Over the years, the financial services industry has established several strategies and concepts using life insurance, for both business and personal needs.
Contrary to popular belief, insurance not only provides coverage, but can also be an integral part of your financial planning and allow you to establish several capital accumulation strategies.
Most of the time, the only reason this product is not part of a physician ’s financial planning is that he/she has not been made aware of the benefits of such a product.
When you choose a life insurance strategy, you can take advantage of proven solutions currently benefiting thousands of people across the country.
Life insurance represents a unique investment opportunity
Did you know that insurance opens the door to a world of tax advantages? When used properly, this vehicle may be ideal for physicians who are looking for an effective strategy to transfer passive investments to a tax-advantaged environment.
There is a widely held perception that the sole purpose of life insurance is to provide policy proceeds should a person pass away prematurely. Though important, this is only one of the uses of life insurance. Under current tax legislation, investment growth within a life-insurance policy is tax-free.
This tax-free growth is similar to that of a Registered Retirement Savings Plan (RRSP). In fact, some insurance products are commonly used as investment vehicles by individuals who earn a higher income given their appeal with regard to taxes.
In addition to deferred-tax investment opportunities, policy proceeds are ultimately distributed directly to beneficiaries tax-free in the event of death. Therefore, life insurance may be an ideal tool for a physician for financial and estate planning.
What makes this solution so attractive?
- Immediate estate growth
- Access to funds if you require them
- Funds that may be protected from creditors under certain circumstances and that may be exempt of probate fees
- A wide range of investment choices
- Tax-free proceeds upon death
- Tax-deferred investment earnings, allowing for more rapid growth
Many of you feel that to build a comfortable retirement plan, you need to invest in the often volatile stock market, even if the investment risk is outside your comfort zone. As a busy physician with little time or ambition to follow the stock market, you should seriously consider tax-sheltered investing using life insurance. This can help you reduce your tax bill to a minimum and maximize your capital accumulation over time.