Life Insurance – Randy Reynolds FAB Planning

What the Wealthy Know about Life Insurance

import Mar 23, 2017

If you have ever thought that life insurance was something you wouldn’t need after you reached a certain level of financial security, you might be interested in knowing why many wealthy individuals still carry large amounts of insurance. Consider the following:

A life insurance advisor in California recently placed a $201 million dollar life insurance policy on the life of a tech industry billionaire;
Well known music executive David Geffen was life insured for $100 million;
Malcolm Forbes, owner of Forbes Magazine, was insured at the time of his death in 1990 for $70 million.

While life insurance is most often looked upon as a vehicle to protect ones family or business, the question that springs to mind is why would individuals with wealth need life insurance?

Thinking of Cancelling Your Life Insurance?

import Feb 20, 2017

Have you found yourself wondering if you really need that life insurance policy you pay for every month? You are not alone.

As time goes on we often forget the reasons behind purchasing the amount and type of coverage we did. For this reason it is advisable to have regular reviews to make sure you are adequately protected.

Perhaps you are having trouble making ends meet and are looking to trim expenses. Maybe you simply don’t think you need it because the kids are getting older and your obligations to them have diminished. Some may feel that they have enough assets accumulated that insurance is no longer necessary and even a waste of money. Before you make the decision to cancel your life insurance policy, consider these compelling reasons to keep it.

Boomer + Sandwich Generation + Club Sandwich + Boomerang = Financial Instability

import Oct 24, 2016

The Sandwich Generation was a term coined by Dorothy Miller in 1981 to describe adult children who were “sandwiched” between their aging parents and their own maturing children. There is even a term for those of us who are in our 50’s or 60’s with elderly parents, adult children and grandchildren – the Club Sandwich. More recently, the Boomerang Generation (the estimated 29% of adults ranging in ages 25 to 34, who live with their parents), are adding to the financial pressures as Boomers head into retirement. It is estimated that by 2026, 1 in 5 Canadians will be older than 65. This means fewer adults to both fund and provide for elder care. Today, it is likely that the average married couple will have more living parents than they do children.

What are the challenges?

Occasional Marijuana Users Get a Break

import Sep 8, 2016

With the federal government heading towards the legalization of personal marijuana use some life insurance companies have announced that occasional marijuana smokers would now be considered as non-smokers on new applications for life insurance and in some cases critical illness insurance.

How significant is this change? Substantial!

As an example, for a male age 35, the standard smoker premium for $500,000 of 20 year renewable term is $1,070*. Now a recreational marijuana user can purchase that same coverage for 410 per year. *

Sun Life, BMO and Empire Life were the first three companies to make this change with Sun and Empire extending the offer to Critical Illness coverage as well. Most insurance companies are expected to make similar announcements. For some companies, medicinal marijuana users are excluded from the new offering but may be considered on a case by case basis.

The Single Premium Insured Annuity

import Aug 22, 2016

Available until January 1, 2017

A New Approach

A new method of structuring an insured annuity has restored its favourable results. The new approach involves combining the prescribed annuity with a Universal Life policy.

The UL policy is funded with a single deposit to provide lifetime coverage.
The remaining capital is then used to purchase the prescribed life annuity.
On the death of the insured/annuitant, the annuity income ceases
The Universal Life policy now returns the full amount of the capital to the intended beneficiaries.

Family Business Planning Strategies

import Jul 18, 2016

67% are at Risk of Succession Failure

If you are an owner in a family enterprise, the chances of your business transitioning successfully to the next generations is not very good. This has not changed over the years. Statistics show a failure rate of:

67% of businesses fail to succeed into the second generation
90% fail by the third generation

With 80% to 90% of all enterprises in North America being family owned, it is important to address the reasons why transition is difficult.

Do You Need Individual Life Insurance?

import May 16, 2016

Canadians may need to rethink their risk management

In a recent study conducted by the Life Insurance and Market Research Association (LIMRA), it was reported that 61% of Canadians hold some form of life insurance. Surprisingly, it also revealed that only 38% of Canadians own an individual life insurance contract.

In another study of middle class Canadians, Manulife reported that 79% had no individual disability insurance and 87% had no individual critical illness coverage.

What both of these studies conclude is that most Canadians rely heavily on their group benefits for their family’s insurance protection.

Taxation of Life Insurance – New Rules Offer a Window of Opportunity

import Mar 21, 2016

Permanent life insurance, such as Whole Life or Universal Life, has long been accepted as a tax efficient way of accumulating cash for future needs. Soon the amount of funds that can be tax sheltered within a life insurance policy will be reduced by new tax rules which take effect January 1, 2017. These changes may make 2016 the best year to buy cash value life insurance.

The changes to the tax rules regarding life insurance have resulted in an update to the “exempt test” which measures how much cash value can accumulate in a policy before it becomes subject to income tax.

Highlights of the new rules and their effect

For Cash Value Life Insurance:

The Corporate Extraction Strategy

import Dec 14, 2015

Transferring a Life Insurance Policy to a Corporation

The Corporate Extraction Strategy involves transferring a personally owned life insurance policy to a corporation for its fair market value (FMV). When handled properly, it will result in withdrawing capital from the corporation tax free!

The preferred candidates for this strategy:

Own a life insurance policy that they wish to maintain;
Own all the shares in a corporation;
Are usually older and/or would be rated or declined for life insurance due to health concerns.

The Best Way to Insure Your Mortgage

import Sep 14, 2015

If you have a mortgage it makes good sense to insure it. Owning a debt free home is an objective of any sound financial plan. In addition, making sure your mortgage is paid off in the event of your death will benefit your family greatly.

The question is should you purchase this coverage through your lending institution or from a life insurance company? A good rule of thumb to follow when searching for advice? Ask an expert!