Insurance is not just about later. It is about now.

Are you using all available tools to fund your retirement? Don’t be so sure!

In addition to registered investment alternatives (RRSP’s, TFSA’s, etc) did you know that you are able to grow capital inside insurance policies on a tax deferred basis funded either personally or corporately? This capital can be used to fund your coverage without paying cash for it annually, but also to fund retirement, emergency expenses, health care, childrens’ education etc. It is like having your own pension plan with a huge insurance component!

Albert Einstein once said “compound interest is the most powerful force in the universe.” This is especially so in a tax deferred environment, earning stable rates of return with low levels of volatility (i.e. your rate of return does not change very much year-to-year). Compared to RRSP’s, that require you to withdraw large amounts at age 71 (at the latest…from a compounding perspective this is the worst possible time) and pay the taxes owing, life insurance policies continue to compound on a tax deferred basis for as long as the lives insured are alive.

The capital created inside these policies on a virtually risk-free basis is incredible. A little bit early creates massive amounts later when it is needed the most.

Why should you be concerned? Well, did you know that it is estimated that half of today’s 65 year olds will be alive to their mid 90’s and there are people alive today that will live to 150 years old? It is very possible that we will need to fund 30+ years of retirement (plus health care expenses) assuming we stop work at age 65. This is a very large funding need, and one you should take seriously if you plan on maintaining your current standard of living.

The right insurance policy will not only allow you to create a layer of safe capital on your personal or corporate balance sheet which grows on a tax deferred basis, but also to ensure there is sufficient and increasing insurance coverage which solves future problems.