➜The ONE Thing: The Lifetime Power of Permanent Life Insurance

Welcome to The ONE Thing! We know you're busy and allergic to long, complicated newsletters which are not practical. That’s why we bring you The ONE Thing. It’s One, clear, actionable insight in each edition—straight to the point. No fluff, no filler — a smart strategy you can apply immediately to protect your future and make your impact that much greater.

This first group of newsletters will cover "The Basics"—helping you understand how life insurance works and why it’s essential.

The ONE Thing: Permanent Life Insurance Is More Than Just Protection

Unlike term insurance, which covers you for a set period and is akin to a “rental” of protection, permanent life insurance is an “asset” that lasts a lifetime and can build equity in the form a cash value (further explained bellow)—a financial asset you can access while you’re still alive. It provides both security and flexibility, making it a powerful tool for wealth preservation, estate planning, and legacy protection.

There are two types of permanent life insurance:

Whole Life Insurance: provides guaranteed lifelong coverage, fixed premiums, and a tax-sheltered cash value that grows steadily over time. It’s ideal for those who want certainty and simplicity — a set-it-and-forget-it strategy with long-term benefits.

Universal Life Insurance: also offers lifelong coverage but with more flexibility. You can adjust your premiums and death benefit, and the investment component can be tailored to your risk tolerance. It’s a powerful tool for Canadians looking to grow wealth tax-efficiently and leave a larger legacy

How It Works

Premiums are typically paid annually (if paid monthly there is a “load” attached so beware), and you have flexibility in how you pay them. You can use personal funds, lower-taxed corporate dollars (if you own a business), or even accumulated cash value and dividends from the policy itself over time.

Here are two key components of a permanent life insurance policy that make it such a powerful tool:

1. Death Benefit – When personally owned there is a tax-free payout to your beneficiaries when you pass away. If the policy is corporately owned, there will likely be a slight taxation on the death benefit in the early years, should a premature death occur (this is usually ground down to zero tax at life expectancy).

2. Cash Value – Think of this as a savings account within your policy. This can either come from premiums paid and dividends earned, or any payments made above the premiums to the policy

Ways to Use "Cash Value":

• Borrow Against It – Take out a loan from the bank using your policy as collateral. (You can repay the loan on your own schedule—or not at all, and have it paid back with the money you'll get through your insurance policy upon death!)

• Withdraw Funds – Access part of the cash value for major expenses. You will pay interest on borrowed money and the debt owed will come off the death benefit.

• Supplement Retirement Income, Emergencies and Investment Opportunities – Think of it as a personal pension. Over time, your cash value grows, and when you retire, you can take out tax-free loans (a loan is not considered a taxable income) or withdrawals to help cover expenses or other investments—without affecting your other investments.

• Pay Premiums – Use accumulated cash value to cover future premiums.

• Serve As a Tax Shelter - Functions like an NO-Limit TFSA, sheltering excess cash flow and passive income from taxes while providing significant benefits for corporations.

Case Study 1: Business Owner Using Cash Value for Growth

Sam, 45, owns a successful tech company. He purchases a permanent life policy for $1M of coverage, paying $15,000 per year in premiums (with a 5.35% dividend rate on his policy) which helps build a growing cash value.

🔹 10 years later, his policy has $160,000 in cash value.
🔹 He uses $75,000 as a loan to expand his business.
🔹 His policy stays active, and the loan is repaid on his terms.

💡 Sam didn’t need to go through a bank—he used his own policy to fund his growth.

Case Study 2: A Tax-Free Retirement Strategy

Lisa, 38, is planning for retirement. She invests in a permanent life policy for $5M of coverage, paying $42,000 per year over 27 years in premiums to grow her cash value.

🔹 At 65, her policy has $2,000,000 in cash value.

🔹 She takes out tax-free loans totaling $1M from her policy for retirement income.
🔹 Her family is still protected with a $1M growing death benefit, even while using the cash value.

💡 Lisa secures retirement income while keeping her financial safety net.

Why High-Net-Worth Clients Buy Permanent Life Insurance

For high-net-worth individuals, permanent life insurance is more than protection—it’s a tax-efficient tool for preserving wealth, ensuring business continuity, and simplifying estate planning.

1. Liquidity for Estate Taxes – Upon death, substantial taxes will likely be owed on real estate, investments, and business assets. Life insurance provides immediate liquidity, preventing the need to sell assets at an inopportune time.

2. Fair Asset Distribution – When a family business or property is involved, not all heirs may be actively engaged. Life insurance can ensure that non-business-involved heirs receive a fair share without forcing a sale or disrupting operations.

3. Shareholders Agreements — Life insurance provides a buyer and market value to provide a buy out of a deceased partners equity in the company to get money to their family and retain 100% control of the company for the surviving partner.

4. Tax Shelter Benefits – Permanent life insurance functions like a NO-Limit TFSA, allowing for tax-exempt growth of wealth while providing a tax-exempt access and tax-exempt payout to beneficiaries.

5. Enhanced Investment Returns – High-net-worth individuals use Immediate Financing Arrangements (IFA) to leverage their policies for investment while keeping access to their capital for other opportunities (To be discussed in a later newsletter)

6. Strategic Philanthropy — Permanent life insurance has the ability to convert estate tax into charity or can be used stand-alone to create an enduring legacy for causes you are passionate about, funding a private foundation or a Donor Advised Fund (to be discussed in a later newsletter).

With these advantages, permanent life insurance is not an expense—it’s a smart, strategic asset in wealth preservation, estate planning and philanthropy.

Final Thoughts: Build Wealth WHILE Protecting Your Legacy

Permanent life insurance is more than just a safety net—it's a dynamic financial powerhouse that evolves with your needs, offering flexibility and unparalleled opportunities. Imagine having access to cash when you need it, a tax-efficient income stream for your retirement, and a lasting legacy for your loved ones! With this strategy, you are firmly in the driver’s seat of your financial journey.

Ready to see how permanent life insurance can transform your financial future?

👉 Let’s talk.

Regards, Mark Halpern and The WEALTHinsurance.com Team

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Mark Halpern, CFP, TEP, MFA-P

[email protected] 

(905) 475-1313 Ext.1

Reuben Menzelefsky CFP, MFA-P

[email protected]

(905) 475-1313

210-600 Cochrane Drive

Markham, Ontario L3R 5K3

→ Next edition, we’ll break down which Insurance is best suited for YOU

Stay tuned for the next ONE Thing!