New question in Life Insurance FAQ

Posted on March 15, 2012 and updated January 23, 2019 in Life Insurance Canada News, Life Insurance FAQ 2 min read
Maybe the TFSA isn’t the tax-shelter Canadians think it is. Maybe the TFSA isn’t the tax-shelter Canadians think it is.

New question in Life Insurance FAQ:

My spouse and I are considering taking the cash value (17,500) from our policies after 19 years and paying off some debt.We can then purchase cheaper term insurance.I`ve read that if the cash value is equal to or less than premiums paid then its tax free,true?

The tax will be based on the adjusted cost base if the cash value is less than the adjusted cost base there will be no tax implications. You can get the Adjusted Cost base from the insurance company. You should definitely get approved for your term policy first before canceling your existing plan also keep in mind that term policies go up as you get older where as your existing policy may not increase on cost. There may also be other riders or provisions in the plan.

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