Analysis of Insurance as an Asset Class and Tax Diversification Tool

Are you confident about the amount of life insurance coverage you have? Are you maximizing your tax savings with the principal residence exemption? In this episode, we delve into life insurance and optimizing capital gains to answer these essential questions. In our conversation, we unpack the nuanced topic of life insurance, what people get wrong about it, and how to effectively calculate your life insurance policy needs. Using his own experience as the lens for the conversation, Mark shares how he calculated his life insurance and incorporated costs such as funeral cover, emergency funds, short-term expenses, and income replacement. Learn about using the safe withdrawal rate shortcut, free resources for calculating life insurance costs, and the best financial tools for getting the most out of your policy. He also delves into capital gains and how to use a lesser-known exemption to reduce the amount owed significantly. Mark walks listeners through how the principal residence exemption works and how it impacted the sale of his rental properties. Then, jumping to a brand new segment on the Rational Reminder Podcast, Ben introduces his financial decision-making iteration of the game of ‘Would you rather’. Finally, we share listener reviews and feedback on previous episodes and debate whether to lease or buy a car in our after-show segment. Tune in now!

Key Points From This Episode:

(0:03:13) Mark explains how he and his wife calculated their life insurance needs.

(0:06:55) Learn how to plan for income replacement and why it is so complicated.

(0:12:10) Ben’s perspective on Mark’s approach to calculating his life insurance coverage.

(0:13:54) Find out why there are differences between Ben and Mark’s calculations.

(0:18:17) How Mark factored in retirement costs into his life insurance calculations.

(0:22:30) Free resources and tips to accurately calculate your life insurance needs.

(0:27:04) Why Mark considers whole life insurance as a separate asset class.

(0:31:25) The principal residence exemption and how Mark applied it to his situation.

(0:39:19) How we would choose to invest $1 billion in today’s market.

(0:42:26) Would You Rather segment: only life insurance versus only disability insurance.

(0:45:02) The exciting development of a tool for realizing capital gains in a corporation.

(0:51:06) Trends in the awareness of corporate notional accounts and tax planning intricacies.

(0:54:12) Listener reviews, episode feedback, and leasing a car instead of buying.

Links From Today’s Episode:

Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/the-rational-reminder-podcast/id1426530582. Rational Reminder Website — https://rationalreminder.ca/ 

Rational Reminder on Instagram — https://www.instagram.com/rationalreminder/

Rational Reminder on X — https://x.com/RationalRemind

Rational Reminder on YouTube — https://www.youtube.com/channel/

Rational Reminder Email — info@rationalreminder.caBenjamin Felix — https://www.pwlcapital.com/author/benjamin-felix/ 

Benjamin on X — https://x.com/benjaminwfelix

Benjamin on LinkedIn — https://www.linkedin.com/in/benjaminwfelix/

Cameron Passmore — https://www.pwlcapital.com/profile/cameron-passmore/

Cameron on X — https://x.com/CameronPassmore

Cameron on LinkedIn — https://www.linkedin.com/in/cameronpassmore/

Mark McGrath on LinkedIn — https://www.linkedin.com/in/markmcgrathcfp/ Mark McGrath on X — https://x.com/MarkMcGrathCFP

‘How Much Life Insurance Do You Need?’ — https://www.linkedin.com/pulse/how-much-life-insurance-do-you-need-mark-mcgrath-cfp-cim-clu--tjwwe/

InsureRight — https://www.insureright.ca/

Episode 65: Dr. Wendall Mascarenhas — https://rationalreminder.ca/podcast/65

Dimensional Fund Advisors — https://www.dimensional.com/

Money Scope Podcast — https://moneyscope.ca/

Braden Financial Services — https://www.bradenfinancialservices.com/

Hendry Warren on LinkedIn — https://www.linkedin.com/company/hendry-warren-llp/

Brady Plunkett on LinkedIn — https://www.linkedin.com/in/brady-plunkett-712489105/

Capital Gains Calculator for Non-Corporations — https://research-tools.pwlcapital.com/research/realize-gain

Episode 305 - Is Private Credit Special? — https://rationalreminder.libsyn.com/episode-305-is-private-credit-special