Give Your Retirement a Boost

When you create your PREC, you can name anyone as shareholders. As the real estate agent, you need to hold the voting shares. But other members of your family can become non-voting shareholders. When someone is listed as a shareholder in the corporation, you can apply for life insurance on that person. And as we learned in the previous blog, the proceeds from a life insurance policy are paid out of the corporation tax free.
So what is the strategy? Consider adding your parents to the corporation, and then have the corporation hold insurance policies on them. You will be able to use after-tax corporate dollars to pay the premiums, and once again turn that into tax-free personal dollars. 
To put numbers to this strategy, I ran quotes on my mother and father.
My mother is 67 this year. To get her $250,000 of coverage, the premiums would be $11,045/year. My father is 70. To get him $250,000 of coverage, the premiums would be $15,445/year. That sounds expensive. So why would I recommend it? Because it makes sense within a financial plan.
Your investments in the housing market and investment markets are subject to fluctuations. Unless you opt for no/low risk options, which typically return less than 3% which you need to pay tax on. Permanent insurance policies have a guaranteed death benefit, and an investment option as well. Plus with their tax-free return, they can outpace conservative investments.
The policies on my mother would have an estimated payout of $385,083 at age 90. That is equivalent to a pre-tax return of 5.55%. My father’s would have an estimated payout of $388,082 which is a pre-tax return of 3.53%. 
Many people believe that insurance is only used to protect you from bad things happening. Wealthy people see that permanent insurance can, and should, be seen as an alternative investment option.
Do you?