Wealth Escalator Plan

The Wealth Escalator Plan demonstrates to your clients how they can use permanent life insurance as a tax-efficient solution to accumulate and hand down an estate, especially if they have maximized their contributions to registered plans.

How it works

The Wealth Escalator Plan is a financial strategy that helps to generate more after-tax wealth upon death. By redirecting money from a taxable investment, your clients can purchase a permanent life insurance policy, the proceeds of which could enhance their estate.

Taxable investments
Your client uses a portion of their non-registered investment portfolio to establish a permanent life insurance policy. These investments transfer from a taxable to tax-deferred vehicle.
Permanent life insurance coverage
Your client purchases a tax-exempt permanent life insurance policy for their life insurance needs.
Tax-efficient growth
The qualified life insurance policy allows the accumulation of cash values that grow tax-deferred, so long as the investments are not withdrawn from the policy and the policy remains exempt.
Wealth transfer
Upon death, the proceeds of the life insurance policy are paid tax-free. If a beneficiary has been named, this death benefit is paid directly, bypassing the estate, and thereby not included for probate. Furthermore, named beneficiary and proceeds paid from the life insurance claim remain confidential.

Advantages

The investments transferred into this plan become tax-deferred until withdrawn.
Creates a tax-free inheritance which is paid directly to the named beneficiary upon the insured’s death.
Offers cash surrender values which are accessible if needed.
Provides creditor protection through the appointment of an eligible beneficiary¹.

¹ Specific conditions must be met in order to qualify for creditor protection

Applicable products

Participating whole life insurance

With Paid-Up Additions (PUA) or Enhanced Insurance as the dividend options
Premium offset is allowed

Guaranteed whole life insurance
Universal life insurance

Type of protection

Individual
Joint First-to-Die
Joint Last-to-Dies
Joint Last-to-Die, Paid-up 1^st Death

Target clientele

The Wealth Escalator Plan is ideal for clients who have reached their maximum RRSP and TFSA contributions and have taxable investments that are generating income that is not required to maintain quality of life. This strategy offers the dual benefit of having more wealth and paying less taxes.

Enjoy lifelong insurance coverage
Increase the value of their estate
Cover end-of-life expenses like debts, funeral costs and taxes payable at death
Secure the financial future of designated beneficiaries with a hassle-free insurance payout that can bypass the estate
Creditor-proof assets by designating an eligible beneficiary

Targeted age: 45 to 65

Clients must be in good health in order to qualify for permanent life insurance.

Sales approach

Here are a few questions to ask your client:

Do you have non-registered investments that are earmarked for your estate?
Do you wish to leave a tax-efficient legacy to your beneficiaries and/or a preferred charity?
Are you receiving T5 slips that increase your taxable income? Would you like to reduce this tax bill?
Would you like to be able to access funds quickly in the event of an emergency?

Illustration creation

To create the report to illustrate the WEP strategy, you first need to enter the product features based on the following:

The policyowner must be an individual
Premium frequency set to Annual
Do not add any additional coverage, since it's not considered when comparing amounts in the report.
This applies to the presentation and is not a constraint for selling additional coverage.

How to create the illustration and the strategy report

Click the Strategies tab.
Open the Concepts section.
In the Affluent client’s section, select Wealth Escalator Plan.
Click the Export button to download the illustration data to an Excel spreadsheet.
Open the downloaded file through your browser or in your Downloads folder.
You'll have 60 minutes to open the file and access the data in the illustration. After that, you'll have to download the spreadsheet again.
Enable content and macros when opening the spreadsheet.

This screen will appear for the selected product:
Make sure the information about the proposed insured and the insurance coverage is correct. If it isn't, exit the page and restart the illustration.
Confirm or change the name of the client the strategy is being prepared for.
In the Insureds section, select the period of time you want to analyze.
Click the Personalize link to select the life expectancy of one of the proposed insureds, the equivalent age or any other period.
The time selected is indicated on the charts by a dotted vertical line.
Create a hypothetical portfolio in the Taxable Investment section, either by choosing the default values related to the chosen investor profiles, or by allocating the composition yourself between short-term investments, fixed-income investments, and equity investments.
The allocation must always total 100%.
For each type of investment, determine a realistic rate of return based on the current environment. This investment portfolio will be compared with the values in the insurance contract. We assume that the sums invested in the 2 scenarios are the same. The composition of the investment can be visualized in graphical or tabular form, according to your preference.
The tax rates shown are in the calculations vary by province or territory. These rates are updated and do not need to be changed.
An interactive chart will show how the results change based on the data you enter.
The chart shows the net value that will go to the estate for the insurance with the WEP strategy and the investment.
This chart illustrates the results up to age 100 of the proposed insured. The results can help them make an informed decision. You can save the report and give them the option they choose.
Click the Display report button and it will open as a PDF.
A copy of the report is automatically saved in the /Downloads/Desjardins.
You can also save it manually.
Go back to the Wealth Escalator Plan input screen and click Exit.

You can only use the saved PDF copy of the report.

To present the strategy again, you'll need to create a new illustration and download it from the Strategies tab.

Sales materiel

Sales material

Wealth Escalator Plan - Concept Summary (available in PDF only).

Describes the Wealth Escalator Plan for individuals and how it can help generate more after-tax wealth
Intended for clients and advisors
8 ½ x 11 inches

Report example
Concept presentation

For additional information please connect with your regional sales director.

Wealth Escalator Plan

Sales approach

How to create the illustration and the strategy report

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