Written by Ron Cooke, President & Founder of Strategic Wealth Protection Partners in Ontario, CEA®, Member of the Estate Planning Council Canada
When should you get permanent life insurance?
The best time to purchase permanent life insurance is when you recognize that your need for coverage will likely last your entire lifetime.
Many Canadians purchase it when they begin building wealth, buying investment properties, growing a business, or planning for future estate taxes. Purchasing coverage while you are younger and healthier often provides more options and lower premiums.
The earlier you begin, the longer your policy has to build tax sheltered growth and support your long-term financial goals.
Can you be too young or too old to get permanent life insurance?
There is no perfect age to purchase permanent life insurance.
Younger individuals often benefit from lower premiums and more years of tax sheltered growth, while older Canadians frequently use it to solve estate planning and tax issues that become more apparent later in life. Even people in their 60s and 70s may find permanent life insurance to be an excellent solution if they qualify medically.
The most important factor is not your age, but whether the policy helps achieve your financial and estate planning objectives.
When does permanent life insurance make sense?
- You want lifetime insurance protection.
- You have a growing estate that may face significant taxes at death.
- You own a business or holding company.
- You own cottages, rental properties, or investment real estate with large capital gains.
- You want investments to grow on a tax sheltered basis.
- You have already maximized your RRSP and TFSA contributions.
- You want to leave more wealth to your children or grandchildren.
- You want to provide liquidity so your family does not have to sell assets to pay estate taxes.
- You are interested in retirement strategies such as an Immediate Financing Arrangement (IFA).
- You want to preserve wealth across multiple generations.
What are the benefits of permanent life insurance?
Permanent life insurance provides guaranteed lifetime protection, while allowing cash values to grow on a tax sheltered basis.
It creates a tax free benefit for your beneficiaries and can provide the liquidity needed to pay estate taxes without forcing your family to sell valuable assets. For corporate owned life insurance, the proceeds may also create a Capital Dividend Account, allowing most of the insurance proceeds to be distributed tax free to shareholders.
It is one of Canada’s most effective long-term wealth preservation tools.
What are the downsides of permanent life insurance?
Permanent life insurance generally requires a larger financial commitment than term insurance because it provides lifetime protection and long-term planning benefits.
It is designed for individuals with long-term objectives rather than temporary insurance needs. Some policy designs also require ongoing reviews to ensure they continue performing as expected. Like any financial strategy, the best results come when the policy is properly designed and regularly reviewed as your circumstances change.
Who should not buy permanent life insurance?
Permanent life insurance is not appropriate for everyone.
Individuals who only need short-term protection, have limited cash flow, or are focused solely on obtaining the lowest insurance premium may be better suited to term insurance. Others may not yet have sufficient assets or estate tax exposure to justify the additional cost.
The key is choosing the insurance that fits your current and future objectives rather than assuming one type of policy is right for everyone.
Is permanent life insurance an asset?
Many permanent life insurance policies become valuable financial assets because they accumulate cash value over time.
The money inside the policy grows on a tax sheltered basis, and depending on the policy design, that value may support borrowing strategies or provide future financial flexibility. At death, the insurance pays a tax free benefit to your beneficiaries, adding another layer of value.
For many successful Canadians, permanent life insurance becomes an important part of their overall wealth and estate planning strategy.
How does leveraged life insurance work?
Leveraged life insurance allows you to deposit money into a properly designed permanent life insurance policy where it grows on a tax sheltered basis.
The policy is then assigned to a financial institution as collateral for a loan, allowing you to reinvest the borrowed funds into your business or income producing investments while the insurance continues to grow. When structured properly, the loan interest may be tax deductible, creating additional tax efficiency.
Leveraged life insurance is also referred to as an Immediate Financing Arrangement (IFA).
Because an IFA is an advanced planning strategy, it is essential to carefully model different loan interest rate assumptions and different participating account or policy return assumptions before proceeding.
Understanding how changing interest rates and insurance performance affect the strategy helps ensure you understand both the opportunities and the risks before implementing the plan.
How long does permanent life insurance last?
Permanent life insurance is designed to provide coverage for your entire lifetime.
Unlike term insurance, it does not expire after a fixed number of years, provided the policy remains properly funded according to its terms. Whether you live to age 90, 100, or beyond, the policy is intended to continue providing protection and estate planning benefits.
This lifetime protection is one of the reasons permanent life insurance plays such an important role in preserving family wealth.
Where should I buy permanent life insurance in Ontario?
The best permanent life insurance policy is not necessarily offered by one insurance company.
Instead you may get the best outcome if you work with a company whose products, underwriting, and long-term performance best fit your specific situation.
At Strategic Wealth Protection Partners (SWPP), we begin with our Living Estate Planning Process, where we evaluate your assets, estate taxes, retirement objectives, and all available planning options before recommending a solution. Because we represent many of Canada’s leading insurance companies, we compare policies to find the one that best aligns with your financial and estate planning goals.
When designing leveraged life insurance or an Immediate Financing Arrangement (IFA), we also prepare detailed projections using different loan interest rate assumptions and different insurance return assumptions. This allows you to clearly understand how changing interest rates or policy performance may affect your strategy over time, so you can move forward with confidence knowing both the potential benefits and the possible risks.
Optimize Your Wealth with the Right Life Insurance Strategy
Are you using life insurance as part of your wealth strategy, or just as basic coverage?
For many Ontario families, permanent life insurance can do far more than provide a payout. When structured properly, it can reduce taxes and help transfer wealth more efficiently to the next generation.
At Strategic Wealth Protection Partners, we help you go beyond surface-level advice.
Whether you’re exploring strategies such as insured retirement plans or leveraged life insurance, or simply want to understand how to structure your policy properly, our team will guide you step by step.
Schedule a Life Insurance Clarity Call
For high-income earners, business owners, and real estate investors, the biggest risk isn’t a lack of growth.
It’s taxation.
Without proper planning, a large portion of your estate will be lost to taxes, fees, and forced asset sales. Life insurance can help offset these costs and preserve more of your wealth for your family. But only if it’s used correctly.
But not every strategy is right for every situation.
That’s where SWPP comes in.
We design life insurance strategies as part of a complete estate plan, so every decision supports your long-term goals, not just a product recommendation. And if life insurance isn’t the right move, we’ll tell you.
We’ll show you all the wealth preservation options that apply to your exact situation, including living trusts, estate freezes, and life insurance.
Discover how to reduce and avoid taxes and leave a rock-solid legacy for the ones you love.
Read More
If you’re considering life insurance for estate planning, you may find these articles helpful:
- What Are the Disadvantages of Permanent Life Insurance in Canada?
- How Does Permanent Life Insurance Work in Canada?
- What Is the Best Age to Get Permanent Life Insurance in Canada?
About the Author
RON COOKE, PRESIDENT & FOUNDER OF STRATEGIC WEALTH PROTECTION PARTNERS
With over 30 years in financial services, I’ve seen the challenges families face when a loved one passes—lost assets, unnecessary taxes, and emotional stress. That’s why I created the Living Estate Plan, a comprehensive process to protect assets, eliminate estate and probate fees, and create legacies that are remembered for many years to come.
This plan ensures your family receives not just your wealth, but a meaningful reminder of your care and love. Tools like The Final Word Journal capture your story, wishes, and essential details, offering clarity and comfort during difficult times.
Your final gift should be more than money—it should be peace of mind, cherished memories, and an organized estate.
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