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Interest Deductibility for Life Insurance Strategies

Keep You Cottage Preserve Your Wealth Provide a Legacy Lower Your Tax Bill
Customized Insurance Protect Your Savings Loan Into Income Minimize Taxes
Permanent Protection Tax Efficient Inheritance Supplemental Income
Term Free Income Save $ On Your Loan Lower Volatility

How Can you Turn a Loan into a Source of Income?

 Imagine a strategy that will turn an investment loan from a liability into an asset while at the same time reducing your insurance costs.

Sounds too good to be true? I have just such a strategy. It is an innovative concept you can use with a Universal Life (UL) policy which is less risky, easier to implement and easier to unwind than a traditional investment loan.

How does it work?

The object of this strategy is to maximize a UL investment account so that it will provide future collateral value for policy loans. The first step is to make at least one deposit of $25,000 or more to a Universal Life contract. After the first deposit is made, you can start borrowing back the deposits through annual policy loans (one per year).

The amount that can be borrowed each year is limited by regulation, however over time, depending on the amount deposited into the policy, you should be able to borrow back a significant portion of your deposits. You can use the borrowed funds to purchase other investments, or to invest back into your business.

The Investor Plus strategy uses the combination of loan interest deductibility provisions contained in the Income Tax Act and interest credited to a special Collateral Investment Account to create an after-tax advantage which turns the policy loan into a source of income.

This income is then used to lower the costs of insurance. Let’s go into a little more detail to explain how this works.

The Benefits of Interest Deductibility

The Income Tax Act allows those who borrow money for the purpose of investing to deduct the interest paid from their income. You will be charged 10% on your policy loan. If the borrowed money is used to purchase additional investments, this interest will be tax deductible, leaving you with a much lower loan rate once the deduction is taken into account. This loan rate is offset by the interest credited to the Collateral Investment Account, which currently stands around 8%, creating an after-tax advantage.

If the loan interest is repaid each year the loan balance remains unchanged. This arrangement can be left in place for the remainder of your lifetime, or the loan can be repaid at any time without penalty.

Free Insurnce quotes over the PhoneThis strategy provides insurance at much lower cost by allowing you to earn interest by borrowing your own capital.

For more information on this and other wealth management strategies, give me a call at
1-877-628-5762.

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