411 on Excelerator Deposit Options

Excelerator Deposit Options (EDOs): Fast-track Your Family’s Financial Future

When it comes to financial planning, most people think of life insurance and critical illness coverage
as essential safety nets. But what if you could supercharge these plans to build wealth and create a
financial legacy for your children? That’s where Excelerator Deposit Options (EDOs) come in.

What is an Excelerator Deposit Option (EDO)?

An Excelerator Deposit Option is an additional deposit you can make into a permanent life insurance policy,
above and beyond your required premiums. Think of it as a turbo boost for your policy’s cash value,
helping it grow at a much faster rate.

This extra contribution accumulates within the policy on a tax-advantaged basis, allowing for greater
flexibility in the future—whether it’s for retirement income, education funding, or wealth transfer.

How Does an EDO Work?

• Pair With a Permanent Life Insurance Plan – EDOs are only available with permanent
  life insurance policies, meaning they’re built for long-term financial strategies.
• Make Additional Contributions – Beyond the required premium, you can deposit extra
  funds into your policy, increasing its cash value.
• Tax-Advantaged Growth – Because the money grows within the policy, it benefits from
  tax-deferred growth, meaning you won’t be taxed on gains unless withdrawn.
• Flexibility in Accessing Funds – Over time, the accumulated cash value can be borrowed
  against or withdrawn, providing liquidity when needed.

When and Under What Conditions Does the Policy Pay Out?

An EDO-enhanced policy provides both living benefits and death benefits, offering financial support
when it’s needed most.

If a Child is Covered:

Many policies allow parents to include children in their coverage. If a covered child suffers a severe illness,
breaks a bone requiring surgery, or faces a medical emergency, the policy may provide a payout or access to
cash value to help cover medical expenses and recovery costs.

If an Adult is Covered:

If the insured adult becomes critically ill or disabled, the policy may provide an early payout, allowing
for financial support during treatment or time away from work. In the event of the insured’s passing, the
policy pays out a tax-free benefit to beneficiaries, ensuring financial security for loved ones.

Use Cases for Payouts:

• Unexpected medical costs (e.g., a child requiring surgery after a sports injury)
• Temporary income replacement during recovery from an illness or injury
• Specialized treatments or out-of-country medical care
• Funeral expenses or estate planning costs

Why Consider Adding an EDO to Your Plan?

• Accelerated Wealth Growth – By contributing more than the minimum premiums, you
  significantly boost the cash value of your policy.
• Tax-Deferred Benefits – Unlike traditional savings accounts or investments,
  EDO contributions grow without immediate tax implications.
• Liquidity for Future Needs – Whether it’s paying for your child’s education,
  buying a home, or supplementing retirement income, EDOs provide flexible access to funds.
• Enhanced Legacy Planning – The policy’s death benefit and cash value can be structured
  to create a long-term financial safety net for your family.

Investing EDO Contributions Wisely

One of the best ways to maximize the value of your EDO is by allocating contributions into a properly
diversified broad market ETF portfolio. Why?

• Diversification – ETFs spread risk across a range of assets, reducing volatility.
• Lower Fees – Compared to mutual funds, ETFs typically have lower management fees,
  meaning more of your money is working for you.
• Market Growth Potential – Broad market ETFs track the performance of entire indexes
  (like the S&P 500 or TSX Composite), historically providing strong long-term growth.

What Happens When the Term Matures?

When your policy matures, you have several options depending on your financial goals:

• Withdraw Funds – Take out the accumulated cash value to support retirement or other
  financial needs.
• Take a Policy Loan – Borrow against the cash value at favorable rates without impacting
  the death benefit.
• Leave the Policy Intact – Continue growing the value, allowing for a larger financial
  legacy to pass on to beneficiaries.

Setting Your Children Up for Financial Success

An EDO isn’t just a smart investment for you—it’s a game-changer for your kids. Here’s how you can use it
to set them up for success:

• Fund Their Education – Use the cash value to pay for post-secondary tuition without
  the restrictions of an RESP.
• Cover Emergency Medical Costs – Access funds for urgent healthcare needs, like a child’s
  broken bone requiring surgery or specialized therapy.
• Gift a Policy – Transfer the policy to your child later in life, providing them with
  a head start in their own financial planning.
• Provide an Emergency Fund – As they grow, they’ll have access to cash value for major
  life events like buying a home or starting a business.