Is permanent life insurance a tax-free investment? [Canada]

Permanent life insurance is often sold as offering tax-free investment growth.

That sounds great, especially for people with high incomes, but I will argue that it's a misrepresentation.

There are up to 3 layers of tax on permanent life insurance that need to be considered.
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[Skilliard]

It's worth noting that as the title suggests, this video is only true in Canada, laws in the US and other countries vary. Not that I recommend whole life insurance though.

[cvalle]

Johnny Sins knows when someone is getting screwed by someone else.

[piranhaa]

Love the short videos! This format makes it so simple to forward on to someone and them not freaking out with a 10 minute or 1 video

[nathanvanwie]

Whole life insurance salesman are some of the worst here in the US. they try to make it sound like they will beat the s&p500 and have better tax benefits than IRA’s.

[vicgill]

Details and personal situations matter. Getting the right product at the right life phase makes it worthwhile AND holding till death. Especially UL policies.

[sebd]

What a killjoy, I was looking forward to cashing out my life insurance.

[samuelcote]

what about critical illness insurance (cancer, etc...) that is pay by company and personal that you can get your money (tax free) back after 15 years?
this is in quebec canada

[YashRohra]

How about corp bought policies.. even with these taxes they seem to provide better returns?

[timemanagementisinvesting]

When ARE they beneficial? They haven’t disappeared, suggesting value. Banks utilize them, suggesting value. I’d been on the fence for quite a while but never reached a conclusion. Good-willing, my siblings and I all plan to outlive our assets but would also like to enjoy the time we’re still here. The closest I came to a conclusion when meditating on it, was that $100mill and above make it more than worthwhile. We’re roughly $6mill, far from my semi-conclusion.

[gillmeter]

Why would I be concerned about what taxes the insurance companies pay... insurance premiums are the same nationally so why do I care if the insurance company pays higher taxes in Ontario or NFLD. Also, rather than taking out the cash surrender value in cash and therefore cancelling the insurance policy, why not leverage the cash value out, reinvest that money, capitalize the interest and then deduct the interest. When you die, your estate pays back the loan out of the death benefit and then your beneficiaries net the difference. Your return on investment in this scenario is very good. And this is just with personal money. With corporately owned policies this works even better as the company can own the policy and fund policy premiums with after tax dollars which are taxes more preferentially. This concept is not for everyone though and is designed for higher net worth individuals. However, making blanket statements without all the facts is problematic. If somebody is recommending permanent insurance to you as a well diversified portfolio, I have no issue with it. But if you have TFSA room and/or short time horizons etc I would look at other investments first. But this quick video is not giving all the facts.

[samsonsoturian]

Think of permanent life insurance as a put on your wellbeing. Great as insurance, but terrible as an investment unless you plan to have a kamikaze lifestyle

[carlchristopher]

You need to clearly state that these laws and rules about tax and permanent life insurance only pertained to canada. These policies are absolutely tax free in the united states.