Life Insurance

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InvestorNewb
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Life Insurance

Post by InvestorNewb » 13 Jul 2017 08:55

Hello,

I'm a 34 y.o male and I want my assets to go to my brothers if I were to pass away. Right now they would be taxed significantly upon death so I'm looking to offset that with life insurance.

What company offers the best rate? Ideally I don't want to pay more than $50/month but would consider going up to $100/month for the right amount.

Thanks
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adrian2
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Re: Life Insurance

Post by adrian2 » 13 Jul 2017 09:08

InvestorNewb wrote:
13 Jul 2017 08:55
I'm a 34 y.o male and I want my assets to go to my brothers if I were to pass away. Right now they would be taxed significantly upon death so I'm looking to offset that with life insurance.
I'm questioning your premise.

Let's say that as of today you own a million in assets, and if you die now your brothers would inherit $800k. What's wrong with that (apart from your passing away, of course)?

In the next five years, let's say you earn an extra $500k and you pay taxes of $200k. Being a frugal man, you only spend $200k and you end up adding another $100k to your nest egg.

If you start from your premise that your brothers "deserve" $1MM now instead of $800k, what do they deserve in 5 years? $1.1MM? $1.3MM ? $1.5MM?

Taxes are part of life.
Taxes are also part of the end of life process.

If, say, the whole $1MM could pass to your brothers today tax free, would you buy life insurance so they can inherit another $200k?
Money is fungible and life insurance proceeds are not tied to the estate tax due, except by mental accounting.

The only exception that would make sense IMO would be if the inheritance is indivisible and finding the money to pay the "death taxes" would be a problem. But I'm guessing in your case you're talking about stocks; liquidating a portion of the portfolio should be easy enough.
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“It doesn't matter how beautiful your theory is, it doesn't matter how smart you are. If it doesn't agree with experiment, it's wrong.” [Richard P. Feynman, Nobel prize winner]

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InvestorNewb
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Re: Life Insurance

Post by InvestorNewb » 13 Jul 2017 09:55

Hey there,

If I could transfer what I currently own to my brothers tax-free upon death, I may not opt for life insurance. But most of my assets are in a CCPC in stocks (which could experience a 50% decline). So should things transpire at the wrong time, my assets could be liquidated at a value that is significantly less than the present value.

My other reasons for wanting to do this:

- I was recently diagnosed with a non life threatening condition
- It is much better to buy life insurance when you're young
- It gives me comfort knowing that others will be well taken care of
- It will compensate for a heavy tax hit
- Peace of mind knowing that what would normally be a very dark period, there is presumably some comfort with a large windfall (I'm thankful to have never been through this, but I imagine such a thing can give comfort in times of distress)
- Legacy knowing that I helped make a difference in other people's live
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AltaRed
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Re: Life Insurance

Post by AltaRed » 13 Jul 2017 10:20

Along the lines of what Adrian is talking about, I think you are going about this the wrong way. Forget about how your assets will be handled and taxes due on liquidation of assets. If you appoint the right executor, it is up to him/her to go liquidation and distribution in a logical way. You cannot rule from the grave.

If you truly want to leave some cold hard cash to a beneficiary immediaely upon death, then buy a term policy specifically for that purpose. Trying to term match your CCPC assets and where equities are at in the business cycle is a mug's game.
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kcowan
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Re: Life Insurance

Post by kcowan » 13 Jul 2017 14:54

The other possibility is to get your heirs to pay for the insurance so they can receive whatever they think they deserve.
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Re: Life Insurance

Post by cashinstinct » 23 Jul 2017 21:54

InvestorNewb wrote:
13 Jul 2017 09:55
- I was recently diagnosed with a non life threatening condition
- It is much better to buy life insurance when you're young
Since you will need to disclose the non life threatening condition, it could impact the price quoted to you.

Why would you pay life insurance to make a bigger gift to people?

The only reason I see is if you can stil qualify for a good rate on life insurance and plan to start a family someday and will need coverage to provide for them.

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