Life insurance for many people represents a grudge purchase; a necessary evil that is imposed on them.

Unfortunately too many people, including small business owners don’t see past the obvious benefits of insurance (paying out a death benefit), and as a result they miss the opportunity to not only grow their money tax deferred, but also the opportunity to invest in equities (stocks) with a guarantee of 100% of their principal. You can invest in GICs, but what are the rates like these days? Probably not so attractive.

What if you could enjoy the growth potential of the stock market, a guarantee of your principal, tax deferred growth, the ability to transfer those funds to your loved ones tax free, and protection from creditors?

There are insurance solutions that allow you to achieve all of the above, and without getting into the nuts and bolts of the plan in this column, here is how it works:

Purchase an insurance policy that allows you to deposit money into it. (Universal Life Insurance allows you to deposit money into the plan.)

The amount deposited can be flexible and you may increase or decrease the amount deposited year after year, however, you must keep the minimum amount of life insurance in place. This is not a substitute for having adequate life insurance in place to take care of your family and meet your financial obligations if you die prematurely.

The idea is to keep the insurance premiums at the minimum required to keep the policy in force so that the rest of the money will be deposited as an investment (you can choose where your money is invested).

As long as your policy meets the criteria set by the Canada Revenue Agency (CRA), it will maintain tax exempt status.

This policy gives you the best of both worlds. The ability to take advantage of the growth potential of the stock market with the protection offered by putting your money into a GIC (you can never realize negative returns).

In these uncertain times, why wouldn’t you take advantage of an opportunity to generate and protect your wealth, grow your money tax deferred, protect your money from creditors, and pass the money to your loved ones tax free in the event of your pre-mature death?

Fear is the elephant in the room – call me and let me help you deflate it.

About the Author

Karl Marshall is President of Marmac Financial Services Limited, an independent insurance and investment brokerage. He lives in the Durham Region and on Saturday nights he hosts The Party Mix on G98.7 FM in Toronto. You may contact him via email @marmacinsurance on Twitter or on Facebook.