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THE INSURANCE ADVISOR CALGARY CAN TRUST<\/p>\n
[\/et_pb_text][et_pb_divider color=”#FFFFFF” divider_weight=”2px” _builder_version=”4.16″ _module_preset=”default” width=”39%” module_alignment=”center” custom_margin=”-8px||||false|false” global_colors_info=”{}”][\/et_pb_divider][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ module_class=”kurts-credential-section” _builder_version=”4.16″ _module_preset=”default” custom_padding=”0px||0px||true|false” global_colors_info=”{}”][et_pb_row column_structure=”1_4,3_4″ use_custom_gutter=”on” gutter_width=”1″ make_equal=”on” _builder_version=”4.16″ _module_preset=”default” width=”100%” max_width=”100%” custom_padding=”0px||0px||true|false” global_colors_info=”{}”][et_pb_column type=”1_4″ _builder_version=”4.16″ _module_preset=”default” background_image=”https:\/\/financialadvise.ca\/wp-content\/uploads\/2022\/06\/family.jpg” background_position=”top_center” global_colors_info=”{}”][et_pb_text _builder_version=”4.16″ _module_preset=”default” height_tablet=”450px” height_phone=”300px” height_last_edited=”on|phone” custom_padding=”||||true|false” global_colors_info=”{}”][\/et_pb_text][\/et_pb_column][et_pb_column type=”3_4″ _builder_version=”4.16″ _module_preset=”default” custom_padding=”7%|7%|7%|7%|true|true” global_colors_info=”{}”][et_pb_text _builder_version=”4.16″ _module_preset=”default” header_2_font=”|300|||||||” header_2_font_size=”42px” global_colors_info=”{}”]<\/p>\n
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Insurance is the most effective way to provide your family and business with financial protection while also giving you peace of mind. These are three of the most common types of insurance you need:<\/span><\/p>\n [\/et_pb_text][et_pb_toggle title=”Disability Insurance” open_toggle_text_color=”#ad8330″ open_toggle_background_color=”RGBA(255,255,255,0)” closed_toggle_background_color=”RGBA(255,255,255,0)” icon_color=”#f58420″ toggle_icon=”E||divi||400″ use_icon_font_size=”on” icon_font_size=”20px” open_icon_color=”#f58420″ open_toggle_icon=”B||divi||400″ open_use_icon_font_size=”on” open_icon_font_size=”20px” _builder_version=”4.21.0″ _module_preset=”default” title_font=”Barlow|300|||||||” title_font_size=”20px” closed_title_font=”Barlow|300|||||||” closed_title_font_size=”20px” body_font=”Barlow|300|||||||” border_width_all=”0px” border_width_bottom=”1px” border_color_bottom=”#d4d4d4″ global_colors_info=”{}”]<\/p>\n Your greatest asset is you and your ability to earn a living. If you’re disabled and can’t work, disability insurance can mean the difference between having enough to pay your bills and financial ruin. Disability insurance is vital for business owners, but anyone responsible for supporting themselves or their family should strongly consider it.<\/span><\/p>\n Unfortunately, nearly 50% of all individuals 35 or younger will be disabled for 90 days or longer before age 65.<\/span><\/p>\n Approximately 30% of people aged 35 – 65 will suffer a disability for at least 90 days, and about 1 in 7 can expect to become disabled for five years or more.<\/span><\/p>\n Regarding protecting your financial future, disability insurance is a must. Consider the odds…During your working years, you will likely face a disability than die.\u00a0<\/span><\/p>\n Protect your family and business today.\u00a0<\/span><\/p>\n We can explain the different features of disability insurance policies and the type of coverage that makes sense for you.<\/span><\/p>\n [\/et_pb_toggle][et_pb_toggle title=”Critical Illness Insurance” open_toggle_text_color=”#ad8330″ open_toggle_background_color=”RGBA(255,255,255,0)” closed_toggle_background_color=”RGBA(255,255,255,0)” icon_color=”#f58420″ toggle_icon=”E||divi||400″ use_icon_font_size=”on” icon_font_size=”20px” open_icon_color=”#f58420″ open_toggle_icon=”B||divi||400″ open_use_icon_font_size=”on” open_icon_font_size=”20px” _builder_version=”4.21.0″ _module_preset=”default” title_font=”Barlow|300|||||||” title_font_size=”20px” closed_title_font=”Barlow|300|||||||” closed_title_font_size=”20px” body_font=”Barlow|300|||||||” border_width_all=”0px” border_width_bottom=”1px” border_color_bottom=”#d4d4d4″ global_colors_info=”{}”]<\/p>\n With critical illness insurance, you’ll get a tax-free lump sum of money if you have a heart attack, stroke or cancer. This can be especially important if you’re self-employed and don’t have employer benefits to help tide you over if you can’t work while recovering or receiving treatment.<\/span><\/p>\n You can use the lump sum any way you see fit, such as paying off bills so you can take time off to focus on your recovery. You may also want to use the lump sum to pay for treatment that the public health system doesn’t cover.<\/span><\/p>\n Many critical illness insurance policies come with a return of premium policy that returns your premiums if you make no claims. We can explain this feature to you, as well as what amount of coverage we recommend.<\/span><\/p>\n [\/et_pb_toggle][et_pb_toggle title=”Life Insurance” open_toggle_text_color=”#ad8330″ open_toggle_background_color=”RGBA(255,255,255,0)” closed_toggle_background_color=”RGBA(255,255,255,0)” icon_color=”#f58420″ toggle_icon=”E||divi||400″ use_icon_font_size=”on” icon_font_size=”20px” open_icon_color=”#f58420″ open_toggle_icon=”B||divi||400″ open_use_icon_font_size=”on” open_icon_font_size=”20px” _builder_version=”4.21.0″ _module_preset=”default” title_font=”Barlow|300|||||||” title_font_size=”20px” closed_title_font=”Barlow|300|||||||” closed_title_font_size=”20px” body_font=”Barlow|300|||||||” border_width_all=”0px” border_width_bottom=”1px” border_color_bottom=”#d4d4d4″ global_colors_info=”{}”]<\/p>\n Life insurance is a must if you have anyone financially dependent on you. Life insurance is generally inexpensive to obtain and provides your family with a tax-free lump sum payment in the event of your death. There are two main types of life insurance \u2013 term and permanent life insurance.<\/span><\/p>\n With term life insurance, you’re covered for a set period \u2013 five, ten, twenty or thirty years. Premiums are lower than they are for permanent life insurance and will rise as you age or if your health deteriorates. Term life insurance is an excellent choice to cover temporary needs such as a mortgage or debt or when your children depend financially on you.\u00a0<\/span><\/p>\n Permanent insurance provides you with lifetime coverage. The premiums will be more expensive than term insurance at the beginning but cost less overall than if you had term insurance for your whole life. In addition, permanent life insurance can be used to cover final expenses and final taxes.\u00a0<\/span><\/p>\n There are also permanent life insurance policies that act as an investment vehicle allowing you to contribute additional funds to the policy, where it grows tax-free. Those funds can be used to supplement your retirement.<\/span><\/p>\n We can help you determine what type of life insurance is best for you and how much coverage you need.<\/span><\/p>\n FAQs<\/strong><\/p>\n 1. What is life insurance?<\/strong><\/p>\n Life insurance is essentially an insurance policy that, in the unfortunate event of your death, pays out to your family. There may be different payouts for various causes of death and different conditions for collecting on these benefits, but for now, that’s not the primary concern. What’s crucial is understanding that life insurance serves as a financial safety net for your family, ensuring their financial security when you’re not there to provide for them. To obtain life insurance, you make premium payments to an insurance company, which takes on your risk. If you have individuals financially reliant on you or specific financial obligations to address, it is advisable to acquire life insurance. And even if your family doesn’t rely on your financial support after your passing, they can still benefit from the legacy you leave behind. At the very least, you wouldn’t want to leave your family in debt. While individual circumstances vary, and Canadian families have unique needs, life insurance always offers a form of financial security.<\/span><\/p>\n 2. How many types of life insurance is available in Canada?\u00a0<\/span><\/strong><\/p>\n In Canada, there exist two primary categories of life insurance policies: term insurance and permanent insurance. There are two types of permanent Insurance products: Whole life & Universal life.\u00a0<\/span><\/p>\n 3. What is term life insurance?\u00a0<\/strong><\/p>\n Term life insurance, the most common type in Canada, features structured premiums covering mortality costs and policy expenses. It lacks an investment component and typically expires around age 75 or 80, making it cost-effective. Term policies are often issued as 10- or 20-year renewable term policies, with some non-renewable options available for shorter-term needs.<\/span><\/p>\n Term policies offer three death benefit structures. The most common is a level death benefit, where the benefit remains constant as long as premiums are paid. An increasing death benefit option, which adjusts for inflation, is rare but available. The third option is a decreasing death benefit, often linked to financial obligations like mortgages. Premiums may be level or decreasing.<\/span><\/p>\n Term policies suit short-term needs, such as mortgage protection, and are cost-effective. They are also suitable for families with limited finances and a recognized insurance need. Convertible term policies are a common offering, allowing conversion to permanent insurance without underwriting, though premiums increase significantly. <\/span>However, term insurance lacks cash value and non-forfeiture provisions, offering little flexibility. Coverage expires when the term ends.<\/span><\/p>\n \u00a04. What is a permanent life insurance?\u00a0<\/strong><\/p>\n In contrast, permanent insurance is intended for enduring needs such as addressing tax liabilities, funeral expenses, providing ongoing support for a disabled child, charitable contributions, accumulating interest, or leaving a legacy.<\/span><\/p>\n 5. What is whole life insurance?<\/strong><\/p>\n Whole life insurance is a long-established type of permanent coverage. It involves a contract with level premiums that can span different timeframes, such as 1, 5, 10, or 20 years. A whole life policy has three key components: an investment part, a protection part, and the insurer’s expenses. The investment part builds a policy reserve over time, reducing the need for the protection part. When this reserve can cover the death benefit by itself, the policy is considered paid up.<\/span><\/p>\n 6. What to expect with whole life insurance?<\/span><\/strong><\/p>\n With a whole life policy, clients have a relatively hands-off experience. They pay premiums, and the insurance company manages the policy. The investment portion typically grows at rates similar to long-term GICs, and this growth is guaranteed, with most gains not subject to taxation. In some cases, extra deposits are allowed, creating additional cash value. However, there are early surrender charges. Accessing the cash value can be done through a policy loan, non-forfeiture provisions, or policy surrender.<\/span><\/p>\n Whole life insurance is more expensive than term insurance. However, when you compare the total cost of a term policy over its lifetime to the premiums paid for whole life insurance, they can often be quite similar.<\/span><\/p>\n There are two main types of whole life insurance: non-participating and participating. In non-participating policies, the insurance company doesn’t share profits with policyholders, resulting in a higher guaranteed cash value and death benefit. Participating policies, on the other hand, offer more features and flexibility. Policyholders can share in the profits through policy dividends, which enhance the cash value and death benefit. However, these dividends are non-guaranteed and vary based on dividend payments.<\/span><\/p>\n Dividends in an insurance policy aren’t fixed; they’re determined annually by the insurance company and depend on factors affecting the participating account, especially changes in investment returns. Premiums paid go into a participating account used for operating expenses, death benefits, and dividends. The company can adjust these dividends based on performance and other factors. Dividends can be used to reduce premiums as well. Basically, the insurance company keeps the dividend and the client is freed from a month or two (approximately, depending on the dividend scale) of premium payments. Premium Offset. In the early 1980s, bond yields were in the mid-teens. These bond yields allowed insurers to offer policies with very generous dividend scales. These policies often featured schemes in which the dividends would grow by such an extent that within 9 or 10 years the dividends would be able to pay the premiums. These were called premium-offset or vanishing premium policies<\/span><\/p>\n 7. What is a universal life insurance?\u00a0<\/strong><\/p>\n Universal life insurance is a more flexible and complex insurance product compared to whole life. It provides clients with various options, but these choices come with some responsibilities. Universal life insurance has two main components:<\/span><\/p>\n Life insurance:<\/strong> Just like other life insurance products, universal life insurance provides a death benefit, underwriting, and a policy document. Premiums are calculated based on mortality, investments, and expenses. It protects against the risk of premature death and can be used for estate planning.<\/span><\/p>\n Investments:<\/strong> Although life insurance isn’t primarily an investment, universal life policies include an investment component. This part allows you to invest in different options like pooled funds, GICs, Term Deposits, and Savings Accounts. These investments grow on a tax-deferred basis, which means you don’t pay taxes on the gains every year.<\/span><\/p>\n Here are five key features of universal life insurance:<\/strong><\/p>\n Universal life insurance is a versatile but complex product. It’s suitable for clients with disposable income, an interest in the investment component, and the need for flexibility. It can also provide creditor protection for cash values, making it valuable for business owners, contractors, and the self-employed.<\/span><\/p>\n 8. What is the different types of coverage available in Universal life insurance?<\/strong><\/p>\n There are two types of coverage available in Universal life insurance.\u00a0<\/span><\/p>\n Level death benefit \u2013<\/strong> The death benefit remains the same throughout the entire duration of the policy. If you bought a policy for $500,000 face value, then it means death benefit would always be $500,000. The death benefit will increase only if you invest very heavily in the policy or if the investments perform well. This option comes with the lowest cost of insurance in a universal life insurance product. At the death of the insured if the investment component is higher than the face value, then death benefit will be higher than the face value.<\/span><\/p>\n Increasing death benefit:<\/strong> This structure comes with 3 different types of death benefit options.\u00a0<\/span><\/p>\n \u00a09. What is Term to 100 Insurance?<\/strong><\/p>\n Term to 100 (T-100) is a permanent insurance type that bridges the gap between term and permanent life insurance. Instead of traditional term policies with set durations, T-100 extends coverage until age 100 by averaging the cost of term insurance over that time. There’s no investment component in T-100, although some policies may start building cash value after 20 years or more.<\/span><\/p>\n With T-100, you’re essentially purchasing straightforward life insurance with level death benefits. It’s a basic product with no policy loans, non-forfeiture options, or cash surrender values, which can be appealing for its simplicity.<\/span><\/p>\n T-100 policies differ from older endowment policies, as they don’t pay out at age 100 but are considered paid-up at that point, meaning no more premiums are required. These policies are often used for late-stage estate planning, where individuals want to cover potential taxes on assets like property. T-100’s premiums are typically 10-15% lower than comparable whole life policies.<\/span><\/p>\n T-100 suits those who need permanent coverage without the added features of whole life or universal life insurance. However, younger clients should be cautious, as missed premiums in T-100 policies can lead to lapses, unlike whole life policies that often activate an automatic premium loan provision.<\/span><\/p>\n \u00a011. What is a corporately owned or business-owned life insurance?<\/strong><\/p>\n Generally, when a corporation owns insurance, the rules are the same as personally owned life insurance. However, there are some special rules for corporations that allow insurance benefits to be given to shareholders without them having to pay taxes. This special mechanism is called the Capital Dividend Account. When shareholders receive dividends from this account, they don’t have to pay taxes on it. This can be a useful estate planning tool to reduce or eliminate the taxes when the shareholder passes away.<\/span><\/p>\n To make sure this process is tax-free and not a shareholder benefit, the corporation (or a subsidiary corporation) should be the one named as the beneficiary in the life insurance policy. This means that the money from the policy goes to the corporation, which can then distribute it to the shareholders.<\/span><\/p>\n 12. What is the Cash Surrender Value (CSV) of a life insurance policy?<\/strong><\/p>\n The Cash Surrender Value (CSV) is the money you receive if you decide to surrender or cancel your life insurance policy.\u00a0<\/span><\/p>\n Both universal life & whole life products have cash surrender value. It represents the value of your policy’s savings or investment component, which has grown over time through premiums and potential earnings.<\/span><\/p>\n However, it’s important to note that insurance companies might deduct certain fees, known as surrender charges, from the CSV if you surrender the policy early. The remaining amount after deducting these charges is what you’ll receive if you choose to cash in your policy. The CSV can be a valuable asset that provides a financial safety net, but it’s essential to understand the terms associated with accessing this value. For term insurance policies, the CSV is zero.<\/span><\/p>\n 13. Can you deduct life insurance premiums?<\/strong><\/p>\n Usually, life insurance premiums aren’t tax-deductible because they’re seen as a capital expense. However, there are some situations where you can deduct the lesser of the Net Cost of Pure Insurance (NCPI) and the premium. To be eligible for this deduction, the policy owner and the borrower must be the same person, and certain conditions must be met as follows:<\/span><\/p>\n \u00a014. What is NCPI of Life insurance policy?\u00a0<\/strong><\/p>\n The Net Cost of Pure Insurance (NCPI) is a concept related to life insurance policies. It’s calculated by multiplying the Net Amount at Risk by the Mortality Factor.<\/span><\/p>\n It increases each year because the risk of mortality naturally increases with age. The calculation of NCPI is governed by the Income Tax Regulations, and it varies depending on when the policy was issued. For policies issued after 2016, the NCPI is generally lower, reflecting improved mortality statistics over recent years.<\/span><\/p>\n 15. Who should be the beneficiary of a corporate-owned life insurance policy?\u00a0<\/strong><\/p>\n When a corporation owns and pays for life insurance, it’s crucial that the corporation or one of its subsidiaries is named as the beneficiary. This means the death benefit from the insurance company goes to the corporation, not to the shareholder’s estate or the shareholder’s family members. Why is this so important? If corporate funds are used to provide personal benefits to shareholders or their families, it can lead to a taxable shareholder benefit.\u00a0<\/span><\/p>\n A recent Tax Court case, Harding v The Queen, serves as an example. In this case, the company owned life insurance policies on Mr. Harding, who was the sole shareholder. However, the policies listed Mr. Harding’s spouse and children as beneficiaries. This arrangement led to the assessment of a shareholder benefit, which was not a favorable outcome. Mr. Harding argued that he didn’t know who the beneficiaries were and didn’t intend to confer a benefit. Unfortunately, both the Canada Revenue Agency and the court didn’t accept these arguments as valid, and they assessed a shareholder benefit for the life insurance premiums paid.<\/span><\/p>\n 16. What is a Capital Dividend Account (CDA) and how does it work?<\/strong><\/p>\n A Capital Dividend Account isn’t an actual bank account; it’s a notional account used for tax purposes. Companies don’t put it on their financial balance sheets, but they might mention it in the notes to their financial statements.<\/span><\/p>\n How it works:<\/strong><\/p>\n Important points:<\/strong><\/p>\n 17. What is ACB of life insurance policy?<\/strong><\/p>\n The ACB also known as the adjusted cost basis is essential for used to determine the gain when there has been a disposition\/surrender of a policy and in calculating the CDA.<\/span><\/p>\n Actions that increase ACB:<\/span><\/strong><\/p>\n Actions that decrease ACB:<\/strong><\/p>\n <\/span><\/p>\n 18. Can the Canada Revenue Agency (CRA) seize life insurance payouts to cover the deceased’s taxes?<\/span><\/strong><\/p>\n Under the law, the CRA has the authority to seize money or assets transferred by a person owing taxes to someone they have a close relationship with (non-arm’s length party). The person receiving these assets becomes jointly and separately responsible for the tax debt, but their liability is limited to the Fair Market Value (FMV) of the transferred assets, minus any amount they paid for it.<\/span><\/p>\n To trigger these rules, there must be a transfer of property from the deceased. When a life insurance death benefit is paid directly to a named beneficiary, it’s generally considered not to be a transfer of property from the deceased. Therefore, the CRA usually cannot seize the insurance payout to cover the deceased’s tax debt. However, this protection doesn’t apply if the estate is the beneficiary of the insurance policy.\u00a0<\/span><\/p>\n 19. What is a policy loan in a life insurance policy?<\/span><\/strong><\/p>\n A policy loan is an amount lent by an insurance company to a policyholder in accordance with the terms of a life insurance policy. Taking a policy loan counts as a disposition, and the money borrowed as well as repayments affect the Adjusted Cost Base (ACB) of the policy.\u00a0<\/span>If the policy loan amount exceeds the ACB, it results in an income gain.<\/span><\/p>\n \u00a020. How to access the cash value in your life insurance policy for investments or other uses?<\/strong><\/p>\n As a life insurance policy owner, you have three main options to access the Cash Surrender Value (CSV) of your policy:<\/span><\/p>\nDisability Insurance Solution in Calgary<\/span><\/span><\/h2>\n
Looking for Critical Illness Insurance in Calgary?<\/h2>\n
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