A key benefit of having a professional financial services advisor is that we are educated and experienced in innovatively solving our clients’ financial challenges. Oftentimes, I’m presented with situations that require all of my skills to find the best solutions for my clients, and recently one such situation presented itself.

Over the years, I’ve provided financial services advice to a couple who are now in their late fifties. They have a family business and their children are currently involved in the affairs of the business but will one day take them over completely. As often happens, I met the couple’s two adult sons because they had become clients one evening to answer their financial planning questions.

The sons were now in their early thirties and were starting to give serious thought about saving for retirement. Since much of their equity was in the family business they did not have much cash to put into a Registered Retirement Savings Plan (RRSP). Rather than investing, say, $100 a month in an investment fund, I suggested another idea.

I suggested that they both purchase a joint last to die life insurance policy on their mother and father naming themselves each as beneficiaries. The sons would pay the monthly premiums instead of placing $100 a month into an RRSP.

After some detailed discussions with them and their parents I was able to come up with a solution they all appreciated. Let’s have a look at what I was able to do for them, and perhaps you may see possibilities for yourself in this plan.

The parents are in good health, aged 56 and 58. A $100,000 life insurance policy on the couple will cost each son about $690 per year in premiums. If the parents live for 25 years, each son would have paid $18,600. Upon their parents’ passing, the sons would receive the full value of the policy – $100,000 ($50,000 each). And most importantly because this is an insurance policy, the money would be tax-free.

Would $60 a month invested into an investment fund over the same period earn the same amount? It’s hard to say because no one can predict the markets, but I was happy to be able to offer the family another alternative to investing in the financial markets.

If this solution caught your attention, please contact me to see if it makes sense for you.  Every person’s situation is unique and requires thoughtful planning, and I would be happy to speak with you.

Orlando Ali

Director, Sales and Business Development

Desjardins Financial Security Independent Network

416-743-1239 x232



Rates are quoted for 2017.

This article is for general information purposes only and should not be construed as insurance, investment or tax advice. The information contained herein is based on sources and materials believed to be reliable, but are not guaranteed. Please refer to the policy for more detailed information.