1. Retirement Income Alternative

2. What if what you thought to be true wasn’t true?
When would you want to know?

3. Life Insurance as an Asset

4. Three Kinds of Money

5. Three Kinds of Money A

6. Three Kinds of Money L

7. Decisions

8. Decisions – NEEDS vs. WANTS

9. Three Kinds of Money T

10. Three Kinds of Money T
Transferred ($)

11. Transferring away from you unknowingly and unnecessarily.
Three Kinds of Money T
Transferred ($)
Transferring away from you unknowingly and unnecessarily.

12. T Kinds of Transfers Credit Card Taxes Term Insurance Costs
Deductibles
Mortgage Payments
Loan Investment
Final Expenses
RRSPs
Claw Backs on Government Benefits

13. The Ideal Investment Tax Deferred Growth Tax Free Distributions
Competitive Return
High Contributions Limits
Additional Benefits ( WP )
Collateral Opportunities
Safe Harbor

14. The Ideal Investment No Loss Provisions Guaranteed Loan Options
Unstructured Loan Payments
Liquidity , Use, and Control
By Pass Estate

17. Human Life Value
This is the estimated lump sum needed to replace a lifetime income and services you provide for your family based on a multiple of your income

18. Client profile Need / Want life insurance
Have assets they will not use in their lifetime
Are ready for a long-term strategy
Want to diversify
Non –Registered assets growing with tax
Alternative retirement strategy
Like Dividend performing stocks
Which clients can benefit most from participating life insurance?
First of all, they must have a need for life insurance.
They should be able to qualify for the life insurance, financially and medically.
They should have assets they will not use in their lifetime
They should be ready for a long-term strategy.
It takes a while for the policy’s cash value growth to accumulate. In the first few years, the cash value is generally lower than the cumulative out-of-pocket premiums paid. The cash value usually exceeds the premiums paid between years 15 and 20, or as early as in the first 10 years, depending on the client’s age and how the policy is structured. This growth often outperforms other asset classes. It is based on guaranteed and non-guaranteed values from the current dividend scale, which will vary. Actual policy results will also vary.
Clients also need to maintain the premiums over the long term.
They should be looking for diversification.
We’re talking about using participating life insurance to provide diversification from other fixed-income asset classes.
Now let’s take a closer look at the features of participating life insurance that make it a unique fixed-income asset.
(Go to next slide.)

19. Tax-advantaged growth
Tax-exposed
Non-registered investments
Tax-deferred
Then taxable
Registered investments
Tax-advantaged
Then tax-free to named beneficiary
Participating life insurance
At the most basic level, most clients divide investments into two types – registered and non-registered.
Non-registered investments are generally taxed while living and become part of the estate upon death.
Registered investments are tax-deferred while living, but fully taxable upon death of the owner, or of their surviving spouse.
However, there is another asset class that’s not commonly understood.
It’s participating life insurance.
This asset provides a tax benefit during the client’s lifetime and for their estate.
Like RRSPs, its growth inside the policy is not taxed while living.
Unlike RRSPs, however, it becomes tax-free to the named beneficiary upon death.

20. Tax-advantaged growth
This illustrates the tax-advantaged room inside your client’s participating life insurance policy.
Each policy has:
A minimum premium, which must be paid to maintain the death benefit
A maximum premium. This is the largest premium permitted for the policy to remain exempt from annual taxation, according to Regulation 306 of the Income Tax Act.
The room between these limits is an opportunity for clients to accumulate cash values that are exempt from annual accrual taxation. Clients can make additional premium deposits to take advantage of this opportunity, by using the additional deposit option.
What tax-advantaged growth means . . .
For your client, this means they can take steps now that will reduce their taxes for years to come. It means more of their money is working for them, instead of for the CRA.
For you, this means you can show your client you are not only increasing their ultimate net worth, but also reducing their taxes each year.

21. Stable performance, low risk
Dividends reflect stable performance, low risk
Investment performance
Smoothed returns
Effects of mortality, expenses, taxes
How investments contribute to dividends
When we think of participating life insurance as a fixed income asset, we can ask, “How does it perform and with what risk?”
The key is policyowner dividends, their stable performance and low risk. Let’s look at:
Investment performance
Smoothed returns
Effects of mortality (death rates), expenses, taxes and other factors
And to start, let’s look at how investments contribute to dividends.
(Go to next slide.)

22. Access to Total cash value
Cash values
Guaranteed
Dividends
Accumulate over time
Access
Policy loans
Withdrawals
Leveraging
Clients build up two kinds of cash value in their policies.
Basic cash value. This is guaranteed. It starts in year 1 or year 7, depending on the policy selected.
Cash value from dividends. There is no guarantee dividends will be credited every year. However, once they are credited, their value is guaranteed.
In the early years, the accumulated cash values are generally lower than the amount paid. It takes a while for them to match and exceed the amount paid in, usually between year 15 and year 20. Life insurance is for the long term.
Of course, life insurance is not an ATM. However, clients can access their accumulated cash value in several ways.
Policy loan. The policy values continue to grow as if there was no loan. However, any unpaid loans will reduce the policy benefit.
Withdrawals. These can result in a taxable disposition to the policyowner and reduce the policy benefit.
Leveraging. Third-party lenders may lend up to 90 per cent of the cash value, if the client qualifies.
What this means . . .
For clients, this means they will acquire an additional source of funds, which they can access without disrupting their investments or selling at a bad time.
For you, this means it will be easier for you to keep your clients invested, if they need cash in the future.
(If needed in response to a question about the available loan amount:)
The total loan value at any time = the loan value in the policy’s table of guaranteed values, PLUS any cash accumulations, PLUS 90 per cent of the cash value of any existing paid-up additions credited to the policy, MINUS any amounts already owed on the policy, MINUS any interest that will have accrued, assuming there is no repayment of all or part of the amounts owed on the policy. All determined as at the next policy anniversary or, if sooner, the next premium due date.

23. Additional deposit option
Reasons to pay more than the basic premium
Optimize tax-advantaged growth within policy
Reduce annual taxes on growth of assets outside policy
Accelerate accumulation of cash values
Increase guaranteed values
Increase payment flexibility
Clients can use the additional deposit option to pay more than the basic premium.
But why would anyone want to pay more than they have to?
Clients can grow their assets faster and pay less tax. Instead of leaving their money in investments where it is eroded by annual taxes, clients can deposit more of it in the tax-advantaged room inside the life insurance policy. Free from tax erosion, the assets can grow faster. There are limits on how much clients can deposit.
Clients can accelerate the growth of their cash values.
Clients can reduce the number of years they need to pay premiums out of pocket.
Clients can protect more of their assets from market risk. That is, the additional deposits increase the amount of potential dividends, which become guaranteed when they are credited.
Clients gain flexibility. When their cash flow fluctuates up, they can deposit the additional amount. When their cash flow fluctuates down, they can reduce their payment to the basic premium.

24. Eroding Factors $500,000 Planned Obsolescence Taxes
Lost Opportunity Costs
$500,000
Inflation
Technological Change
Interest Rate Declines
Propensity to Consume
Market Risk
Interest Charges and Loans

25. THANK YOU
Questions?