Participatory life insurance: What is it?
How to reconcile estate planning and wealth management without any tax burden? A life protection product can meet this challenge without violating the laws in force. Discover participatory life insurance, its main assets, its operation and the support offered by our company to sign a policy adapted to your needs.
What is participatory life insurance?
This lifetime protection guarantees the payment of a non-taxable sum to a beneficiary previously chosen by the contractor. The remittance of this money occurs after the death of the subscriber. Pending the execution of the death benefit, the insurer manages the funds collected and distributes participations in return.
Premiums are paid over a predefined period of 10 or 20 years, or even up to a specified age. Their regular payment guarantees the growth of the cash value of the policy. This insurance remains very popular because of the multiple possibilities it offers. It is aimed at both individuals and companies.
Why subscribe to a participatory life insurance?
This type of contract is not limited to life protection. It stands out from competitive products by many other assets such as tax benefits, asset management, etc.
Tax-free permanent life insurance
This lifetime protection guarantees a financial inheritance to a previously designated beneficiary. The subscriber manages to easily build up a substantial capital by paying premiums over a certain period or until a given age. The clauses clearly define the terms and conditions for the execution of the “death benefit”.
This insurance frees you from the constraints of estate planning. You get the guarantee to bequeath a financial inheritance to your offspring. In addition, the tax authorities do not tax the capital paid to the designated beneficiary. The subscriber also has the option of disbursing a tax-free annual annuity through a redemption of accumulated value.
Performance of Participating Accounts
This whole life insurance is like a real investment. It makes it possible to serenely build up savings and to value them over time. Indeed, insurers do not hoard the funds collected. They pay them into a participation account and manage them professionally to generate short- or long-term returns.
Then, they distribute the profits among the different subscribers in proportion to their assets. They can use their additional winnings in several ways.
- They have the option of letting this income accumulate on their portfolio over the years or invest that money to acquire free life insurance. This could substantially increase the cash value of their policy.
- Contractors may also choose to withdraw their profits in cash or to keep them in account to reduce the amount of the premium paid periodically.
Highly flexible whole life insurance
This product guarantees excellent protection with the possibility of substantially increasing your wealth over the years. Indeed, policyholders can reinvest their earnings or accumulate them in their account to gradually increase the cash value of their policy.
Contractors may also withdraw or borrow money from their policy. You can also partially or fully transfer this insurance as security for a loan requested from another financial institution. The tax authorities could tax these related transactions. In addition, the death benefit logically decreases if you access the cash value.
Participatory life insurance adapted to companies
Such a policy provides for the payment of a tax-free amount to a corporation after the death of the promoter, partner or adult employee. This type of life protection also allows establishments to:
- fill a need for liquidity;
- finance a repurchase agreement;
- repay loans;
- diversify their portfolio;
- assign their policy as security for a loan;
- reduce the tax on off-farm investments.
How does participating life insurance work?
The process begins with the subscription of a contract. Then, you periodically honor the payment of premiums while the value of your policy grows tax-free. Professionals collect your payments in an account and manage them to generate short- or long-term returns.
The insurer distributes interests that the subscribers can withdraw in this case. They also have the option of using them to purchase additional coverage or to reduce the monthly amount of their premium. The clauses also provide for other related transactions that may be taxable. Upon the death of the contractor, the designated beneficiary receives a tax-free payment.
Which participatory life insurance to take out?
Our company guarantees you quality support for the signing of a policy adapted to your expectations. An experienced advisor will contact you quickly to discuss with you after your application has been submitted. It explains the different offers available and helps you make a choice after a strict analysis of needs.
The cost of such a contract depends on several factors such as age, state of health of the subscriber, gender, profession, etc. We provide you with modern tools to estimate the amount of the premium and the death benefit. We also help you build your file to easily submit your application. Our offers are aimed at all residents of Montreal and its surroundings.