Why Whole Life Insurance In Canada?

We have a bank account in addition to other things that we're doing. So it's also the same. We have a whole life policy in addition to other things that we are doing. So when you are looking at your overall financial picture, understanding that whole life is fantastic, but it is a tool that you can use in conjunction with your investment activities. So we're providing all these advantages by having this as part of our portfolio. But. But we still need to be doing other things as well. And you just get to accelerate the results in those other things because you have control of the banking function.

Why whole life insurance? That's a question that's on everybody's lips about what is so great about whole life insurance and why should I consider that above any other product? I'm here with my colleague Jingjian Fung. I'm Liz Lamond and we're here to talk about the attributes of whole life insurance and why it makes a really great asset in your pool of assets in building your wealth. Jingjin, let's talk about. Can you define what whole life insurance is?

Whole life by the name of it is not just insured for a period of term, it's really having the insurance for your whole life. You're insured for the entire of your lifespan. And by saying that is when we pass away, we will have a death benefit goes to our beneficiaries.

Yeah. When you put the contract in place and as long as you continue to pay those premiums or have some way that the those premiums are being paid, then that policy will stay in place for the whole of your life. And while we're talking about premiums, I think that's one of the advantages of whole life insurance is that those premiums don't increase over your lifetime. So if you're to renew other types of insurance, then those premiums usually go up as we get older and closer to the likelihood of death. Whereas whole life insurance, the premium amount stays flat for the whole of our life. And we have some options as to how that premium can get paid. But certainly the amount is going to be consistent. So you're going to pay the same when you put out a contract, when you start one at say 30 or 40, it will be the same amount you pay for premiums when you're 60 or 70. If you're still choosing to pay premiums.

At that point and you're covered for your entire life for that same premium. That's really a great advantage of that.

Yes, absolutely. I think as well.

Jen.

Jen, another thing that a lot of people really like about whole life insurance is that it's private. So a lot of people like the attributes that it's an arrangement between you and the insurance company. So it's something that you can benefit from in terms of some protection of your assets in that private arrangement. Right.

Some people use it even to protect their I guess relationship if they were to say the other thing you mentioned is a unilateral contract between you and the life insurance company. Therefore it's a great general original wealth that you can change the owner and you can pass this down to your children or your desired beneficiary.

Something that people often ask is, is that death benefit tax free? And the answer is yes, it is a tax free benefit that's paid out to your beneficiaries on your passing. So that's obviously makes it very, very different equation in terms of what your family, in terms of tax, in terms of inheritance, how you can plan that to cover off any tax, other tax liabilities that may occur. So it's a very powerful tool to use in conjunction with other things that are happening in your estate. So it's something that is worth investigating to see whether that even just that component is a really good fit for you. But Jen, Jen, that's great. But often people say well it's awesome that there's a tax free death benefit, but what are the advantages while I'm living? So is there anything that I can make the most of while I'm. While I'm living? Because yes, that's going to solve those problems for my family later on. But what about me now? Because I have the need for money and the need of use of money during my lifetime. So how, how does whole life assist with that?

Yeah, I think that's most attractive. One of the most attractive points with infinite banking concept which is like we're not aiming to get the death benefit when we die after it's called a whole life insurance is really about how we get a benefit when we are al. So we have this living benefit while we are alive. We can utilize this whole life insurance as a tool to really funding and where we store our wealth when we are alive.

If we break that down a little bit, there is cash value that is growing inside the in a properly designed whole life policy and your money stays inside the policy compounding and then you have access to liquidity using the insurance company's money in the form of a policy loan. So understanding that not only are you getting the benefits of that growth that's occurring inside your policy every single day and the contractual guarantees around that growth. But you're also not giving up liquidity during that time so that you can have access to a portion of that cash value while your money continues to grow.

So the money that stays in this policy, the cash value list you just mentioned, is very safe and is inflation protected and is great saving tool compared with our checking account that has almost nothing with this environment.

One thing that we often get asked about is how does this work in conjunction with everything else I'm doing. And so a really important point I think about a whole life policy is it is not an investment, it is a tool that we're using and it's something that we're doing in addition to other things that we're doing. So we have a bank account in addition to other things that we're doing. So it's also the same, we have a whole life policy in addition to other things that we are doing. So when you are looking at your overall financial picture, understanding that whole life is fantastic, but it is a tool that you can use in conjunction with your investment activities. So we're providing all these advantages by having this as part of our portfolio, but we still need to be doing other things as well. And you just get to accelerate the results in those other things because you have control of the banking function.

There are so many great benefits and advantages with whole life insurance. I know a lot of people are more familiar with term insurance. When I look at it as more like whole life insurance. We're kind of building our house with equity that we have easy access to this fund. You know, we all need the money during our lifespan. We all have to send our kids to school, we have to purchase a car or put it down, down payment. Life happens. You know, I saw the movie up when they have this piggy and every time they have something happening in life, they have to smash that piggy bank and get access to money and your money really not growing. So with infinite banking, with a platform on whole life insurance, with a special design where you can have easy access to your asset, your wealth for your life events while you are leaving, but as well your money can continue to grow. That's just a fantastic tool that you can be using.

Understanding that if we're going to use the technical term around that, that's opportunity cost, we kind of forget about opportunity cost when we spend our money by spending cash. So we say I'm not paying any interest, but we're giving up the ability to ever earn interest on that money. So that's the cost of using that money. And understanding that is really, really important. Because when we understand that, we understand that we need to warehouse our money in a place where we're not constantly in this cycle of constantly going back to zero, because it's very, very hard to get ahead if that's the case. So understanding that you can use a tool like a whole life policy just to continue to accelerate your results, because you are able to leverage that environment where your money continues to compound while you have access to liquidity. If you would like to learn more about this process, we have lots of videos that are appearing beside and we'd love to hear your comments below about something that you found really valuable in terms of using whole life insurance for.