Canada Life Participating Life Insurance - Wealth Achiever

I have a life ot death question I got a phone call from Investors Group, spoke with them in person and they suggested the following life insurance product. This life insurance is offered by Canada Life and is called : Participating Life Insurance - Wealth Achiever
This is what they told me: The main benefit of that product is that all the investments made are tax deductible and not taxable when withdrawn(kinda like a TFSA but no 5000$ limit) However if i commit to a certain amount per month and need to make the payment otherwise there are penalties (getting smaller the closer you get to 20 years).

The example they gave me, If i put 25 000$ a year (way to much for me btw) in 20 years i can withdraw ~ 620 000$ tax free, and every year after that the amount was considerably higher. Basically, i get a 120 000$ return with 500 000$ after 20 years. That's good but the every year tax deduction is what attracts me the most.
I'll get a call within a week to buy that insurance, but since i find it to good to be true, i'm starting to have doubts.

Any useful imput would be appreciated.

This is a great question.

Participating Insurance is "permanent" insurance wherein the growth of your investment is participating in the performance of the insurance company.

THERE ARE NO TAX DEDUCTIONS FOR LIFE INSURANCE DEPOSITS..is that clear?

However, the invested value will grow on a TAX-DEFERRED basis, NOT TAX FREE.

If you withdrawal the funds, all the growth will be taxed to you as income...OUCH!!

IN order to access your funds in a "Tax free" way (as they say), then you need to obtain a loan against the value of your policy...this loan is NOT GUARANTEED and the amount of the is also NOT GUARANTEED.

Read this article on permanent insurance (sometimes called Universal Life or Whole Life)...HERE

If you don't fit the criteria, then stay away. From what you have posted so far, your are very misinformed by the advisor or not yet understanding the product. Make sure you completely understand what you are getting into before giving them any money.

don't get sold on RATE of RETURN...it is not guaranteed.

One more thing....

PERMANENT INSURANCE (like the one you're proposed) IS A TAX DEFERRAL MECHANISM...ONLY PROCEED WITH THE GO AHEAD OF A TAX PROFESSIONAL...your accountant, not a sales person.

Don't be afraid to get a second opinion from an independent advisor that you trust.

All the best.

investment property/principal residence question (no one can give me an answer

I have talked to several real estate lawyers and a few accountants and no one can give me a definite answer. Everyone seems to be telling me something different.

Here is the situation.

My parents are looking to purchase a new condo. Either 1 through assignment that closes in a couple months or 1 to 2 pre construction units that close in 2014.
If they treat this as investment property with intent to rent it out right away what kind of taxes (HST) would they have to pay on the purchase, and how much of this is refundable. I have heard rates such as 1.5%, 7.8% and 13%. Some people have said they get all of it back up to $24,000 per unit and some have said they only get up to 6% back. Everyone is giving me a different answer :S

Option 2.

The condo is purchased by them. But one of there siblings who are over 18 will live there for a bit. Since it would be a principal residence we would not have to pay any extra HST.. Say the sibling moves out and then they decide to rent the place. How are they effected? How long does the sibling have to live there? Can the property still remain as principal residence or does it have to turn into rental unit.

any help is appreciated.

AFAIK the HST rebates are only for primary residences AND NOT for investment properties.

May be this link can provide some answers http://www.rev.gov.on.ca/en/notices/hst/pdf/04.pdf

"Primary place of residence
One of the main conditions for a new housing rebate to be available is that you must buy or build the house for use as your or your relation’s primary place of residence.

Your primary place of residence is generally a house that you own, jointly or otherwise, and that you intend to live in on a permanent basis. You may have more than one place of residence, but you are considered to have only one primary place of residence.

Note
If you buy or build a new house in Canada but your primary place of residence remains outside Canada, then your house in Canada would be a secondary place of residence and would not qualify for the new housing rebate.

The following are examples of some of the factors we may consider to determine whether a house is your or your relation’s, primary place of residence for purposes of the new housing rebate:


•whether you consider the house as your main residence;
•the length of time you inhabit the premises; and
•the designation of that address on personal and public records.
To be eligible for the new housing rebate, your intent to use the house as your or your relation’s, primary place of residence must be evident at the outset of buying, constructing, or substantially renovating the house.

For rebate purposes, a house is not your primary place of residence if, for example, your intention is to use the house as your primary place of residence upon some more distant occasion, such as retirement. Further, a recreational cottage or an investment property is not your primary place of residence for rebate purposes. No new housing rebate is available in these cases."