Benefits of Investing in Life Insurance Company Products

Not so long ago if you wanted GIC’s, you went to the bank. If you wanted to buy stocks, you reached out to a stockbroker. If you wanted life insurance, you went to a life insurance company. Today the lines have blurred quite a bit. Banks, life insurance companies, and mutual fund companies are all in the same game and no matter what a prospective client is in the market for, more than likely, a bank, an investment institution or a life insurance company will all have solutions for those needs.

While there are solutions offered by all investment firms as well as banks, there are 3 unique benefits to investing with a life insurance company.

Probate Protection:

In many cases an estate must pass through probate at death. Depending on the size and complexity of the estate, there can be significant fees as well as time delays. Using investments tied to life insurance with a designated beneficiary means that any monies tied to such investments would pass directly to the designated beneficiary, bypassing probate fees as well as delays typical of the probate process.

Creditor Protection:

Sometimes we overlook the fact that usually at death there is money owed. Safeguarding assets from creditors at death should always be an important consideration when setting up a proper overall financial strategy. Thanks to the preferred status afforded to life insurance company’s under Canadian law, assets held within life insurance policies and annuity products, including RRSP, segregated fund contracts and term deposits cannot be seized by creditors. In simple terms, provided certain steps are taken when preparing these contracts, creditors cannot come after these assets at death, which allows your loved ones to receive the full benefit.


When you purchase a segregated fund product or other investment product through a life insurance company there are generally 2 condition that provide you, the investor, with guarantees on your capital. These two conditions are death and maturity. So as an example, Becky Thomson invests $100,000 in segregated funds through the Acme life insurance company. The maturity period is set for 10 years. If the guarantee is 100% then if Becky dies in year 2 and the investment has been on a decline since she invested, her beneficiary would still receive the full $100,000 (on death). If she left the money invested for 10 years and at year ten the value had also decreased to $75,000, she would still be guaranteed her $100,000 original investment (on maturity).

It would be quite unlikely that she would see a loss when an investment stays the term (usually 10 or 15 years) but the benefit here is that she would have guarantees on her initial investment in the event of potential losses.

To get a more detailed understanding of your retirement and investment options, reach out to me directly and I will be happy guide you through the process of effectively planning for your future.