Insurance

INSURANCE

We deliver information on common life insurance obligations and answer any questions you may have that is related to your insurance planning needs. Insurance is an exceptional and important financial planning tool. It is also used in securing the future of those you love.There are not many options that can secure your families financial future like insurance.

INSURANCE SERVICES

Personal Life

Life insurance can be an important part of your financial strategies, helping to ensure a more secure financial future for your loved ones in the event of untimely uncertainty. There are many advantages for life insurance.

Final expenses : Your beneficiaries can use insurance benefits to help cover final expenses.
Paying off debts : The insurance benefits can be used to pay off mortgage and other debts.
Income replacement : Life insurance benefits can help replace your income that helps your loved ones to continue to enjoy the same standard of living and for securing college education for your children.
Retirement Income : Your loved ones can use the benefits as a source of income during retirement.
Tax Free Benefit : Life insurance provides tax free death benefit to your beneficiaries.
Paying estate taxes : Life Insurance benefits can be used to pay off estate taxes either fully or partially.
Charitable Goals: The insurance benefits can be used to meet your charitable goals, if you have any.
Cash Value : Cash value in life insurance is considered as an asset class and a living benefit.

If you wish ,You can use cash value for your retirement plan or any other purpose either by surrendering or withdrawal or borrow against it. There are two main types of life insurance plans. Term life insurance plans and Whole life insurance plans.

Term life insurance

Term life insurance provides coverage for a limited period of time, the relevant term with low cost affordable premiums. Since the premiums are least expensive, there is no cash values in Term life insurance . Most term plans are convertible and renewable. The premiums are fixed and guaranteed for the specific period of time.

Preferred rates are also available for smokers and non smokers. The products offered on a single or joint basis. These term plans are suitable for the clients who want to cover their large debt (Mortgage) and income replacement with affordable premiums at early stages of their life.

The available term plans offer the coverage for 10 years , 20 years , 30 years and 40 years or choice of any term between 10 years and 40 years ( T13,T22,T31 ), renewable until age 80, until age 65 or age 100 (T100). The coverage amounts between $100,000 and $20,000,000. Term plans are available as stand-alone policy or as rider.

Stand-alone policy : It is a base insurance policy to cover a specific risk.
Rider : Rider is a optional coverage you can add to your base insurance policy ( new or existing ) to cover other risks.
You will pay additional premiums for additional coverage. Available riders are Child term rider, Accidental Insurance, Guaranteed insurability option, Term rider, CI rider, Disability waiver, Owner waiver, parent waiver, etc.
In general, there are two available sources for Mortgage life insurance in the market. Personal term life insurance and Lender’s Mortgage Insurance.

PERSONAL TERM LIFE INSURANCE Usually, Life insurance companies issue personal life insurance policies after completing all underwriting requirements. In this case, Your loved ones receive insurance benefits faster as there is no further verification of medical records at the time of the claim. It is like a comprehensive policy as per need based analysis to cover all risks including full Mortgage amount, income replacement, children education , final expenses ,other debts, etc.

LENDER’S MORTGAGE INSURANCE Lenders issue the mortgage insurance policies to cover only the mortgage balance to protect their debt only. It is like a creditor protection insurance. Comparison of this with personal Term life insurance is provided below.

WHOLE LIFE INSURANCE

Whole life insurance provides the coverage for life. The premiums are fixed, based on the age of the issue , and usually do not increase with age. The premiums are typically much higher than those of term life insurance. Higher premiums beyond the cost of insurance generates cash value in permanent life insurance. Both whole life insurance and Term 100 provide the coverage for life. The difference between Term 100 and whole life insurance is that the Term 100 policy has no cash value .Based on cash value generation and investment pattern ,there are 3 different types of whole life insurance plans
. 1) Non participating life insurance,
2 ) Participating life insurance
3) Universal life insurance

NON-PARTICIPATING LIFE INSURANCE:Policyholders of non participating life insurance do not receive dividends, as they are not participants in interest , dividends and capital gains earned by the insurer (Insurance company) on premium paid. Guaranteed cash values and guaranteed level premiums payable for limited period (10 years,15 years and 20 years ) or life, after which time the policy becomes fully paid up. level death benefit or increasing death benefit (Paid up Additions ) options are available. It offers coverage for single, joint first to die or Joint last to die. Available riders are Term riders, Spousal term riders, Child term rider, Accidental death benefit rider and Disability waiver of premium rider. Also available Quit smoking incentive plan ( Lower premiums for the first two years and continue if you really quit smoking ) , Bereavement assistance of $1000 and Access to advance medicals’ expert medical opinion program.

PAR LIFE INSURANCE:Policyholders of par life insurance are entitled to receive dividends as they are participating in profits earned through participating account of the insurer on premium paid. There are guaranteed and non guaranteed cash values. Policy holder is entitled to receive whichever is higher. Non guaranteed cash values are based on dividend scale and usually higher than guaranteed cash values. Guaranteed level premiums for limited period ( 10 years and 20 years ) or life . Available dividend options are Paid up additions, Enhanced insurance, Premium reduction, Dividends on deposit and Cash payment.

UNIVERSAL LIFE INSURANCE:It is more flexible whole life insurance with an investment savings element. There are no guaranteed cash values. Cash values are purely based on the performance of the policy fund. You can choose investment options from a wide variety of investment options to suit your needs. It comes with the opportunity to grow investments tax-deferred. It is ideal if you want to leave a tax free legacy for your loved ones. Most universal life policies contain a flexible premium payment options . Available cost of insurance options are , level ( level to 10 years , level to 20 years and level to age 100) and Yearly Renewable Term ( YRT to age 70, YRT to age 85/15 years, YRT to age 85/20 years, YRT to age 100 ). Flexible death benefit options are level and level + fund .

PERSONAL LIFE INSURANCE STRATEGIES

These strategies are more suitable to the clients who have inheritance or who are maximizing their RRSP and TFSA contributions , and still looking for tax deferred growth with a tax advantaged strategy using either Par life insurance or Universal life insurance.

PERSONAL INVESTMENT STRATEGY:Simply redirect some of your money from taxable investments ( non registered ) to pay the premiums for a Par life insurance policy. You can leave more money to your loved ones and save taxes:
•By redirecting money from taxable investments into par life insurance policy, you pay less tax today and in the future.
•Policy cash values grow on tax deferred basis.
•Proceeds are paid to your loved ones tax free.

PERSONAL RETIREMENT STRATEGY:Simply redirect some of your money from taxable investments to pay the premiums for a Par life insurance policy . Use policy cash values as collateral for a tax-free bank loan to supplement your retirement income. Unlike the traditional loans, this loan is repaid using the proceeds from the policy. With this strategy, you can enjoy your retirement :
•A bank loan can supplement your retirement income with tax free basis.
•At the end, the life insurance proceeds pay off the loan with the balance paid to beneficiaries.

Save Taxes :

•By redirecting money from taxable investments into par life insurance policy, you pay less tax today and in the future.
•Policy cash values grow on tax deferred basis.
•Proceeds are paid to your loved ones tax free.

BUSINESS LIFE AND HEALTH INSURANCE

Proper insurance and building a team of employees is crucial to any business. Business life insurance provides financial security for your business and your family in case of your loss to the business. Business disability insurance protects your business, your family and you when you are unable to work due to illness or injury. Business critical insurance protects your business, your family and you when you are in any critical illness.

Key employee life insurance helps your business survive the loss of key employee . key employee disability insurance provides financial security for your business when key employee becomes non performing due to illness or injury. Key employee critical illness provides financial security for your business when key employee in critically ill.

Health benefits through group plans provide health benefits to your employees and help your business to retain them.

An unforeseen events in business like death of a owner , disability, critical illness, divorce, retirement or bankruptcy triggers a buyout .Usually buyout is done through agreement which is called buyout agreement or buy sell agreement .The business life and health insurance provides funds to buyout agreements or buy-sell agreements .

BUY SELL AGREEMENT :It is also known as buyout agreement. Whenever corporation has more than one shareholder, it is commonly recommended that the shareholders enter into a buy sell agreement It allows for the smooth transfer of shares or other business assets from a departing or a disabled or a critically ill shareholder to the remaining shareholders of the business. Its main purpose is to facilitate this transition without affecting financial well being of the departing shareholder and his/her family, or the financial health and viability of the corporation.

IKEY PERSON INSURANCE key persons whose skills, knowledge, experience or leadership are responsible for the majority of profits and important to a business’ continued financial success . Should something happen to one of these persons it is likely that their loss will have a detrimental impact on the profitability of the business and will cause financial strain. Key persons includes : company directors, sales directors, IT specialists, etc. Key person insurance protects your business against the loss of such a key persons. Usually company is the sole owner and beneficiary of the key person insurance policy. Sometimes ownership is shared between company sand key person. The company can use the insurance proceeds for expenses until it can find a replacement person.

BUSINESS SUCCESSION PLANNING Business succession planning is simply an advanced planning how you are going to transfer your business ownership and transition out of your business either when you decide to leave your business or due to any unforeseen events . Without a proper business succession plan the future of your business can be at stake. You can start succession planning years ahead of time that helps you to smoothly transition out of your business . Early planning also helps you to maximize the value of your business before transition and can help ensure that your business, your family and you are properly protected against unforeseen events, including death and disability . It also help you structure a retirement income that meets your financial goals and maximize your financial security . An effective business succession plan will help you accomplish the smooth transfer of our business.

CORPORATE LIFE INSURANCE STRATEGIES

These strategies are the right solutions for you if your corporation has taxable investments, if you need life insurance to protect your business, if you want a tax-efficient way to transfer assets to your heirs , if you supplement your retirement income and if you have an up to date will.

There is a double tax trap (capital gains tax and dividend tax ) to taxable investments in the corporation when the owner of corporation dies. There is a deemed disposition when the owner of the corporation dies and capital gains tax is payable . Again dividend tax is payable when the executor of the owner’s will makes payments from corporation to the beneficiary.

If the corporation is the owner and beneficiary, when the proceeds of the life insurance policy are paid to the corporation , the amounts in excess of the policy ACB are credited to the Capital Dividend Account which is a notional account in corporations and provides tax free dividends to owners or their beneficiaries.

CORPORATE INVESTMENT STRATEGY

This strategy uses life insurance to reduce the impact of double tax trap. Simply redirect some or all of the corporation’s surplus from taxable investments into Par insurance policy that reduce the fair market value (FMV) of the corporation,
•Because only the policy’s cash surrender value is included in the calculation.
•This creates a larger estate and
•May reduce the capital gains tax payable.
Generate tax-free capital dividends.
•When the proceeds of life insurance policy are paid to the corporation ,amounts in excess of ACB are credited to the Capital dividend account which provides tax free dividends to owners or their beneficiaries.

CORPORATE RETIREMENT STRATEGY

You already know that life insurance can help protect your business by making funds available to pay off debts, fund buy sell agreements and keep the business running. But did you know that cash value of life insurance policy is an asset class that can also benefit you and your business during your lifetime?This strategy can help decrease your corporate taxes and increase your cash flow in retirement. Simply redirect some or all of the corporation’s surplus from taxable investments into a par life insurance policy that grow your assets
•The funds within the insurance policy grow on tax-deferred basis.
•Additional premium can accelerate the growth.

Enjoy your retirement

•You can apply for a personal bank loan using the cash value of corporate policy as collateral.
•The collateral bank loan can supplement your retirement cash flow with tax-free dollars.
Protect your business

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