Personal Ownership of Life Insurance
Life insurance has been used for centuries as a way to protect a family in the event of the death of the person who is earning income for the family. The life insurancecan be either invested to earn interest and dividends, or it can be used to purchase an . Either option will provide the means to replace all or a portion of the lost income.
One benefit associated with personally-owned life insurance is the opportunity for creditor protection. Creditor protection means that creditors cannot seize thein the life insurance policy. The objective may be to protect the life insurance proceeds from creditors during the life of the life insured, or to protect the proceeds after the death of the life insured.
Avoidance of Probate Fees
Probate fees are charged by the provinces on all assets in the estate (in Ontario the probate fee is 1.5%). A personally-held policy with a designated(for example your spouse) avoids probate fees. If the estate of the insured person is the beneficiary of the policy, then those proceeds may be subject to probate fees.