Helping your clients live their
best lives. Without compromise.
How does someone plan to live their best life?
This series of case studies looks into hypothetical scenarios* of customers facing cash flow challenges and who turned to Manulife Bank lending solutions to leverage their assets in order to realize their dreams.
1
Wealth decumulation into retirement
2
Wealth preservation with an eye to the future
3
How high-net-worth clients can leverage insurance to enhance cash flow
4
Lending solutions in annual financial planning
* Sample cases for illustration purposes only
How high-net-worth clients can leverage
insurance to enhance cash flow
Addressing clients’ crucial insurance needs while freeing
cash flow for investments
Through Manulife Bank lending solutions and strategies, you can enable and inspire your clients to see to their growing insurance needs while maximizing their investment plans—a win-win scenario for, in this case, a successful surgeon concerned about personal cash flow.
Meet Michael 
| 49 |
| Well-established and busy cardiovascular surgeon |
|
$625,000+ per annum |
|
Married 3 children aged 19, 14, and 13 |
Over the past 20 years, Michael* has built a thriving and highly regarded career as a cardiovascular surgeon.
His specific niche experience, coupled with his reputation, brings a substantial income and consistently growing wealth (reflected by his family’s lifestyle).
However, Michael continues to lean on a sizeable yet inadequate $1.5M term life insurance policy that served him well when he was starting up two decades ago, but not any longer.
* Sample cases for illustration purposes only
Michael’s reality
With three kids, a home and cottage, and a successful career, Michael is well established and now thinking of the future. As the primary breadwinner for his family, he’s realizing that his current Term-20 life insurance is insufficient given his increasing wealth but worries that a hefty premium will eat into his cash flow—money he’d prefer to put into investments.
How can he protect his family while maximizing his legacy?
0%
of Canadians bought life insurance as a way to transfer wealth to their beneficiaries
M
Canadian households feel underinsured
0%
of households in the highest income category (over $100K household income) say they’re underinsured
Source : Life Insurance Marketing and Research Association, 2022
Michael’s assets
As a young doctor, Michael was 100% focused on establishing himself. Today, he and his family live extremely well, and he’s been investing in his three kids’ futures. He’d love to see them follow in his footsteps, but private education and medical school require capital.
At 49, Michael’s also looking at his “big picture” tomorrow, growing non-registered portfolios even more aggressively toward retirement. But it occurs to him—what if he should predecease his family? How will they fare?
The $1.5M of Term-20 life insurance coverage he set up just before his first child was born suited his needs then, but that was nearly 20 years ago. It’s up for renewal, but his estate now calls for greater, permanent coverage. How can he manage higher premiums while continuing to invest wisely?
Investments
Value
$1.1M
Focuses on non-registered accounts each year
Real estate
Value
$1.95M
Mortgages exist on primary home
($1.1M equity) and cottage ($850K equity)
Life insurance
Cash Value
$0
Cash value on $1.5M Term-20 life insurance policy
For illustration purposes only.
Michael’s options
Michael knows he has to rethink his financial plan. While he has sizeable wealth, his commitment to his children’s education leaves him with two mortgages still in play. His goal now is to build toward a comfortable retirement and to insure his estate’s true value for his family. Michael feels he must be able to achieve both, but he’s unsure how. So, he reached out to his advisor.
Michael’s strategy
Insurance-based investing |
Immediate Financing Arrangement (IFA)
Michael’s advisor introduced the IFA concept as a means to fill his substantial permanent life insurance needs while minimally impacting his cash flow. The IFA was put in place to obtain a $4M whole life insurance policy, and once the policy is in force, Michael can borrow an amount equivalent to up to 100% of the CSV each year.
Michael can use the credit facility to grow his non-registered portfolio as well as invest in any number of financial opportunities. The IFA also allows Michael the flexibility to pay only the monthly interest on the funds he uses, or he can choose to repay it in full at any time.
Benefit #1
Permanent life insurance protection
With a whole life insurance policy of $4M, Michael can protect his family in case of the unexpected with higher coverage that doesn’t expire.
When Michael passes away, the outstanding loan is repaid out of the death benefit, and the remaining proceeds will be paid, tax-free, to his beneficiaries.
Benefit #2
Growing CSV to secure a line of credit2
An IFA also helps provide Michael with significant and growing cash value to secure the credit facility.
Because the CSV grows each year on the policy’s anniversary date, Michael can unlock that growth each year to further fund his investment strategies.
Michael will have access to tax deductions arising from this IFA strategy. He should discuss these with his advisor and accountant.1
At a glance
In consultation with a team of financial experts that includes his insurance advisor and accountant, Michael will be able to protect his family with a permanent life insurance policy that will also create significant CSV in its early years. This allows him to borrow against the cash value for the purpose of making investments.
With the IFA strategy, Michael can borrow up to 100% of the accumulated CSV of his life insurance policy each year. The advantage is that the life insurance policy’s CSV creates a rapidly increasing borrowing capacity over time.
Potential cash value growth2
Note: The basic IFA concept assumes the borrower has sufficient income and qualifies to write off interest payments and take advantage of the collateral premium deduction.3
For illustration purposes only.
Michael’s best life is ahead
Let's see how Michael's doing 15 years from now. Retired just a few months ago, he’s looking forward to many years ahead quietly living life instead of saving lives.
His kids are indeed following in his footsteps. His eldest is, like her dad, a cardiovascular surgeon; the middle child has just started her residency in orthopedic surgery, while the youngest is majoring in dentistry.
Michael’s investments are showing excellent returns; between that and the whole life coverage on his estate, he’s confident of a secure future for his kids and, eventually, grandkids.
Manulife Bank has the solutions and strategies in place to help Canadians live their best lives, whatever they might be.
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Investment Lending
Commercial Lending
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