Insurance as a wealth management strategy

May 19, 2021 | Elizabeth de Groot


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The past year has reminded us all that life doesn’t always go as planned.  Life circumstances such as our health, employment, and family situations can change abruptly and without warning.  Now more than ever, we find ourselves wanting to plan for the unexpected.  You might find yourself giving more thought to what's important to you and your family.  There is peace of mind that comes from a personalized wealth plan.  

When we hear the term “wealth planning,” many of us tend to focus solely on the investment portfolio and its performance.  While investment management is certainly an integral piece of overall wealth management, there are other areas of planning that can – and should – be discussed.  Broader wealth planning could include financial planning, tax strategy, charitable giving, saving for education, business-owner planning, estate planning, financial literacy, and insurance.    

We often worry not only about building and protecting wealth in our lifetime, but also maintaining those assets for future generations. Life insurance can be a way to grow and maximize wealth as part of a broader financial and estate plan. It can provide immediate and tax-free liquidity to satisfy estate obligations including taxes, probate and estate settlement costs.  The policy death benefit will typically bypass the estate, which means that the funds aren’t subject to probate (where provincially applicable) and can go directly to beneficiaries without delay.  This feature facilitates a tax-effective way to transfer wealth to the next generation or perhaps a charity of choice. 

While many understand the value of life insurance, few people consider the financial repercussions of recovering from a serious accident or illness.  Critical illness coverage provides financial safeguards in the event of a loss of income or the depletion of assets that could seriously affect achieving your financial goals.  More recently, Covid-19 has also heightened interest in long-term-care insurance to help provide a cash flow to keep you in your home longer or provide extra assistance in long-term care or retirement homes if needed.

Regardless of your situation, any strategy you consider should reflect your personal and family objectives.  The true value of wealth planning comes from partnering with a team of professionals to explore all possible strategies that could enhance and protect your wealth.       
For more information on the benefits of comprehensive wealth planning, contact Elizabeth de Groot of RBC Dominion Securities at elizabeth.degroot@rbc.com or 705-444-4742.

This article is supplied by Elizabeth de Groot, CFP, FCSI, CIWM, FMA, Vice-President, Investment & Wealth Advisor with RBC Dominion Securities Inc. Member–Canadian Investor Protection Fund.  This information is not intended as nor does it constitute tax or legal advice. Readers should consult their own lawyer, accountant or other professional advisor when planning to implement a strategy. Insurance products are offered through RBC Wealth Management Financial Services Inc. (“RBC WMFS”), a subsidiary of RBC Dominion Securities Inc.* RBC WMFS is licensed as a financial services firm in the province of Quebec. RBC Dominion Securities Inc., RBC WMFS and Royal Bank of Canada are separate corporate entities which are affiliated. *Member-Canadian Investor Protection Fund. RBC Dominion Securities Inc. and RBC WMFS are member companies of RBC Wealth Management, a business segment of Royal Bank of Canada. ® / TM Trademark(s) of Royal Bank of Canada. Used under licence. © RBC Wealth Management Financial Services Inc. © 2021 RBC Dominion Securities Inc. All rights reserved.