There are many financial strategies for saving and investing your money so you can have sufficient income when you retire. In Canada, there are 4 areas where you can take advantage of tax-free growth: RRSPs, TFSAs, your primary/principal residence and permanent life insurance.
Most Canadians have home ownership as a goal and have an RRSP either personally or through work. The TFSA also continues to grow in popularity but owning a permanent life insurance policy does not get the same attention. Permanent life insurance can add a lot of value to a retirement and estate plan when used as a compliment to an RRSP and TFSA.
In addition to providing your loved ones with some security in the event of your death, permanent life insurance has an investment portion or cash value component of the policy which allows you to grow wealth on a tax-deferred basis. This means you do not have to pay taxes on any interest, dividends, or capital gains on this cash value portion of the policy until you withdraw it. Over time this cash value grows, and you can borrow against it without having to pay taxes. This tax-free money can be used as a compliment to your retirement income.
Many permanent life insurance policies, such as a whole life insurance policy, also have guaranteed growth which help to insulate them against the volatile market, providing stability and more predictable growth. If you purchase permanent life insurance when you are younger, the premiums will generally be lower (those premiums will not increase) and it allows you more time for the cash value of the policy to grow.
Adding permanent life insurance as savings to compliment your retirement income not only helps protect the ones you love but builds cash value to use later in life. Since each of us is unique in our financial situation and needs, speak to your financial advisor to help you build your retirement plan.