investment growth) is paid tax-free to the Lee's beneficiary. Add in the flexibility to modify the program as savings or insurance needs change, or borrow against the policy's cash value, and they can have the security and strong financial future their family deserves. What tax-deferred accumulation can do! Over time, tax-deferred investments in a TD Universal Life policy can dramatically outperform similar investments in a taxable vehicle. 2. Tax relief for your investment income even after you've maxed out your RSP. TD Universal Life is also a tax-deferred insurance vehicle that can be tailored to investors who have exhausted their RSP contribution limits, and want a tax-efficient investment alternative. You can choose from guaranteed rate investments or a range of other options linked to the performance of market indexes such as the TSE 300 or S&P 500. While premiums are not tax-deductible, investment growth held in the policy is not taxed and death benefits (including investment earnings) are paid tax-free to your beneficiary. Any amounts withdrawn from the policy prior to death or held in a surplus account as excess deposits are not exempt from tax. Let's look at an example. Sam Green is a 50-year-old partner in a small business who receives a substantial salary plus bonus. He plans to work until age 65 and then retire. Sam has always made the maximum contributions to his RSP but realizes that if he wants to enjoy a comfortable retirement that he will need to put additional funds aside for this purpose. He is looking for a tax efficient investment vehicle. With TD Universal Life, he can take advantage of a life insurance vehicle that can be tailored to his specific insurance and investment needs. While TD Universal Life is a life insurance policy, Sam can optimize the tax-deferred savings component. This means more of each deposit he makes goes towards building up the cash value of his policy. It offers a wide range of investment options to match his investment goals and level of risk-tolerance. He also has the ability to change investment options as well as make lump sum deposits to further enhance the cash value of his policy. 3. Ensure a full inheritance for those who matter most. Canada's tax laws can significantly erode your family's inheritance. The problem is simple. On death, government taxes and fees may apply to your assets, including your cottage, retirement savings plans and family heirlooms. Without adequate life insurance protection, these costs will reduce your estate with the potential to leave loved ones with a financial shortfall. For a small percentage of the assets held, TD Universal Life can provide the funds to cover the estimated taxes payable and ensure your full estate goes to the people it should. Let's look at an example. Joan and Ken Graves both in their mid fifties are looking forward to their retirement. They are planning on moving into a condominium and retaining the family cottage. The Graves both have RSPs and some stocks and bonds. They just recently learned that all these assets as well as the family cottage will be fully taxable at their death, some at a rate in excess of 50%. While a surviving spouse may defer tax on a transfer of capital assets, this does not eliminate it. Any remaining balance will be taxed on the death of the surviving spouse. They had planned on leaving these assets to their children and are looking for a way to preserve them for their family. As the Graves have discovered, Canada's tax laws can significantly erode a family's inheritance — depleting carefully acquired assets they've worked a lifetime to build, such as the family cottage, stocks and bonds and retirement savings plans. With a joint last-to-die TD Universal Life policy, however, the insurance proceeds can be used to cover the estimated taxes, ensuring that the Graves' full estate passes to their family. Otherwise, their family could be faced with possibly having to sell some assets or taking out a loan to pay the tax bill. By providing tax-free cash to meet this liability, their family receives everything the Graves wished for them. The following chart shows the current value of the Graves' assets and the estimated taxes due upon both their deaths.
4. Protect your business - and your livelihood.
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