There are four reasons clients use participating whole life as an asset class.
- Tax free growth. Similar to an RSP, money inside a whole life policy is deemed by Revenue Canada to be tax-exempt and therefore grows tax free.
- Performance. Dividends are guaranteed to be paid and the increased annual cash values and death benefits are guaranteed. The current dividend interest rate is 6.25%.
- Asset allocation. Sun life is the third largest debt provider in North American investing in Hospitals, Bridges and Roads making its asset allocation conservative with a history of robust performance in a participating insurance policy which means by law, the insurer must return 97.5% of the profit of the insurance portfolio to its policy holders (you).
- Diversification. Perhaps most important is the fact that the traditional investment portfolio of stocks and bonds is no longer working and whole life is an alternative asset class.
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