The Advantages And Disadvantages Of Owning Participating Whole Life Insurance

How Whole Life Insurance Works – An Overview

Advantages of Owning Participating Whole Life Insurance

  • Equity creation and ownership – providing ultimate Control for the owner. You are also a shareholder earning dividends, based on the profits of the Par account and/or the insurance company.
  • Premium rates are guaranteed to never go up. Flexibility can also be built-in so the owner can make changes to the amount and method of premium payment, anytime along the way.
  • Guaranteed lifetime death benefit, which when designed correctly, the tax-free payout of this insurance continues to grow each year. You get guaranteed lifelong protection that will be there when your family needs it most, creating an instant, growing, and permanent legacy.
  • Guaranteed and increasing cash values with uninterrupted compounding. Your capital is preserved, and your gains are locked-in, making this a stable, predictable asset that pays you - all built on a foundation of contractual guarantees.
  • Liquidity - cash values can be used at any time (within the administrative guidelines of the insurer), for ANY purpose, making this a Liquid asset.
  • Liquidity - cash values can be used as collateral for a loan at any time (within the administrative guidelines of the insurer), for ANY purpose. This allows for uninterrupted compounding. Your cash grows for the future AND you use it today! You also avoid the opportunity costs of paying with cash
  • With discipline it can become a forced savings model. By having a fixed minimum deposit of premiums (which you decide on), many Canadians can save more over time as they readjust priorities.
  • History – dating back to 1847 in Canada – 20 years before Canada officially became a country – Whole Life Insurance has been a staple of consistent savings. The dividend paying history spans more than 173 years, without ever missing a year, and is unmatched by any financial products in Canada.
  • Your wealth must reside somewhere. By warehousing your money in an insurance company that you are a part owner of, you are keeping those dollars outside of the fractional reserve banking system. It is the banking system that creates and perpetuates inflation. We can become a part of the solution to inflation instead of contributing to the problem - every time we deposit and/or borrow from a traditional bank or financial institution. Insurance companies cannot fractionalize
    or inflate money.
  • Provides guaranteed tax-advantaged (can be tax-free) income for retirement and long- term care needs.
  • Provides guaranteed tax-free income for beneficiaries (transfer of wealth).
  • Provides a guaranteed estate planning tool to pay estate taxes from the sale of other assets (deemed dispositions upon death).
  • Return on equity is better (often 400% to 500% better) than average growth on typical secure savings vehicles. It is not subject to the volatility of the markets and it provides inflation protection. It is “saving”, not “investing”.
  • Policy loans can be interest only loans for the lifetime of the contract (if you choose).
  • By design, Par Whole Life insulates owners from the volatility of the markets and the vast uncertainty tied to economic and geopolitical risk.
  • Whole life is a private contract between the owner (who has all the control) and the insurance company. This can create a layer of protection from creditors and judgements.
  • Growth in the policy is tax advantaged. Whole life policies are tax exempt products.

disadvantages of Owning Participating Whole Life Insurance

  • I​nitial premium costs are typically higher than Term Insurance. This is the cost of ownership versus renting. On the other hand, over the long-term Whole Life can be less expensive than term and it never expires. This is especially true with a child’s plan.
  • Withdrawals of cash values reduce the long-term growth and cannot be repaid to the policy.
  • Policy loan interest rates may be higher than loan interest rates elsewhere. However, any interest that is paid to the insurance company contributes to the profits, which you as an owner will benefit from – in the form of dividends. If you borrow from a financial institution, only the shareholders of the bank benefit. It also creates money out of nothing and contributes to inflation.
  • As with any loan, interest, if not paid, will compound, and be added to the balance of the loan. However, the simple interest is calculated on the daily balance and charged annually on the policy anniversary. It is not compounded monthly or semi-annually, like most loans and mortgages. Therefore, the actual rate is lower than a traditional loan with the same interest rate.
  • It is a long-term strategy that requires discipline and making educated decisions. A knowledgeable and experienced coach is essential.

Overall, Participating Whole Life Insurance is an asset purchase that builds equity and provides a guaranteed death benefit. This asset allows the owner to benefit while alive and you do NOT have to die to win. It is true LIFE insurance and not death insurance. Due to the level fixed premium, guaranteed for the lifetime of the Whole Life Insurance contract, Whole Life Insurance becomes a financial tool that can be used wisely to build wealth, provide needed liquidity, and legally avoid certain income and estate taxes. Though Whole Life Insurance may not be for everyone, it continues to remain a solid and secure financial tool that consumers demanded and is used by individuals, families, business owners and companies to keep more of the money they make. Your wealth must reside somewhere – why not in an entity that you own and control and that grows your wealth while you are able to access it and use it?

We all would do well to discover these truths before we lose the opportunity to purchase the life insurance that will provide us with the guarantee that we will have enough money when we retire; instead of risking money in investments that get destroyed by taxes, management expense ratios, and volatility – all out of our control!

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