Life Insurance

The Estate Bond

Growing your estate without undue market risk and taxes

Often we see older investors shift gears near retirement and beyond.  Many become risk adverse and move their assets into fixed income type investments.  Unfortunately this often results in the assets being exposed to higher rates of income tax and lower rates of return – never a good combination.

Or maybe the older investor cannot fully enjoy their retirement years for fear of spending their children’s inheritance.

The Estate Bond financial planning strategy presents a solution to both of these problems.

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Pay Attention to Your Beneficiary Designation

It’s more important than you think

Naming a beneficiary is a valuable feature of life insurance and segregated funds policies so it is important to carefully choose your beneficiaries.

Estate – the default choice

Many people choose to name their “estate” as their beneficiary.  Although this is an easy short-term solution, it is important to review the risks of doing this.  If you are stuck for a significant “other” beneficiary, don’t forget to change it to a more appropriate option later.  Why?

  • The proceeds will be subjected to probate fees and the benefits received will be co-mingled with all the other estate assets which may be exposed to various third parties.
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Group Insurance – Only Part of the Solution

Ownership of individual life insurance at its lowest level in 30 years

The Life Insurance and Market Research Association (LIMRA) 2013 study shines a light on a developing problem for Canadian households:

  • Individual ownership of Life Insurance was at its lowest level in 30 years;
  • 3 in 10 households did not have individual life insurance at all;
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Is it Time for your Insurance Audit?

Has it been awhile since you last looked at your insurance portfolio? Are you a little sketchy in your recollection of all the coverage you have and why you have it? Are you uncertain as to whether or not your portfolio reflects your current situation? If this is the case, this might be the ideal time to have an audit of your insurance policies. Circumstances can change over time and making sure your protection keeps pace is a worthwhile exercise.


A comprehensive audit should review the following:

  • Is the total death benefit of your life insurance appropriate to your needs? A current capital needs analysis can help to determine this.
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Don’t Wait Too Long to Convert Your Term Insurance

If you require permanent life insurance coverage for family, estate planning, business, or tax planning purposes or you just wish to accumulate money in your life insurance program it may be time to look at a permanent, level cost solution.

Many of us purchase large amounts of low cost term insurance to cover our needs while we are raising our families or growing our businesses.  However, as the saying goes, “there is no free lunch”.  Eventually this low cost term insurance starts to become expensive and other options should be considered.  If you are unable to qualify for a new permanent insurance policy don’t worry, your safety net is the conversion option in your existing policy.

4 REASONS TO CONVERT YOUR COVERAGE

  • A change in your health you are no longer able to qualify for life insurance or you have received a sub-standard rating.  
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The Cascading Life Insurance Strategy

A Lifetime Gift for your Grandchildren

If you are a grandparent wishing to provide an asset for your grandchildren without compromising your own financial security you may want to consider an estate planning application known as “Cascading Life Insurance” that will generate:

• Tax deferred or tax free accumulation of wealth;
• Generational transfer of wealth with no income tax consequences;
• Avoidance of probate fees;
• Protection against claims of creditors;
• Providing a significant legacy.

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Four Things You Need To Know About Inexpensive Term Insurance

The most basic form of insurance and the simplest to understand is Renewable and Convertible Term Insurance. Coverage is provided for a specified term, the policy renews automatically at the end each term period until the policy expires, most commonly at age 85. This plan has the lowest initial cost at entry, but don’t be mesmerized by the low cost because on renewal you will pay a substantial increase. If, however, you become uninsurable before the end of the term period you will have no other option but to renew or convert it to a permanent plan if you want to keep the coverage.

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Cover your bases in case of an emergency

No matter how much we plan, things can and do go wrong. Here’s how to prepare yourself financially.

By Gail Vaz-Oxlade for MoneySense.ca

The mouse in Scottish poet Robbie Burns’s To a Mouse on Turning her up in her Nest with a Plough teaches us a lot about what it means to expect the unexpected. The truth is, no matter how much we plan, things can and do go wrong (in the poem the plough turns a mouse’s nest to mulch) causing all kinds of problems.

So the question becomes, do you have a back-up plan? Most people don’t. And yet, it is only those who take the time to create a Plan B that weather storms well.

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©iStockphoto.com/courtneyk
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Is Your Insurance Planning Affected By The Recent Budget?

On March 21st, Finance Minister Jim Flaherty tabled his 2013 Federal Budget. Some of the provisions of that document has or will have an impact on some life insurance products and/or strategies. However, let’s start on a positive note.

The Lifetime Capital Gains Exemption has been increased from $750,000 to $800,000 starting in 2014. For the years after 2014, the LCGE will be indexed to inflation. The Lifetime Capital Gains Exemption applies to capital gains realized by individual taxpayers on disposition of certain qualified property – shares in a Qualifying Small Business Corporation or eligible farm and fishing property. For those individuals who have already claimed the old limit of $750,000 they will be entitled to the difference from the increased amount.

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Guaranteed Level of Cost Insurance – Get it While You Still Can!

The equity markets of the past four years plus the prevailing low interest rate environment have combined to have a dramatic effect on the Canadian life insurance industry. What this means for consumers is that many of the products that are currently being used for effective estate plans and long term financial planning may soon no longer be available, or if they are, they will be priced significantly higher than they are today.

The four primary factors that enter into the pricing of a life insurance product are mortality, expenses, persistency and investment returns. It is the latter that is of considerable concern to the life companies. Recently, long bond rates fell to the lowest rate seen in 100 years. The United States hit a 150 year low. The reserves that the insurance companies have to maintain are long term investments of the insurers, thus, with low returns, the result is rising insurance premiums. As if this wasn’t enough, the Canada Revenue Agency is currently reviewing ways in which to increase their revenues derived from the taxation of life insurance companies.

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