Creditor Proof - What does it mean to me?
Certain financial instruments (assets) created under the Ontario Insurance Act can be structured to retain a special status that exempts them from seizure by creditors of the owner of such assets. Recent Supreme Court decisions upheld this unique protective status. Financial instruments of assets that fall under this category are all Life Insurance and Annuity products. This would include RRSP, RRIF and Universal Life plans issued by Life Insurance Companies. It also includes unregistered annuity plans like GIAs, GLICs and prescribed and non prescribed annuities.
I don't have creditors!
May be not yet? On the other hand, if you have or should have professional liability insurance; or Errors & Omissions insurance; or not incorporated you are a prefect candidate for future creditors created by criminal or tort liability. Your life savings can be insulated from these unfortunate circumstances. Call for details.
Bank Mortgage Insurance plans - Are there alternatives?
Advantages - Bank Plans
convenience - its right there - no hassle.
It is group insurance so it usually has a low unit cost
Simplified issue, there are few or no qualification questions
Disadvantages - Banks Plans
It's a group policy & not portable - you can't take it with you.
Cost changes - every time you renew or re-negotiate.
Coverage is discontinued - after the term of your interest period, mortgage paid off or if house sold
If your not in good health, it can places your negotiating
position for mortgage at a disadvantage.
It's inflexible - the bank owns it. In the event of death its
not paid to your beneficiary.
Bank Plans Utilize Post claim Underwriting..
On balance and if practical, it is almost always best to own your own protection policy that you "earmark" or pledge for a specific purpose.
You may change its purpose over course of time. First its mortgage protection, then its collateral for a business start up loan, after which it may become funding instrument for a "buy sell" agreement and last it may be used to pay capital gains or RRSP tax liability. The policy didn't change, its purpose did.
In practical terms its analogous to owning a car versus "daily renting". The cost per rental is cheap, but there are severe restrictions on what you can use it for, how many miles you can put on it or who can drive. On the other hand, if you have a life long need for a car on a semi regular basis its much more cost effective and practical to "own it" outright. Life insurance is the same.
The price of individual term life insurance, especially for healthy non-smokers is becoming very competitive with the bank rates.
Health & Dental - Can any one buy it?
We have three three extended health and dental programs, insured individual, or group and self funded individual or group. The group plan is available only to employers. As an employer you are either self employed as a sole proprietor, in a partnership arrangement or incorporated. As an employer you must be prepared to finance the cost of the grouppremiums to at least 50%. Groups of 10 or less employees must have 100% participation. While the minimum employees that may be eligible for coverage is one, the above specifications must be observed. Self funded programs for individuals called Health Spending Accounts are designed for incorporated professionals so that can pay their medical bill through their corporations as a deductible business expense, yet not a taxable employeee benefit. The plan works and is acceptable to CRA if structured properly.
How can I get Mortgage & GIA rate Quote?
Contact Creative Solutions Insurance Agency Ltd. by phone or fax. or E-MAIL
How can I get the best Term Life Insurance rates?
Contact Creative Solutions Insurance Agency Ltd. by phone or fax. or E-MAIL
Should I buy Term or Permanent Life Insurance?
It depends! The oldest life insurance questions there is. For many people the answer is simple and straight forward. One camp swear by term insurance and the other would only buy whole life (also called permanent insurance). The truth is that one is not better than another. You could ask whether summer tires are better than snow tires, or all season. For shorter term needs (i.e. under 20 years) then term is the best. But for needs that will always be there (funeral, capital gains tax, RRIF tax, charitable gifts, leaving a gift, etc) then whole life insurance Term 100 or universal life is the best. Take a look at Term or Whole Life Insurance for a further explanation of choosing term or whole life insurance
Can you buy life insurance on someone else without them knowing?
No. The person to be insured must consent and the person buying the policy must be able to demonstrate an insurable interest. The policy owner must demonstrate an economic loss that is real and unexpected. Without these two requirements the life insurance company by law cannot and will not accept the application.
Family member has died, how can I find out if they had life insurance?
It can be a real challenge to find out if a family member had life insurance if they did not tell anyone about it. You should start by looking through all of their papers for any evidence of a life insurance policy. For example, if the family member had life insurance they would have received statements each year and probably would have had regular payments out of their bank account. Find several helpful tips at our Lost Insurance Policypage..
Do I need to have a medical to buy life insurance?
It depends. There are No Medical Exam Life Insurance policies where it is possible to buy coverage without having a medical or submitting to any tests. These policies are generally a bit more expensive or for a smaller amount of coverage. Best rates at older ages and large amounts may require paramediacals and blood test or more. In many cases however you can get buy right over the phone. Call for details
Can a claim on policy be denied by the insurance company?
Yes, there are a few instances where this can happen. In the first two years of the policy date, or the date of a reinstated policy that had previously lapsed, suicide is not covered and if you omitted or misinformed information that would have caused the insurer not to have issued the policy had they know the information.
After two years, If the policy was issued on a "post claim underwriting basis", otherwise it can only be denied for fraud. An example of a fraudulent statement is improperly stipulating your smoking habit.
What is an Irrevocable beneficiary?
How the interests of preferred beneficiaries may be protected most effectively is by naming them as irrevocable. Irrevocable beneficiary is an individual designated as beneficiary of an insurance policy, whose interest cannot be revoked without the individual's written consent.
In Common Law provinces, the default designation is “revocable”. You must expessedly name someone irrevocable. In Quebec, the revese is true, the default is “irrevocable” and you must expressedly named them revocable.
When the policy owner makes the beneficiary designation without retaining the right to revoke or change the designation, the beneficiary will be an irrevocable beneficiary. If a beneficiary is designated irrevocable, this prevents the policyowner from changing the beneficiary unless the irrevocable beneficiary gives permission. In addition, a policy owner cannot surrender the policy for cash or obtain a loan on the policy unless the irrevocable beneficiary so permits. In Canada creditor protection of beneficiaries in a preferred class are well established and are more tight if named irrevocable. A detailed description of beneficiaries issues can be found underBeneficiaries.
Is Suicide covered in life insurance?
Yes, most policies cover suicide after coverage has been in force for two years or longer.
GICs & GIAs - Is there a difference?
Both offer a guarantee of the principal and a rate of interest earnings over its term of 1 year or more.
Guaranteed Investment Certificate (GIC)
is offered by Banks & Trust Companies
- backed by CDIC
- Guaranteed Investment Annuity (GIA)
is offered by Life Insurance Companies
- backed by COMCORP
Some GIAs give "locked-in" rates, yet allow to redeem before end of term (subject to redemption charge and or market value adjustment).
GIAs offer longer terms, often up to 10 years. * GIAs can be made "creditor proof"
Because GIAs are offered only by Licensed Life Insurance Agents, you can get "shop at home service".
You can also get shopping for the best rates.
GLIC - What is it?
Guaranteed Lifetime Income Certificate (GLIC) comes from our STRATEGIES department and is the name we gave this creative system that combines two financial instruments to
1) Guarantee a pre-determined monthly income for life.
2) Guarantee the capital to your estate;
3) Guarantee a significantly higher after tax income than GICs.
4) Allow the flexibility of "creditor proofing" funds.
If you like GICs, you'll love GLICs! Contact us for a quote.
Mutual & Segregated Funds - What is the difference?
Both Fund types utilize professional money managers to invest directly or indirectly into a basket of stocks, bonds T-Bills or a combination of each. Mutual Funds regulated under the Securities Act are offered by licensed advisors through Independent Dealerships or directly by Banks, Trust Companies, Mutual Fund Companies. Segregated Funds are regulated by the Insurance Act and are offered exclusively through Life insurance Companies and their licensed distribution networks. The key differentials between the two Fund types are the minimum guarantees of capital;creditor proofing; liquidity; and investment variety. Segregated funds are of particular interest to those Canadians that are looking for some base guarantees of capital like seniors or professionals exposed to creditor liability.
RRSP - What does it stand for?
Registered Retirement Savings Plan. Any investment that is in an RRSP has met CRA statute and regulation that allows pre-tax dollars to be used in the plan. The government or Canada Revenue Agency, does not guarantee in anyway, either the capital or the performance of the investment vehicle.
RRIF - What does it stand for?
Registered Retirement Income Fund. Any investment that is in a RRIF has met CRA statutes and regulation that allows pre-tax dollars to be held in the plan. RRIFs are the income generating version of RRSPs and all RRSPs must be converted to RRIFs (or annuities) by no later than age 69. The government or Canada Revenue Agency does not guarantee in anyway either the capital or the performance of the investment vehicle in a RRIF.
What is aTFSA?
The Tax-Free Savings Account (TFSA) is a flexible, registered, general-purpose savings vehicle that allows Canadians to earn tax-free investment income to more easily meet lifetime savings needs. The TFSA complements existing registered savings plans like the Registered Retirement Savings Plans (RRSP) and the Registered Education Savings Plans (RESP).
How does aTFSA work?
- As of January 1, 2013, Canadian residents, age 18 and older, can contribute up to $5,500 annually to a TFSA. This is an increase from the annual contribution limit of $5,000 for 2009 through 2012 and reflects indexation to inflation. In 2013,2014 it went to $5,500; in 2015 to $10,000. A change in government repeals the 2015 increase for subsequent years back to $5,500.
- Investment income earned in a TFSA is tax-free.
- Withdrawals from a TFSA are tax-free.
- Unused TFSA contribution room is carried forward and accumulates in future years.
- Full amount of withdrawals can be put back into the TFSA in future years. Re-contributing in the same year may result in an over-contribution amount which would be subject to a penalty tax.
- Choose from a wide range of investment options such as mutual funds, Guaranteed Investment Certificates (GICs) and bonds.
- Contributions are not tax-deductible.
- Neither income earned within a TFSA nor withdrawals from it affect eligibility for federal income-tested benefits and credits, such as Old Age Security, the Guaranteed Income Supplement, and the Canada Child Tax Benefit.
- Funds can be given to a spouse or common-law partner for them to invest in their TFSA.
- TFSA assets can generally be transferred to a spouse or common-law partner upon death.
How do I protect profits from a catastrophic illness of a key employee, like me?
You can insure your key employees against a disability, critical illness or death to create eithr a lump sum or an income stream to use to offset key persons contributin to the bottom line.
IRP - What is it?
A creative retirement planning system that compliments RRSP savings. It is of particular interest to Canadians who find that RRSP limits are curtailing their ability to save. This curtailment stems from Pension Plan limit constraints; or the flat RRSP maximum; or your effective tax planning that reduces taxable income to levels that limit RRSP savings. IRP savings levels are independent of RRSP limits.
The investment growth component of an IRP is tax deferred much like an RRSP. The creative feature of an IRP is two fold.
It integrates RRSP and IRP savings on a tax deferred basis, and
Creates tax free cash flows during retirement.
Complete the inquiry form and mail or fax it to Creative Solutions Insurance Agency Ltd.
How Can I make a sizable tax deductible charitable gift and increase the value of my estate.
With Proper planning you can make gifts of assets to various non-profit and not for profit organizations like religious, educational and governmental agencies and get a tremendous tax savings. e.g. Gifting life insurance proceeds gifted to some charitable organizations can get you a 100% tax credit of either the cash value, future premiums, or the death benefit depending on how it is structured.
Investment Limits of UNIVERSAL LIFE - Are there any?
In a Universal life policy to create the tax sheltered long term savings vehicle, you need the fundamental element, life insurance. The unit cost of the life insurance is a function of the insured's age, sex health status and other insurability factors. Any additional amounts deposited towards the contract is the savings component. The maximum additional amount that may be placed in the contract is based on a complicated formula called MTAR. Simplistically, it is relational to the insurance amount and the cost of that insurance. In other words, the higher the insurance the larger the savings corridor.
It is a perfect vehicle, in that most every one needs and has life insurance for one reason or another. Maximizing on this need creates the tax shelter vehicle. Roughly speaking the maximum savings component is 4 times the insurance cost at the younger ages and double at the older ages. So if you need life insurance anyway, its a great way to integrate this program into your RSP program.
To understand Universal Life a little better see Universal Life.
Are UNIVERSAL LIFE Investment Returns Competitive?
The investment returns in a Universal life contracts tend to be on the conservative side as apposed to the investment choices in Mutual Funds. The investment rules for insurance contracts tend to lean toward fixed instruments like bonds, mortgages and T-bills. Some creative insurers have made the most of this by using T-Bills and derivatives to emulate stock market indexes around the world. This financial technique allows world wide diversification within the investment rules. An added value is the virtual elimination of the foreign currency risk by doing daily buy & sells.
This makes some Universal Life policy investment yields attractive and competitive. It is an option when other tax deferred options have been considered and exhausted.
Extended Health & Dental - Can anyone buy it?
We have three three extended health and dental programs, insured individual, or group and self funded individual or group. The group plan is available only to employers. As an employer you are either self employed as a sole proprietor, in a partnership arrangement or incorporated. As an employer you must be prepared to finance the cost of the group premiums to at least 50%. Groups of 10 or less employees must have 100% participation. While the minimum employees that may be eligible for coverage is one, the above specifications must be observed. Self funded programs for individuals calledHealth Spending Accounts are designed for incorporated professionals so that can pay their medical bill through their corporations as a deductible business expense, yet not a taxable employeee benefit. The plan works and is acceptable to CRA if structured properly.