Investing in Insurance
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Mary and Tom are both 40 years old, have two school-age children and have fully paid off the mortgage on their home in downtown Calgary. Although retirement is still 20 years ahead of them, they’ve managed their money wisely and invest the maximum amount in their RRSPs each year. They’ve also set up an RESP for their children’s education, and annually contributed as much as they are allowed to that tax-deferral structure.

Still, they have money left over to invest. They like the fact that their RRSPs and RESP make it possible for their assets to compound tax-free, maximizing their returns over the long term, and they wonder if there are other investment solutions that provide similar benefits.

The couple’s financial advisor, Harry, suggests that they consider universal life insurance. This type of coverage, he explains to them, is unlike other types of insurance in that you can hold a wide selection of investments within a universal life policy. Interest earned by those investments grows on a tax-deferred basis, which makes universal life an attractive option for people like Mary and Tom who are already “maxing-out” their RRSP contributions and are looking for additional tax-advantaged investing opportunities.

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