- Life Insurance
- Term insurance
- Whole life insurance
- Universal life insurance
- Disability Insurance
- Critical Illness Insurance
- Estate Planning
Insurance provides “peace of mind” and “comfort” that if anything bad should happen, you and your family would be taken care of financially. Insurance Companies charge a monthly or yearly premium and if a claim may arise, they provide you with a lump sum or monthly income stream.
Life Insurance may provide your beneficiary with a lump sum benefit at the time of your death. This amount can be used to eliminate debt, mortgages, funeral costs, as well as provide income for your family, children’s education or favorite charities.
Life insurance is one of the most important benefits available to you and offers a key source of financial protection and peace of mind.
This is the most simple and least expensive type of life insurance. It means you are insured for as long as you maintain the policy, for a stated term. Term insurance is well suited for those on a limited budget, giving them peace of mind that their families will be taken care of in case the worst happens.
A term assurance policy provides a fixed amount of life insurance (the sum assured) for a fixed period (the term) in return for the payment of a fixed monthly premium that is set at outset and will not change. At the beginning of the plan you decide how much cover you need and over how many years you need it.
It can be positioned to pay off a large loan such as a mortgage or home refinance. Term life insurance is known for the low monthly payments for young people relative to the high payout. Insurers offer term insurance policies providing level premiums of 5, 10, 20 and 30 year terms.
Claims filed on term life insurance will be satisfied as long as the premiums are up to date, the insurance contract has not expired and if no claims are filed. There are no returns of premium dollars if no claim is filed by the insured.
Whole Life Insurance
Unlike Term Insurance, Whole Life Insurance continues as long as you live and continue making premium payments. Because Whole Life Insurance premium levels are permanent, it is most economical when purchased when the insured is young.
Whole Life Insurance is set up to function not only as insurance, but as a kind of cash fund to assist you with short-term financial needs. As long as your policy remains intact, you can borrow against it and loan yourself money at the current interest rate.
Universal Life Insurance
Universal Life provides the comfort of life insurance protection, together with the benefit of tax-deferred investing. Universal life policies are the most flexible life insurance policies, and can and should be designed and tailored to fit the needs of each individual.
In addition to providing security and protection through its life insurance component, universal life insurance can provide an additional source of income for emergencies, retirement or for estate planning needs.
Universal Life offers you the opportunity for tax-advantaged investing. This gives you the chance to increase your wealth by investing money within your policy.
In the first year each policyholder selects his or her premium, ranging from the minimum (the pure cost of the insurance) to the maximum, (Canada Revenue Agency calculated amount).
The investment selections within the policy are dependent on the insurance company. Most offer a full range of investment options, from fixed income all the way through to equity-based investments.
Registered Education Savings Plans (RESPs)
A Registered Education Savings Plan (RESP) is a contract between an individual who is the subscriber, and a person or organization, who is the promoter. The subscriber (or a person acting for the subscriber) makes contributions to the RESP, which earns income. The subscriber names one or more beneficiaries and agrees to make contributions for them.
Saving for a university or college education doesn’t have to be daunting. Registered Education Savings Plans (RESPs) allow tax-free growth with your choice of investments.
Disability strikes far more frequently than premature death. Temporary or long-term disability can happen at any age. It can come suddenly from an accident, or severe mental or physical illness, or develop over time. A third of all people now aged 35 will be unable to work for at least six months before reaching age 65.
Disability Insurance is a form of insurance that insures the beneficiary’s earned income against the risk that disability will make working (and therefore earning) impossible. It includes paid sick leave, short-term disability benefits, and long-term disability benefits.
Having adequate disability insurance is crucial.
Critical Illness Insurance
Surviving a critical illness or condition—such as heart attack, cancer or stroke—can turn your life upside down. It can affect you physically, emotionally and financially. It can also affect those close to you—your spouse, your family, your business partner.
A flexible critical illness insurance product could provide you with a one-time, lump sum benefit at a critical time in your life. How you use it is up to you. Start with the basic plan, and then use optional benefit riders to customize your coverage.
Critical illness insurance may provide financial resources that can help pay for additional personal, family or business expenses that often accompany a critical illness or condition.
Health insurance and disability insurance may cover some expenses but not all. If you use your savings, RRSPs or loans to cover the costs, your retirement income may be affected and you could experience financial strain. Consider critical illness insurance as an important part of your financial security plan.
RRSP stands for Registered Retirement Savings Plan and is a Canadian retirement plan. RRSP contributions can be used to reduce Canadian contributor’s income tax up to a certain limit. RRSP is one of the few tax shelters Canadian can use. Any income earned in the RRSP is exempt of tax until the RRSP account owner start drawing funds from it. You can contribute in RRSP until the age of 71.
What is the Home Buyers Plan (HBP)?
The RRSP Home Buyers plan is a program that allows first time home buyers to withdraw up to $25,000 (previously $20,000, as of 2009 Federal Budget) from their RRSP towards their first home TAX FREE.
How does it work?
As mentioned above, if you are a first time home buyer, you can withdraw up to $25,000 out of your RRSP tax free! If you are purchasing the home with a spouse, you can both withdraw $25,000 EACH from your accounts. In terms of repayment, you have up to 15 years to pay back your RRSP starting the second year after the year of withdrawal (see CRA). At this time 1/15 of your borrowed amount must be paid back per year.
What’s the catch?
In terms of penalties, if you don’t repay 1/15 of the borrowed amount per year, you’ll have to add the amount as income.
You MUST be a first time home buyer and a resident of Canada at the time of withdrawal.
You MUST purchase or build the home before October 1st after the year of withdrawal.
RRSP contributions of up to 90 days before the withdrawal date can be used towards the HBP.
Why would I do this?
This is one of the only ways to withdraw from your RRSP tax free and is a great way to get into the real estate market. Some may argue that you’re missing out on growth on your RRSP while the money is borrowed. However, if you get a good price for your first home relative to others in the neighborhood, the appreciation of the home will hopefully make up for this.
In addition to that, aggressive RRSP contributions after purchasing the home should be part of the plan. For more information you can visit the HBP program in detail at: Home Buyers’ Plan (HBP)
You have worked hard to ensure a comfortable lifestyle. Your house, investments and holiday home are all part of the estate you will leave to your spouse, children and other loved ones. In order to prevent a major portion of your assets from going to the Canada Revenue Agency (CRA) as taxes, you need estate planning assistance.
Benefits of Estate Planning:
Preserve the value of your estate
Ensure your estate goes into the right hands
Save your loved ones from the impact of huge taxes