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Posts from the ‘Life Insurance’ Category

24
Oct

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

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? Read more »

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8
Sep

Occasional Marijuana Users Get a Break

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. Read more »

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22
Aug

The Single Premium Insured Annuity

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.

Read more »

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19
Jun

The Clock is Ticking!

Don’t Put Off Your Decision to Buy Life Insurance

2016 is an opportune year to buy life insurance.  New laws affecting the taxation of life insurance come into effect on January 1, 2017. After this date new policies will not perform as well as they do currently.

The good news is that the proceeds of life insurance policies paid at death still remain tax free.  What has been affected is the amount of cash value that may accrue in a policy and the tax-free distribution of death proceeds from a life insurance policy owned in a corporation.

How will this impact your existing and future policies?

Adjustment to the Maximum Tax Actuarial Reserve

Whole Life and Universal Life policies are valuable vehicles in which to accumulate cash value. The limit of how much can be invested is governed by the Maximum Tax Actuarial Reserve (MTAR).  If the cash value ever exceeds the MTAR limit, the policy is deemed to be “offside” and will be subject to accrual taxation. Read more »

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16
May

Do You Need Individual Life Insurance?

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.  Read more »

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21
Mar

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

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: Read more »

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