It sounds morbid, but young Canadians who want some significant cash in their golden years should take out an insurance policy on aging parents. “You get a great rate of return,” says Cindy Davis, vice-president of estate planning at Raymond James. “High single-digit if not double-digit territory.” Insurance isn’t taxed, so when the parents die, the children get a nice lump sum without having to shell out half to the government.
It’s 30-year-olds with healthy, 60-something parents who should consider this strategy. Premiums on boomers can be affordable—about $245 a month to insure a 60-year-old for $250,000. Ideally, parents will pass away in their 80s or 90s, so the financial windfall will come just as their children are ready for retirement.
(Research, editorial and spiritual support provided by Bryan Borzykowski)