Wealth Escalator Plan

The Wealth Escalator Plan demonstrates to your clients how they can use permanent life insurance as a tax-efficient solution to accumulate and hand down an estate, especially if they have maximized their contributions to registered plans.

The Wealth Escalator Plan is a financial strategy that helps to generate more after-tax wealth upon death. By redirecting money from a taxable investment, your clients can purchase a permanent life insurance policy, the proceeds of which could enhance their estate.

  1. Taxable investments
    Your client uses a portion of their non-registered investment portfolio to establish a permanent life insurance policy. These investments transfer from a taxable to tax-deferred vehicle.
  2. Permanent life insurance coverage
    Your client purchases a tax-exempt permanent life insurance policy for their life insurance needs.
  3. Tax-efficient growth
    The qualified life insurance policy allows the accumulation of cash values that grow tax-deferred, so long as the investments are not withdrawn from the policy and the policy remains exempt.
  4. Wealth transfer
    Upon death, the proceeds of the life insurance policy are paid tax-free. If a beneficiary has been named, this death benefit is paid directly, bypassing the estate, and thereby not included for probate. Furthermore, named beneficiary and proceeds paid from the life insurance claim remain confidential.

Advantages

  • The investments transferred into this plan become tax-deferred until withdrawn.
  • Creates a tax-free inheritance which is paid directly to the named beneficiary upon the insured’s death.
  • Offers cash surrender values which are accessible if needed.
  • Provides creditor protection through the appointment of an eligible beneficiary1.

1 Specific conditions must be met in order to qualify for creditor protection

Applicable products

  • Participating whole life insurance
    • With Paid-Up Additions (PUA) or Enhanced Insurance as the dividend options
    • Premium offset is allowed
  • Guaranteed whole life insurance
  • Universal life insurance

Type of protection

  • Individual
  • Joint First-to-Die
  • Joint Last-to-Dies
  • Joint Last-to-Die, Paid-up 1st Death

The Wealth Escalator Plan is ideal for clients who have reached their maximum RRSP and TFSA contributions and have taxable investments that are generating income that is not required to maintain quality of life. This strategy offers the dual benefit of having more wealth and paying less taxes.

  • Enjoy lifelong insurance coverage
  • Increase the value of their estate
  • Cover end-of-life expenses like debts, funeral costs and taxes payable at death
  • Secure the financial future of designated beneficiaries with a hassle-free insurance payout that can bypass the estate
  • Creditor-proof assets by designating an eligible beneficiary

Targeted age: 45 to 65

Clients must be in good health in order to qualify for permanent life insurance.

Sales approach

Here are a few questions to ask your client:

  • Do you have non-registered investments that are earmarked for your estate?
  • Do you wish to leave a tax-efficient legacy to your beneficiaries and/or a preferred charity?
  • Are you receiving T5 slips that increase your taxable income? Would you like to reduce this tax bill?
  • Would you like to be able to access funds quickly in the event of an emergency?

Procedure to illustrate the corporate wealth escalator plan:

  1. Click the Sales Strategies tab.
  2. Open the Concepts section.
  3. Select Wealth Escalator Plan (Participating / Permanent/ Universal Life Insurance) in the drop-down menu.
  4. Download the concept by clicking on Export. The data in the illustration will be transferred to a spreadsheet. You will have 60 minutes to open the spreadsheet and to access the data in the illustration. After this time, you will need to download the spreadsheet again.
  5. When the browser has finished downloading the spreadsheet, open the spreadsheet directly from the link in the browser or from your Downloads folder.
  6. When opening the spreadsheet, activate the contents and macros.
  7. Press the Start button to start the sales strategy.
  8. The following entry screens will be displayed depending upon the product used:
  9. Participating Whole Life:

    Universal Life:

    Permanent:

  10. Enter Allocation and Rate of Return data for the taxable investment comparison. Tax information will be pre-populated based upon the highest marginal tax rate in the client’s province of residence, this can be modified as needed.
  11. Confirm the fields and click on the PDF icon.
  12. The Wealth Escalator concept report will appear in PDF format.
  13. A copy of the report will automatically save in the directory "\Downloads\Desjardins". You will also have an option to manually save the document.
  14. When you have finished consulting the report return to the input screen and click Quit.
  15. Only the saved PDF report can be used to view the spreadsheet results. To illustrate the concept again, please produce a new illustration and download the concept from the Sales Strategies tab.

Wealth Escalator Plan - Concept Summary (available in PDF only).

  • Describes the Wealth Escalator Plan for individuals and how it can help generate more after-tax wealth
  • Intended for clients and advisors
  • 8 ½ x 11 inches

Report example
Concept presentation


For additional information please connect with your regional sales director.