Corporate Estate Bond
Many successful Canadian business owners keep their retain earnings into the corporation and they hold investments inside the corporation. As the business owners approach retirement, they tend to be conservative in their investment approach and do not want to invest in a portfolio which has a lot of volatility. Mostly these corporate held investments are fixed incomes assets and generate relatively very low returns. Corporate estate bond is very effective as it helps to increase to estate value grow significantly.
Let us consider an example of a couple age 58(male) and 56(female) and they are investing into a fixed income portfolio which yield 2.5% rate of return annually.
Assuming(47% MTR) they are depositing $25K annually for next 20 years. The total value of portfolio is $543,235(after taxes).
Alternatively, the couple can get a life insurance joint last to die policy with 500K coverage. The death benefit after twenty years is almost 840K. Moreover the death benefit amount is get deposited in a capital dividend account (Death benefit less adjust cost basis). From capital dividend account the funds can be distributed to the share holders.
Who should consider investing in corporate Estate bond?
Wealthy individuals with stable corporation, who want to maximise the estate value. Also, health is very important as the premiums will change if the applicants are not healthy.
What is disadvantage of the corporate Estate Bond?
As it is a life insurance policy the death benefit is paid only at the time pf death. The individuals do not have access to the funds in the initial years as the cash value inside the policy is very low.
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REVIEWS & TESTIMONIALS
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