Insurance Investments Products
As you can see above, the current room available for 2022 follows the last two years at $6000. Many Canadians have far more space than this open. However, Canadians are seemingly getting more distrustful of governments in general and have concerns about the future of tax-qualified plans like the TFSA and RRSP. Much of this has to do with fears of the “bail-in” legislation in Canada. Following the Crisis of failing banks in Cyprus in 2012-2013 and Greece in 2009-2010 following the Financial Crisis, many western nations moved from bailout to bail-in legislation.
Famous bestselling Author R. Nelson Nash commented in his book Becoming Your Own Banker that tax-qualified plans provided by governments were akin to appointing the fox to guard the henhouse as he describes Willie Sutton's law. “Wherever wealth is accumulated, someone will try to steal it.”
For this reason, Canadians are learning that the original “tax-free savings” has always been Participating Whole Life Insurance. It has been around as a stabilizing force in the financial lives of Canadian families for over 170 years. Unlike the restrictions of a TFSA account, there are no limits imposed on the government to how much you can put in or take out as a Par Owner with a private contract.
Insurance Investments Products
It is misleading to look at insurance as an investment. The most common forms of life insurance products in Canada that get lumped into this category are:
- Participating Whole Life insurance. This is the type of insurance we strongly recommend for its 170 plus years history of consistent dividends. It has the highest guarantees, longest track record, most straightforward design, and best features that give the policy owner control. Participating whole life insurance is a permanent form of life insurance that guarantees lifetime coverage as long as it's in force. The dividends from this policy type can help create a powerful compounding effect over time. Its best feature is unrestricted access to capital with the contractural policy loan feature that can allow multitasking.
- Universal Life Insurance. We do not recommend this type of life insurance. However, it is a style of insurance that allows you to pick and choose some basic investment options within it. This can work out well for someone who manages it well and has a high level of understanding…but most people aren't willing to put in the time to truly understand what's under the hood of this vehicle. It's often way too late when someone finds out they were missing a spark plug the whole time. You can learn more about that in our Universal Life article.
