Insurance – To Fit Your Life
Erica Stephenson - Aug 10, 2017
Many of our clients are unaware that we are able to look after their life insurance needs, just as we deal with their investment transactions. But who better than us to act as a starting point for your protection requirements? We are already familiar
Many of our clients are unaware that we are able to look after their life insurance needs, just as we deal with their investment transactions. But who better than us to act as a starting point for your protection requirements? We are already familiar with your financial and personal circumstances, and are well-positioned to extend that knowledge to insurance recommendations.
Indeed, insurance today can work well in conjunction with traditional investment programs to take advantage of certain features of insurance and tax rules. The range of innovative financial solutions which insurance can provide can be surprising. Whether it makes sense for you depends on your personal circumstances, of course. It will take an analysis of your situation by an insurance professional working in conjunction with me, your investment advisor.
Generally speaking, life insurance policies provide protection for the dependents of the insured, so that the income needs, say, of the dependents can be covered for a reasonable period if the insured should die unexpectedly. There are many ways this coverage can be obtained, including:
• Term Insurance — This is the logical first choice for many young people, for example. Relatively cheap, especially for the young, it is easy to tailor a term insurance strategy for specific protection during a given time period.
• Whole Life — A more permanent type of coverage, whole life can assist in building assets while continuing to provide life protection.
• Universal Life — Life insurance combined with an investment component that can provide potentially higher returns on assets, together with some attractive tax advantages and other features.
Much valuable work of insurance agents today is to provide for the possibility that income will be interrupted by illness or accident.
• Disability Insurance — The insured does not die, but can no longer work at his or her usual profession. Disability coverage provides income support to meet ongoing obligations. Disability insurance in some form may be offered by employers as part of their benefits packages.
• Critical Illness Insurance — Generally, critical illness insurance pays out a lump sum benefit upon being diagnosed with certain serious diseases such as cancer. Critical illness insurance can usually be purchased for differing amounts of payout. An extra-cost feature that may be considered is a “return of premium” where monies paid into a policy can be returned if the insured remains healthy over the life of the policy.
Estate and Tax Planning
Potential tax liabilities are often a catalyst to buying insurance. Here are some typical situations where insurance may be of assistance:
• Providing a substantial bequest to charity. A life insurance policy with the charity named as beneficiary may be a simple way of achieving your philanthropic goal without impacting significantly on bequests to others.
• Offsetting tax on Registered Retirement Savings Plans (RRSPs) and Registered Retirement Income Funds (RRIFs). Where there are few other assets in an estate, an insurance policy to cover potential tax liabilities may maximize wealth transfer to other beneficiaries.
• Offsetting tax on illiquid assets. If you own a cottage or other vacation property that you wish to see remain in your family, an insurance policy to cover tax and other costs upon your death may make sense. Similarly, a private corporation might use insurance to ensure funds are available for tax demands that may arise on the death of the owner.
If you would like further information about any of the differnt types of Insurance available to you, please give us a call at 604-643-7023.