Income Sheltering - Universal Life has become a vital tool in tax planning
strategies. In addition to providing liquidity with tax-free death benefits, Universal
Life also offers tax-deferred accumulation with a wide array of investment options.
Preferred tax treatment and flexibility allow for income sheltering and retirement
augmentation.
Leveraging Concepts - Cash Values from a Universal or Whole Life plan can be assigned to a
bank, which in turn provides a line of credit to use for retirement income.
The advantages to these arrangements are that cash values within the plans continue to
accrue without taxation. As well, individuals can access their line of credit with out
having to pay personal income tax. In corporate arrangements the income is taxable to the
retired shareholder. However in both cases, if structured properly the interest paid on
the line of credit may be tax deductible. Professional Assistance should always be
sought prior to implementing any of these arrangements.
