Insurance
Insurance
Do you have insurance coverage in place if you or your spouse were to pass? Do you or your spouse have a policy in place to cover the balance of your mortgage and other expenses? Do you own a business with a partner? What if your business partner were to pass without a buy-sell agreement in place? You may not have the available funds to cover the purchase of your partners portion of the business. This means a part of the business may go to your partners spouse or children. Insurance coverage is always important to have, whether it’s for your family or your business, not before things go bad, such as a pandemic. We specialize in leveraging insurance and tailoring policies specific to your family and business.
Life Insurance
Clients looking for a tax-effective alternative to a low-risk portfolio, life insurance is an option worth considering. When we think of investment asset classes, we usually think of stocks, bonds and cash investments. But permanent life insurance that stays in place for a client’s lifetime, not only providing ongoing life insurance protection, it can produce better rates of return than more traditional, conservative purchases like GICs or government bonds. It can provide significant benefits such as a tax-free death benefit, tax preferred cash value growth, possible avoidance of estate and settlement costs such as probate fees.
Critical Illness Insurance
While no one wants to think about falling prey to an unexpected condition such as a heart attack or cancer, it’s better to contemplate all the ways a surprise setback can affect your retirement assets or your business. It’s one of the planning points we emphasize with our clients.
Disability Insurance
The ability to earn an income is your greatest financial asset that you need to protect. Purchasing disability
insurance can provide you with ongoing payments in the event you become disabled and can’t work.
Mortgage Protection
When it comes to protecting your mortgage, you have a choice.
Go the route of a traditional lending institution or take advantage of a great alternative.Not all mortgage protection is created equal. Ask yourself:
Did you choose your beneficiary?
Can you keep it if you move?
Who owns the policy?
Are you paying too much?
Read more on how you can protect more than the mortgage.
Corporate Owned Life Insuranc
Enables business owners to grow passive assets and/or surplus profits on a tax-deferred basis. This alternative to a company’s taxable investments is designed to provide a business with a higher tax-free value of the business for the estate or surviving shareholders. It permits a business to benefit from a tax-deferred program with no increased risk, while still permitting access to cash for business needs. One objective of the Corporate Owned Insurance may be to reduce ultimate tax liability realized upon the death of a shareholder. Under current tax laws, when an insured business owner dies, the company receives the proceeds of the policy tax-free and also receives a credit to its capital dividend account for the proceeds minus the adjusted cost basis of the policy. Capital dividends can be paid out to shareholders tax-free.
Key Person Insurance
When a business loses a key person, several things can happen. First and foremost, the business is disrupted as the owners try to assess what has happened and develop a plan of action. This disruption usually causes a drop in sales as the business focus is diffused. As well, sales that have already been made may not be deliverable or may be questionable, causing clients to go elsewhere. Creditors may become concerned and force the company to liquidate assets to pay back loans or, possibly, put it into receivership. Finally, even if the business is able to survive all these factors, it still must replace the skills that were lost, if possible.
Buy/Sell Insurance
The most common event covered by a buy/sell agreement is the death of a partner, outlining the actions that are taken and method of funding used, such as the proceeds of a life insurance policy, to buy out the deceased partner’s business interest.
Insured Retirement Program
An insurance retirement plan allows permanent policy owners to fund their life insurance policies over their initial base premium (cost of insurance, charges, and fees) with the intention of investing toward retirement, to take advantage of the tax-free asset accumulation from within their insurance policies during the accumulation phase, and to implement a series of annual bank loans against the policy for tax-free retirement income.
Immediate Financing Arrangement
An IFA allows the owners of corporations to have their cake and eat it too! High net-worth (HNW) clients that have strong cash flow have the ability to secure a loan from a financial institution using the cash value of an exempt insurance policy as collateral. The client deposits sufficient funds in his or her policy to create an early cash surrender value (CSV) and applies for the loan.
Interest can be paid on the loan each year and can reduce the costs of funding
the policy in two ways: by claiming an interest expense deduction (when the
loan is used to generate income); and by claiming a collateral insurance deduction
if the policyholder and borrower are the same person. The loan can be repaid at
any time, including upon death, by using the insurance proceeds. If the policy is held within a corporation, gross proceeds upon the death of the insured generate a credit to the
corporation’s capital dividend account (CDA).
This is a very appealing structure for many reasons; the life insurance coverage continues to grow, the ability to invest the borrowed funds, the credit to the CDA and the tax deductions.
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