Is life insurance a good way to build a personal legacy?

Is life insurance a good way to build a personal legacy?



First of all, what does it mean to build a legacy? It simply refers to a technique used to maximize the value of a share one’s wealth that you plan on not using during your lifetime.

It is in the form of a guaranteed investment, tax-free, that this strategy is presented. Thus, funds can be set aside for the next generation or for a charitable cause.

Many people keep some of their assets that they plan to leave as a legacy and don’t plan to use.

But why do some people decide to build a personal legacy?

If you have the right profile, building a personal legacy allows you to:

  • Bequeath an amount, tax-free, upon your death;
  • Protect these funds from creditors, both yours and that of your beneficiaries;
  • Increase the value of your legacy at the time of your death;
  • Reduce the cost and length of time for the estate in favor of designated beneficiaries ;
  • To increase the value of the funds you intend to bequeath, out of reach of taxes based on the law in force.

In addition to providing a significant legacy to your heirs, life insurance can also help you to achieve your dreams and goals.

Whether you dream of traveling around the world or plan to build a house from the sweat of your brow, these are projects that require cash.

You will see an example below of how much a life insurance policy can significantly increase your legacy.

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What is life insurance or investment to prepare your estate?

Due to the tax regulations on life insurance, it is possible to leave a substantial amount of money to your estate as well as amend clauses designating beneficiaries in usufruct (the right to enjoy something belonging to another) or those in bare ownership (the right to keep something).

When it comes to alternative investments, they gain interest over the long term as the legacy is built gradually as you invest your funds and accumulate interest.



 Many popular investment products are taxable, creating a tax burden at the time of death.

These investments are more complicated to pass on as a legacy without any transfer, inheritance, valuation, or probate fees.

In contrast, by building your personal legacy, you can use your extra income or capital to subscribe to a permanent life insurance.

You can deposit the money monthly or annually, based on your preference, for a predefined period or for life.

Of course, as with any life insurance product, the money deposited varies based on age, gender, health status, and level of taxation.


Here is a demonstration of how building a personal legacy with life insurance and alternative investment can be done

To help you better understand the significant advantage that an alternative investment or life insurance for building personal wealth can give, we present a table below.

All figures shown in this table are based on the example of a 33-year old male, non-smoker.

The example below is based on participating life insurance for a coverage of $1 Million with deposits distributed over a period of 8 years.

Regarding the posted figures of the alternative investment, they are based on a 4% interest rate per year, with 40% tax and a 100% interest rate growth.




Comparative table in building a personal legacy with life insurance vs. alternative investment

How does life insurance work?

Death benefit for your estate

How alternative investments work Life insurance benefit in % every year
Age of the policy How much do you pay for the premium or deposit amount? Interest on the investment How much will you pay for taxes? Amount accumulated in anticipation of a personal legacy
1 year $26,391 1 million $1,055 $422 $27,025 3600 %
2 years $26,391 1 million $2,135 $855 $54,695 1730%
3 years $26,391 1 million $3,245 $1,300 $83,030 1100%
4 years $26,391 1 million $4,380 $1,750 $112,050 790%
5 years $26,391 1 million $5,540 $2,215 $141,770 605%
6 years $26,391 1 million $6,725 $2,690 $172,195 480%
7 years $26,391 1 million $7,945 $3,180 $203,350 390%
8 years $26,391 1 million $9,190 $3,675 $235,256 325%
9 years $0 1 million $9,410 $3,765 $240,900 315%
10 years $0 1 million $9,635 $3,855 $246,670 305%
15 years $0 1 million $10,850 $4,340 $277,735 260%
20 years $0 1 million $12,215 $4,890 $312,700 220%
25 years $0 $1,080,930 $13,755 $5,500 $352,070 205%
30 years $0 $1,218,100 $15,845 $6,200 $396,400 205%
35 years $0 $1,378,310 $17,435 $6,975 $446,305 210%
40 years $0 $1,569,500 $19,630 $7,850 $502,500 210%
45 years $0 $1,801,400 $22,100 $8,840 $565,760 220%
50 years $0 $2,084,600 $24,885 $9,950 $636,990 225%
55 years $0 $2,429,000 $28,015 $11,200 $717,185 240%
60 years $0 $2,841,600 $31,545 $12,620 $807,480 250%
65 years $0 $3,314,700 $35,515 $14,205 $909,140 265%

*A cash advance on the cash value of a life insurance policy may be taxed on its adjusted cost base. On the other hand, the life insurance benefits are not taxable at the time of death.

The table above is for illustration purposes only. It does not represent an insurance price guarantee. The tax figures in this table were based on Canada’s Income Tax Act and its various regulations.

Any amendment to the said Act or regulations may affect the figures presented in this table. It is advisable to speak to a life insurance broker or financial advisor to find out which strategy is beneficial to your situation.

In the case of a life insurance with an alternative investment of which the policyholder is a business entity, the table shows what would be the net estate value, based on life insurance and alternative investment capital paid at the time of death. This table does not show any gain in capital value for the for the eventual disposition of any shares at the time of death.

No figure in the above table represents any guarantee in cost. It is strictly based on the various criteria mentioned above. The actual amounts may be lower or higher, depending on the characteristics of the individual applicant.

To know the actual amounts based on your personal situation, fill out the form on this page and ask for your quote, free and without any obligation. One of our partners will be happy to find you an offer tailored to your needs.


Discover the life insurance policy that will let you build your personal legacy

If the time has come for you to plan your estate, seek the advice of a qualified professional. You can avoid risky investments and ensure that you have the best product for building a significant legacy.

By using the form on this page, vou gain access to a network of partners consisting of insurers and insurance brokers located throughout Quebec.

This network of partners have access to over 20 life insurance companies. One of them will assist you when he will receive your answers.

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