Insurance

Understanding the Annuity Advantage
The possibility of tax deferral and guaranteed income for life are reasons why annuities are often the cornerstone of a retirement income plan. Generally, annuities pay a good rate of return, are extremely low risk, and can compliment other retirement incomes.
There are two types of annuities – “life” and “term certain.” This article focuses on life annuities, which might be right for you if:
• you want a fixed income guaranteed for life
• you don’t want to make investment decisions
• you want to lock in your investments at current rates
• you’re not concerned about leaving an estate to your children
Continue reading Understanding the Annuity Advantage (pdf)

The Insured Annuity Strategy
Perhaps the biggest retirement question we face is, “Will I have enough?” Most of us want to know that we’ll have a steady base level of retirement income that won’t run out too soon. The Insured Annuity strategy can preserve the value of your estate, minimize income taxes and most importantly, guarantee an income stream for the rest of your life.
Continue reading The Insured Annuity Strategy (pdf)

Critical Illness Insurance
One of the great advantages of modern technology is that it’s allowing more people to survive once fatal medical conditions. However, the unfortunate reality is that many survivors must bear a heavy financial burden for things like medical treatment outside Canada, or ongoing care at home or in a facility. What can prevent depletion of your savings if you should fall ill? Critical Illness (CI) insurance can stop loss and protect your assets.
Continue reading Critical Illness Insurance (pdf)

The Estate Reallocation Strategy
The key to effective estate planning is to minimize estate tax and maximize the amount of wealth that is transferred to the next generation. But how? Life insurance offers a unique strategy. While registered assets, such as those within RRSPs, RRIFs, and pension plans allow for immediate tax deductions and tax-deferred savings for retirement, any withdrawals will be fully taxed as income at your marginal tax rate. Furthermore, any income or growth from most non-registered investments such as GICs, stocks, bonds, real estate, and cash will be taxable to some extent, either as it is earned or upon the sale of the asset. Even upon death, you are deemed to have sold all of your assets at their fair market value for tax purposes, which can result in some significant liabilities for your estate.
Continue reading The Estate Reallocation Strategy (pdf)

Insurance that could save your life
“Not because you’re going to die, but because you’re going to survive” – Dr. Marius Barnard, physician that developed the concept of Critical Illness insurance
Recovering from a critical illness can be a personal triumph and a financial disaster. Financial strain can result from the inability to continue working, medical costs not covered through provincial or personal medical insurance plans, or the financial setback to your retirement plans.
Maintain your lifestyle
Critical Illness (CI) insurance is a type of insurance that can protect your financial health. It pays a lump-sum benefit upon the diagnosis of a critical illness, unlike traditional life insurance that pays a beneficiary upon death.
It was designed to help meet the high costs associated with serious illness, and to help maintain your lifestyle during and after recovery.
CI insurance originated in 1983 when a South African physician approached the insurance industry to create a product that would help take care of his patients’ financial issues so that they could concentrate on the most important thing – getting better.
Today, most CI policies cover patients for a dozen or more common types of illness.
Continue reading Insurance that could save your life (pdf)

Is your financial plan fully protected?
Planning for the future involves more than investing. Even the largest portfolio can be eroded by unforeseen expenses and tax consequences following an untimely death. The best way to save your family from unnecessary difficulty is to incorporate insurance into your financial plan.
Life insurance is one of the most overlooked financial solutions, and its role within a well-developed financial strategy is often under appreciated. Here are some common misconceptions about life insurance.
Misconception #1: With substantial savings, there is no use for life insurance
Continue reading Is your financial plan fully protected? (pdf)

Keyperson Protection
Business owners are usually the most important employees of the business. They provide the organization with direction, leadership, and management; but they also provide the history: how the business got started, who the people were, and how the business has grown.
There may be other key individuals in the business organization who make a significant contribution to the success of the business. They could be “heir apparents” who have not yet obtained a share interest in the business.
In the event of premature death of the business owners or the other key employees, the business may face an uncertain future:
• creditors may demand payment
• banks may call loans and be less helpful in extending credit
• employees may seek more stable employment elsewhere
• customers may not comeback
• the business may be faced with a forced sale or liquidation of the business and suffer heavy losses
Continue reading Keyperson Protection (pdf)

Life Annuities – Are They Right for You?
As a part of retirement planning annuity income can compliment other incomes you are receiving. There are two types of annuities – “life” and “term certain.” Both these types of annuities can be registered and non-registered. This article will outline the details of life annuities and suggest reasons why you may wish to consider them in your portfolio.
What is a life annuity?
Life annuities provide you with a regular income paid at selected intervals for the rest of your life, regardless of the age you live to. These payments will cease at your death and no value will be available to your beneficiaries unless you arrange for a joint annuity or a guaranteed minimum payment period (explained later.) These regular payments can be monthly, quarterly, semi-annually or annual. A life annuity can only be purchased from a life insurance company. The income payments can be level for the remainder of your life or can be indexed at a pre-selected rate. Several factors, including current interest rates, are considered when an annuity income is calculated, and as a result, once you buy a life annuity you are locking this interest rate in for the entire payment period.
Continue reading Life Annuities – Are They Right for You? (pdf)

Using life insurance to unlock trapped assets
If you’ve worked hard to build up a successful business, you certainly don’t want to lose the company’s assets to corporate and estate taxes, but without adequate planning that is what may happen. However, there is a powerful financial strategy available that can help you maximize the value of your company’s assets, and transfer them to the next generation with a minimum of taxation.
The tax trap
Here’s the situation: you have investment assets inside a holding company that you do not anticipate needing during your lifetime. These assets are simply being invested, and will eventually be funneled out of the corporation and passed on to your heirs.
However, there’s a “tax trap” to consider. The growth of your corporately-owned investments is taxed at an even higher rate than if you owned the investments personally. However, if you take the money out of the corporation, it will be taxed again, most likely as a personal dividend. Finally, your company’s investment assets could be taxable in the hands of your heirs, significantly diminishing the value of your estate.
Fortunately, there is a way to unlock these trapped assets and minimize the tax liability, all through the use of life insurance
Continue reading Using life insurance to unlock trapped assets (pdf)

Protecting your family and your business
If you are a business owner, your focus is likely on the long-term viability of your business. Decisions you make today may impact your business tomorrow and thereafter. Think back to the last time you made a major purchase for your business. Before making that decision, you probably examined all your options and evaluated the costs and benefits of making the purchase.
When it comes to personal and business financial planning, the same forethought is warranted. Have you ever evaluated the costs to the business if you were no longer involved in it? A long term disability, diagnosis of an illness or death could have a devastating effect on your business, not to mention your family.
Putting your family first
If you have a spouse or children who depend on your income, you must consider what would happen if you were no longer able to run your business. Insurance provides a safety net that can help ensure your loved ones will retain a comfortable standard of living in the event of your death or disability or diagnosis of a critical illness.
Continue reading Protecting your family and your business (pdf)

The Role of Insurance in Tax Planning
Insurance has typically been used to protect against the risk of future financial loss. However, more and more, innovative insurance solutions are being used to safeguard the value of investors’ assets in a tax efficient manner.
Key Tax-Related Insurance Benefits
1. Creating a tax-free wealth transfer
Insurance is transferred to beneficiaries outside of your estate and as such does not trigger taxes, probate fees, or legal costs.
2. Preserving assets against taxation
Insurance can be designed to provide beneficiaries with a lump sum of cash equal to the taxes owing on the deemed disposition value of your investments.
3. Generating tax-preferred income
Insurance strategies can be used to create tax-preferred retirement income streams.
4. Minimizing tax on corporate assets
Insurance can provide a means to move surplus assets out of the corporation on a tax-preferred basis while enhancing the value that will be passed to beneficiaries.
5. Minimizing tax through charitable giving
Insurance will help increase the size of your gift and in most cases provide significant tax benefits.
Continue reading The Role of Insurance in Tax Planning (pdf)

Tax-advantaged Growth Through Universal Life
Canadians who maximize RRSP and pension contributions and need another means of tax advantaged growth to supplement their savings are increasingly looking to Universal Life insurance.
Universal Life is an insurance product but it also has some attractive investment features. Deposits to the policy over and above the premium are funnelled into an investment account, which can be allocated to a variety of investment options. The funds can accumulate on a tax deferred basis, although there are constraints on the size of the investment component under the Income Tax Act. In addition, a Universal Life policy can be paid out to named beneficiaries on a tax-free basis after death.
The Universal Life policy can be used to provide retirement income either by making withdrawals from the plan or – in an innovative feature – by pledging the plan as collateral for a loan. Over time, the cash value of the deposits in the investment account can have significant accumulation, which can be withdrawn, if required. The proceeds upon withdrawal may be subject to taxation.
Continue reading Tax-advantaged Growth Through Universal Life (pdf)