Even if insurance is a topic that puts you to sleep, there is a major change coming in the insurance world deserving of your attention given its potential to significantly impact your wealth and what you are able to pass on to your loved ones.

Unless you work in the insurance industry, there’s a good chance that you aren’t aware of this or haven’t given it much thought.

Act now or miss out on Permanent Life Insurance-2

What’s Happening with Permanent Life Insurance?

On January 1, 2017, new rules will come into effect that will change how permanent life insurance policies – which have both an insurance component and an investment component – provide tax-sheltered benefits.

Broadly speaking, the new rules will result in a general increase in the cost of insurance and a decrease in the speed at which premiums can be paid into a policy.

What does this mean for you? Ultimately, you may end up paying more in taxes and enjoy less potential growth of your wealth.

Personal or Corporate Permanent Life Insurance Policy?

The rule changes will affect the taxation of all permanent life insurance policies , whether they are held by individuals or corporations. So if you currently hold a permanent life policy – or plan to set one up in the future – these changes are relevant to you.

Although corporate-held policies may be less common than those held by individuals, they offer considerable tax advantages. For corporate-held policies, the biggest change under the new rules is how old you have to be at the time of your death to receive the full death benefit on a tax-free basis. Currently, if you are 73 or older when you die, the full death benefit can be paid out tax free as a corporate dividend to your chosen beneficiaries. Under the new rules, the amount of your death benefit that can be paid out tax free will be partially reduced unless you are 90 or older at the time of your death.

Why Does This Matter?

The key thing to note is that the upcoming changes will reduce your ability to minimize tax and maximize wealth. The existing rules offer an attractive opportunity to use permanent life insurance to protect your wealth for future generations, but the clock is ticking and this opportunity will disappear as you celebrate the stroke of midnight on New Year’s Eve.

The good news: permanent life insurance policies established prior to January 1, 2017, will be grandfathered under the existing rules. As long as you set up a permanent life policy optimized for the existing rules before the end of 2016, you can lock in your access to the more favourable existing rules. However, some changes to the terms of existing policies may be treated as the creation of a new policy under the new rules and thus take away the grandfathering protection, so it’s important to get everything in order before the deadline.

What Should You Do?

The deadline may still be several months away, but the time to act is now. Insurance companies are experiencing a rush of applications as 2017 draws near and have warned that processing applications may take longer than normal.

The underwriting process – which can take anywhere from a few weeks to several months – must be completed before December 31, 2016 for a new policy to be grandfathered under the existing rules. So, now is the time to start the conversation and get the ball rolling.

Permanent Life Insurance for future generations

You may not find insurance an interesting topic, but in this instance it is a timely topic that offers an excellent way to maximize the wealth that you can pass on to future generations.

We are here to help you take advantage of this opportunity before it disappears, so we invite you to speak with us today about how we can help you grow and protect your wealth.

We have the know-how and resources to identify the right policy for your needs, help you establish a corporation if required, and work with lawyers and accountants to structure things according to your requirements.

All it takes from you is a phone call to get things started:

Rubach Wealth Permanent Life Insurance Meeting