The Benefits of Working with a Life Insurance Broker


There are many ways a Life Insurance broker can add value in helping to determine your insurance needs and finding the right product for you.  One of the main benefits of working with a broker rather than an agent from one specific company is that a broker will examine the market to find the best overall solution to meet your needs.  This may include searching the market for desirable product features and including policies from different insurers, usually resulting in cost savings.

Jonathan Weinstein, one of our Insurance Advisors at TriDelta Financial, gives a good example of how one can benefit by working with a life insurance broker:

“I worked on a solution for a client recently – the client was a 35 year old female who was looking for permanent life insurance and critical illness (CI) insurance (CI is a plan that pays a tax free lump sum living benefit in the event of certain catastrophic health issues – e.g. heart attack, stroke).  She was interested in paying off her premiums during her working years with coverage in force for life, so I looked into some 20-pay plans for her (i.e. policies with a level premium cost for a 20 year period at which time no further payments are required and the policyholder remains covered).  Based on a needs analysis I determined she required $300,000 in life insurance and $100,000 in Critical Illness insurance.


For the life policy I found a 20-pay Universal Life plan with a cost of $160/month.  For the Critical Illness policy I looked at 20-pay plans that included a Return of Premium (ROP) on Death rider.  This is a policy that is paid up after 20 years, with CI protection for life, and with this rider if a claim is never made the insurance company will return all premiums paid to the insured’s estate (after 20 years the insurer will also return all premiums paid upon surrender of the policy; if surrender is exercised coverage is no longer in force).  The total monthly premium cost for this plan was $128, or about $30,000 over 20 years (so in essence, in addition to the CI protection, given that all premiums will be returned upon death with the ROP feature, the client was purchasing an additional $30,000 in Life Insurance).  The total monthly premiums for the two policies were $288.

I then however, looked at one company’s CI plan which included a great feature – rather than choosing the ROP rider, this insurer offers a life insurance rider – in the event of death with no CI claim having been made, they will pay the full face value of the policy (in this case $100,000) rather than just returning the premiums ($30,000 as noted above).  So I calculated the premiums by choosing this rider and reducing the Universal Life Insurance plan to $230,000 from $300,000 (as the new CI plan chosen was providing an additional $70,000 in life insurance).

The resulting total monthly premium costs were $273!  The client is saving $180/year – $3,600 over the 20 year payment period and is getting the same total coverage (with the only caveat being she needs to keep both policies in force).  The client was happy with this solution and appreciated the cost savings by structuring it this way.

As a broker I was able to mix and match products from different companies and find unique product features to provide a solution that met the client’s needs and saved her money.  If you would like an assessment of your insurance needs to see if you are properly set up or would like to find out about different alternatives please contact us here at TriDelta.”


Benefits of Using Life Insurance as a Retirement Tool


Yesterday, we talked about the retirement strategy of using life insurance as a savings mechanism. Today,  we look at the benefits of using life insurance for retirement.

To recap: Basically, you take out a guaranteed life insurance policy on an older relative and name yourself the sole beneficiary. When this older relative passes away, whether it is in 10, 20 or 30 years, you are ideally approaching or in retirement and receive the guaranteed payout.

Now how does this  benefit you as a retirement instrument?

  • If you are making $200,000-plus a year, and you are maxing out your RRSP contribution and TFSA contribution, over time you are probably left with savings held in non-registered investments or in a second property. Both of these are being taxed and subject to the variability of the markets.
  • If you are middle aged and you have a parent in his or her 60s or 70s, and in decent health, he or she will certainly qualify for permanent life insurance. By funding this insurance with money that would otherwise be taxed in some way, and getting a payout around retirement, this meets the objective of retirement planning perfectly.
  • Many people respond: “Isn’t life insurance very expensive at that age?” The answer is that the rate of return can be very good. This return is not tied to any investments held within the insurance policy. It is based on the dollars put in over the years, held within the plan using a guaranteed minimum return, and the insurance payout at the
  • If you want more tax sheltering than you are allowed with RRSPs and TFSAs, an alternative is to pay for the life insurance on your parent. In some cases the return is so good and the other benefits are so strong, you would want to do this instead of some of your RRSP and TFSA contributions.
  • If you are self-employed, earning good money but not earning a salary, you simply don’t have much or any RRSP contribution room. This type of strategy is a great alternative. You get the best of both worlds in terms of tax efficient income, and you still can benefit from a tax sheltered retirement strategy – without any hard limit on contributions. An even better option for self-employed individuals is to buy the insurance policy within their company.
  • Remember that the named beneficiary of an insurance policy can be quite flexible. In some cases, parents are more comfortable with the process if they know that the grandchildren are also named as beneficiaries on the policy.
  • Among other benefits of this strategy, the insurance policy is creditor proof, and the death benefit is not considered family assets in the event of marriage breakdown (unlike the RRSP and TFSA).

Some might suggest that it seems odd to financially benefit from a relative’s death. While one can understand the point of view, it is really no different than anyone who is likely to receive an inheritance. It is simply helping your family to do smart financial planning.

Make sure to read the article that originally describes how this life-insurance strategy works.

Maxed out RRSP & TFSA? An Alternative Tax-Sheltered Retirement Strategy


There is an alternative tax-sheltered retirement strategy that is a substitute for RRSPs or tax-free savings account. This strategy allows you to invest a set amount every year (that you can comfortably afford) and guarantees that you generally earn a return of around 8% after tax, annually. In your late working years or early retirement, you receive a tax free payout. The investment does not move up and down with the stock or real estate market.

Intrigued? Here is how it works:

•You have maxed out your RRSPs. This could be because your income is high and you have good savings, or you have a sizable pension contribution, or as a self-employed individual who receives dividends you have very little RRSP room to use, and your TFSA is maxed out.

•You have a parent or in-law, aunt or uncle, who is in reasonably good health for his or her age, and is somewhere between 60 and 80. Reasonably good health means no recent or current cancer, heart attacks or strokes or other major diseases.

•You take out a permanent insurance contract on this individual. With permanent insurance, if it is held until death, it is guaranteed to provide a payout. For example, if someone puts in $12,000 a year for 15 years, that totals $180,000. The insurance policy might pay out $360,000 in 15 years. This is different from a “term 10” or “term 20” insurance policy that covers only a fixed time period, and usually has a return of negative 100 per cent. Permanent insurance allows you to know the payout on the investment. The only unknown is when the payout will occur.

•To implement the strategy, you would search the market for the best permanent insurance solution given the age and health status of the individual. That will require an insurance broker who has access to the full market, focuses on estate planning and understands the strategy.


To better understand this life insurance strategy, here is an example:

We have an imaginary investor, Joe, and he is 41. His yearly income is $200,000, and he has no more room in his RRSP or TFSA. He has $150,000 in non-registered investment assets (and these are being taxed).

Joe’s mother, Susan, is 70 and in decent health (except for a bad knee). Joe’s insurance broker has searched the market to find the best return for a permanent policy for a 70-year-old woman. Joe deposits $12,000 a year for 15 years and the policy is fully paid up – a unique feature of this particular product. This policy also has a return of premium. It essentially adds one dollar of payout for every dollar Joe puts in.

After one year, Joe has put in $12,000. If Susan passed away, the insurance payout would be $193,000, for a return of 1,508 per cent. Every year Joe puts in $12,000, the payout goes up $12,000. In year five, Joe would have put in $60,000 and the insurance payout would be worth $241,000. In 15 years, Joe has put in $180,000. In this case, the policy is now fully paid, and Joe doesn’t need to pay another dollar. The payout figure does not continue growing past this point.

As it turns out, Susan passes away shortly after, at age 85. Joe is now 56 years old. The insurance policy pays out $361,000 to the beneficiaries. In this case, Joe is the sole beneficiary.

If Joe had put the same $12,000 a year for 15 years into a non-registered GIC, to have the same after-tax return as this strategy (assuming Joe pays a 46 per cent marginal tax rate), he would have to find a GIC paying 15.35 per cent.

Not only did this strategy provide Joe with extra tax shelter, but it guaranteed he would at least double his money, tax free, whether Susan lived to age 71 or age 95.

Read Part II to learn about the benefits of using life insurance as a retirement savings tool.

[IN THE NEWS] Universal Life Insurance may trump RRSP in some cases


Can universal life insurance be a retirement savings tool, more effective than the RRSP? In this article, my colleague Asher Tward offers up his views on when and how life insurance policies can be used to save for retirement:

UL May Trump Life Insurance, In Some Cases”

By: Al Emid for (March 19, 2010)

“The RRSP may be the most familiar retirement saving strategy, but it might no longer be the automatic choice. The popularity of the RRSP mushroomed when investors had few other tax shelters available, but the financial landscape has changed, and the well-rounded advisor knows there are other options.

Tax-Free Savings Accounts are an obvious tool for generating tax-advantaged retirement income, but other strategies might rely on various insurance products that now offer tax-planning options.

Under certain circumstances, universal life insurance may offer a more effective tax-advantaged strategy than RRSP contributions, suggests Asher Tward, vice-president, estate planning at Toronto-based TriDelta Financial Inc.” READ MORE AT SOURCE…