Life Insurance

Life Insurance

Traditionally, life insurance helped to ensure that your family and loved ones were protected against financial difficulties in the event of a premature death. Today, life insurance has evolved and is also used as a powerful investment and estate-planning vehicle.
 
Basic Features Of Life Insurance
In addition to providing protection and investment potential, life insurance has traditional benefits that make it unique.
 
Tax-Free Death Benefit
If you name a beneficiary, the proceeds do not go through your estate, but go directly to the person or organization you name. No probate fees or taxes apply.
 
Creditor Protection
Some life policies may be protected from the claims of creditors of the owner. This protection is available if a certain family relationship exists between the life insured and beneficiary (and in Quebec, between the policy owner and the beneficiary), or if a beneficiary designation is irrevocable.

Mortgage Insurance

Do You Really Know Much About Your Bank Mortgage Insurance?

Mortgage Life Insurance is designed to protect your lender in case something happens to you, the mortgagor. This basic fact is reflected in various aspects of the Insurance product that your bank will typically offer. Here are some of the most important aspects to consider with most Mortgage Life Insurance Policies offered by Lending Institutions.

  • Your premium remains level, while your coverage steadily decreases with your Mortgage over time. Thus, in later years, you will still be paying the same premium for a reduced amount of coverage.
  • Bank Mortgage Insurance is non-transferable. your Mortgage Insurance coverage will cease if you move your mortgage to another bank. If your health has changed, you may be unable to re-qualify for coverage elsewhere, and be forced to keep your mortgage at the same institution even if this means paying a higher mortgage rate.
  • The renewal rates on your Bank Mortgage Insurance MAY NOT BE GUARANTEED.
  • Can you convert your Mortgage Life Insurance to a permanent product in the event your health changes?
  • Your bank is the beneficiary of the Mortgage Life Insurance. Thus, your family has no choice about how to use the funds at a time when money may be required most. Your lender automatically pays off the mortgage with the proceeds. There are no other options.
     
What Are Your Alternatives To Bank Mortgage Insurance?
A Personal Term Insurance Policy Offered Through a Private Carrier. Consider the Following:
  • You own the policy, not your lender. You have the freedom to switch your mortgage to another institution in the future, without jeopardizing your Mortgage Insurance coverage.
  • Your family is the beneficiary of the policy, rather than your lender. Your family can decide how to use the proceeds. For example, to pay off all or part of the mortgage, provide an income supplement, or take care of other immediate financial commitments.
  • Your policy is convertible to any permanent plan of insurance offered by the sponsor carrier, at any time. Thus, if your health changes, you can keep your full death benefit, and convert your insurance to a permanent plan without the necessity of a medical.
  • Your renewal rates are GUARANTEED.
  • Your coverage isn't reduced by a decline in your mortgage balance.
  • The cost is similar, and in most cases lower than the cost of decreasing mortgage insurance offered by your bank.

Term Insurance

Term insurance provides low-cost protection for a specific period of time and is a good way to cover short-tem insurance needs for individuals, families and businesses.

Available for terms of 5, 10 and 20 years (or longer), term provides flexible, low-cost term insurance for individual, family or business insurance needs.

Affordability. Term offers exceptionally competitive premiums, giving you the ability to secure a large amount of insurance protection for a relatively low premium. Term is particularly cost-effective if you have a financial need for insurance coverage during a specific time period. The fixed term creates a lower cost of insurance that translates into lower premiums when compared to other life insurance products.

Permanent Insurance

Permanent insurance is (generally) a level cost insurance program that (if structured properly) you cannot out-live, as it continues until the day you die (whenever that may be). By comparison to term plans, the initial price may be 3 to 4 times (or more) the premium of term, but in the long term it is generally less costly (over an extended period of time) than term insurance. Also, given the nature of some insurance needs (estate protection, capital gains taxes, estate equalization, etc.) permanent coverage is the only resonable solution for guaranteed protection.

Permanent insurance is (generally) a level cost insurance program that (if structured properly) you cannot out-live, as it continues until the day you die (whenever that may be). By comparison to term plans, the initial price may be 3 to 4 times (or more) the premium of term, but in the long term it is generally less costly (over an extended period of time) than term insurance. Also, given the nature of some insurance needs (estate protection, capital gains taxes, estate equalization, etc.) permanent coverage is the only resonable solution for guaranteed protection.

Universal Life

insurance plans have distinct benefits, which set them apart from term, permanent and other life insurance plans. Universal life insurance includes not only the traditional insurance protection that is provided by all life insurance plans, but also unique tax-advantaged investment opportunities.

For example, when you make a premium payment, the money is deposited into the tax-deferred investment fund or funds you choose. Every month the insurer deducts the cost of insurance, administration charges and any charges for policy riders and/or additional benefits that you have selected. The balance in the fund continues to earn tax-sheltered interest.

With flexible death benefits and a full range of accumulation options, Universal life plans can be customized to suit your long-term financial goals and can be easily modified to meet changing needs.

  • Tax-advantaged growth to maximize your capital. Interest growth earned within a universal life policy is tax-sheltered to a maximum determined under the Income Tax Act.
  • Creditor protection. Universal life policies may be protected from the claims of creditors of the owner. This protection is available if a certain family relationship exists between the life insured and beneficiary (and in Quebec, between the policy owner and the beneficiary), or if a beneficiary designation is irrevocable.
  • Probate bypass and tax-free benefits. The proceeds from universal life policies can be paid directly to the named beneficiary tax free, bypassing the estate and the delays and expenses surrounding probate (probate is not applicable in Quebec).
  • Flexible protection. Unlike other forms of life insurance, you'll have the flexibility to fund their insurance needs by changing your death benefit option, increasing or decreasing your premiums, paying at unscheduled dates, stopping and restarting payments, or paying premiums with the accumulated tax-advantaged fund value from their policy.
  • Accessible cash values. You can withdraw a portion of the cash values that have built up within your policy at any time. Convenient withdrawal and loan methods are available, subject to current tax laws and policy surrender fees.

Insured Retirement Strategy

Supplemental tax-free income for your retirement years:

Studies say we're all going to live longer. So, even if you're contributing the maximum to your RRSP’s and other registered plans, you'll likely want or need to save even more. The problem is, the income and gains from most non-registered investment options are taxable, which can dramatically reduce your returns.

The Challenge:

You need to save money in a non-registered investment so you can build a supplemental reserve to protect your retirement. To accomplish this, however, you must harness the power of tax-advantaged growth.

Consider An Insured Retirement Strategy

Before you retire, take out a flexible universal life insurance policy. Then, choosing from a wide range of tax-deferred investment options, you make deposits into the plan. Even when insurance costs are taken into consideration, The Insured Retirement Strategy may provide a better return on investment than a non-registered guaranteed interest products or mutual fund over the long term. When your retire, use the plan to provide a source of supplemental income by accessing the cash value you have built up.

An Insured Retirement Strategy offers you:

  • Tax-advantaged growth beyond RRSP limits
  • A wide selection of competitive investment options
  • Cash for emergencies
  • Tax-advantaged funds for your estate
  • An investment bonus to enhance investment returns
  • An additional source of income for retirement

Estate Preservation

Your estate represents, in part, what you have built in your lifetime. A cottage? RRSPs? Mutual funds? A home? A small business? A farm? They mean a lot to you - and to the family you leave behind. So it can be tragic if your heirs are forced to liquidate these assets just to pay capital gains taxes and other estate charges they might not be able to afford.

The Challenge:

Upon your death or that of your spouse, capital gains tax is triggered on the growth of your real estate, equity in businesses and stocks. In addition, the full value of RRSPs and RRIFs are considered cashed in and subject to income tax. The result can be an estate of considerably less value than you intended for your heirs. In fact, capital gains tax on real estate - a cottage, for example - can make the property too expensive for your surviving family to keep.

The Estate Preservation strategy

This strategy involves three simple steps.

The first is to defer taxes for your spouse, should you die first. This can be accomplished by naming him or her as beneficiary of your RRSP or RRIF, while willing your spouse all your other assets. This way, taxes are only due on your spouse's death - this strategy is called a Spousal Rollover.

The second step involves working with your advisor to estimate potential capital gains tax and other taxes and charges that may be levied against your estate once a surviving spouse dies.

The third step is to set up a universal life policy to pay these claims with its death benefit, maximizing the value of your estate for your heirs.

For example, you could prepare for paying the capital gains on your cottage by investing in mutual funds, stocks or bonds. Alternatively, they could use a term insurance policy.

The result: Peace of Mind

Your estate is passed on intact and worry free - to be enjoyed by the ones you love for years to come. This is a creative insurance solution that your advisor can customize for your specific needs.

To request a quote please complete our Quote Request Form.

Copyright ©2016
Kirkham and Jack is working in partnership with Continuum Financial Centres , a division of Financial Horizons Group