Permanent Life Insurance: A Lifetime of Tax-Effective Rewards

When your goal is to provide for the people and causes that matter to you, permanent life insurance provides a solid foundation for a tax-efficient financial plan you and your family can rely on.

It’s called permanent life insurance because it lasts your whole life — as long as your premiums (i.e., the amount you pay for an insurance policy) are paid.

Here’s how it works

1. Get started
   Permanent life insurance policies come in a variety of forms. The coverage that you choose will depend on your age, your health, your long-term goals, and your budget. Typically, the earlier you buy your policy, the better. Why? Because the cost of life insurance is often less expensive when you are young and in good health. But there’s no bad time to add this kind of coverage to your financial plan. The first step is getting objective advice from your Serenia Life advisor — at no cost to you. Ask about how much coverage you need and consider what you can afford to pay without compromising your other financial goals.
2. Enjoy potential savings opportunities
   Some permanent life insurance policies also have a savings element. While you take comfort in knowing that your loved ones are protected, you also accumulate tax-preferred savings in what’s called the cash value portion of your policy. With some permanent life insurance policies, the money gets invested on your behalf and managed for you. Over time, the cash value can grow, and eventually be used when you need it most.
3. Pay at your own pace
   Some permanent policies offer a lot of flexibility when it comes to making your payments, allowing those who want to pay for their policy quickly to do so, while others may opt to spread the cost over a lifetime. What matters most is choosing the option that works best with all the other moving parts of your financial plan. Some policies allow you to put more money into them — above and beyond what is required. This may increase the cash value of your policy, giving you more flexibility in the future. And once the policy is paid in full, it can never expire.

Tap into the cash value of your policy when needed

Imagine wanting to give your children a leg up a few decades from now. Perhaps you want to help with education costs or give them a down payment on their first home. If you choose a permanent life insurance policy with a cash value, some of that money can be used to help meet your future cash needs.

Accessing money from your policy should always be planned with advice from a Serenia Life advisor, who may suggest including tax and other specialists as needed to help you make the best use of your money. Options for accessing cash can include:

1. Giving yourself a policy loan*
   If you need cash, you can borrow money from your life insurance policy without a credit check and the loan won’t appear on your credit history. You’re under no obligation to pay back the loan since you’re borrowing money from your own policy. When you die, the insurance company will simply deduct any money owing — plus interest — from the death benefit (i.e., a payment made to designated family members or other loved ones after you die). Be sure to carefully compare the lifetime cost of borrowing to alternative forms of financing.
2. Make a cash withdrawal*
   You can withdraw money from the cash portion of a permanent life insurance policy for any reason. Note that this option may reduce the amount of the death benefit for your beneficiaries, and that fees may apply at the time of withdrawal. But if there’s more than enough money to meet their needs, why not spread the love around?

Adding it all up

When you look at the benefits of permanent life insurance over the course of your lifetime, you can see the advantages at every stage.

The Early Years

• Contribution to a long-term plan to protect your family
• Potential to build an emergency fund that will have plenty of time to grow

Mid-Life

• Access to emergency funds
• Professional investment management

Legacy Planning

• Guaranteed payout to beneficiaries
• Financial resources to help loved ones
• Ability to donate to charity

Permanent life insurance comes in several forms. We can help you choose the right option, with the right amount of coverage, at rates you can afford. Speak to a Serenia Life advisor today.

*Note that policy loans and withdrawals may be subject to income tax. To better understand when and why this might occur, consider speaking with a tax specialist.

This blog post contains general information only. Because each person’s situation is unique, it is best to speak with a qualified professional before making any final decisions. Serenia Life Financial does not advise clients on tax, accounting, or legal matters.