When You Need It
No one likes to think of the “what if” and pay for something that “never is”.
We can show you how to gain from “what if that never was”.
Shared Ownership Critical Illness Insurance
The main objective of shared ownership critical illness insurance is to allow the shareholder of a private company to benefit from insurance coverage in the event of a critical illness that is covered by the policy. However, when a company and its shareholder take out a critical illness policy on said shareholder, this strategy can also offer other advantages:
● The insurance policy provides for the payment of benefits to the company in the event the shareholder suffers from one of the medical conditions or illnesses covered.
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● The contract is taken out with a premium repayment option if the critical illness benefit has not been paid upon termination or the expiration of the policy (for example, after 15 years).
● This option is payable by the shareholder personally through a higher salary or dividend or by the company, thus becoming a taxable benefit. However, after a certain number of years, it provides for repayment of all premiums, particularly those of the company and the shareholder, all tax-free and net of management fees. The amount is paid to the shareholder, tax-free.
● In addition to allowing the money to be released by the company, this option allows an interesting off-balance sheet return in several circumstances, especially if the shareholder’s marginal rate is high. This could also reduce the amounts of liabilities and the risk of losing the perferable corporate rate.
Insurance As an Asset Class
When an estate has a need for it, insurance can sometimes be used as an investment or as a separate asset class in some cases. The policy's implied after-tax rate of return depends on several factors, such as the premiums payable, underlying investments, management fees, the possibility of use of capital dividend accounts, etc.
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In many cases, the after-tax rate of return will be excellent, even after the client's life expectancy. It must then be considered whether it would be possible to obtain an equivalent pre-tax gross rate of return excluding the policy. Because the date of the client's death is unknown, it is essential to establish a strategy in the event of premature death. Life insurance can also be added to the prudent portion of a diversified portfolio.
Insured Retirement Strategies
Insured retirement is a type of financial strategy that provides the client with the benefits of a life insurance policy while offering the prospect of flexible retirement income.
Investments are made into a permanent life insurance policy for the duration of the insured's life. The income generated on these investments and the surrender value is collected tax-free for the insured person's lifetime.
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When the insured retires, the insurance policy is allocated as security to a financial organization. The financial organization can then issue loans to the policyholder depending on their needs. The amounts loaned by the financial organization are non-taxable and act as retirement income for the policyholder.
Depending on the situation, the amount of the loan issued by the financial organization is limited to a predetermined amount of the surrender value of the insurance policy or the premiums. Generally, the borrower is not required to repay the loans or the interest during their lifetime.
Upon the death of the policyholder, the financial organization will receive the amount of the death benefit that corresponds to the balance of the loans and any unpaid interest. The loan is then repaid in agreement with the terms and conditions of the agreement between the policyholder and the financial organization. The remaining balance of the death benefit is then paid to the beneficiaries named.
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At Paslawski Capital Management, we believe the power of knowledge, skill and experience is what makes a successful business. That's why we've partnered with PPI. PPI's highly credentialed team of accountants, lawyers and actuaries can collaborate with our client's advisors in a research and support role. They offer advanced tax and estate planning, in-depth knowledge and experience, and customized solutions for complex client needs that demand sophisticated planning and strategies.