Aside from all the general insurance needs an investor may have, we use the Insurance marketplace to facilitate universal life policies as they are needed for an investor who may have a corporate structure as follows. An investor may own a holding company which owns an operating company, as the operating company earns residual income we transfer this residual income to the holding company by way of non taxable intercompany dividends which then result in retained earnings and investments being accumulated inside the holding company which, in our opinion, is a great strategy to finance the retirement component of your life. In these types of structures, a universal life policy is used 1) to fund the eventual tax liability created by the holding company to the investor’s eventual estate as well as 2) creating significant tax free income for the investor to withdraw from the universal life policy as well as from their holding companies throughout their lifetime.
We also use the Insurance marketplace to access “segregated funds”, which is simply a mutual fund offered by an insurance company that has an insurance policy attached to it to guarantee the principal portion of the investment. A good option for a mutual fund investor who is concerned about protecting their capital but the “principal guarantee” provided by the insurance policy comes at a steep cost and usually you need to leave your funds invested for as long as 10 years to qualify for the guaranteed principal protection.
Advantages of Insurance protection for your estate
Disadvantages of Insurance costs; certain liquidity risks