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One out of
every 3 Canadians do not live to see their 65th
Birthday.
No one likes to plan for the
time of his or her death or serious illness and injury. But without
proper planning, you could be imposing tremendous financial stress
on your family and heirs.
At Prudent Asset Management
Inc., we help you understand your needs, and how to go about
protecting yourself and your family. We will give you answers
on:
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How much
insurance do I really need?
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What type of
insurance is best for me at this time?
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How do I keep my family
from having to pay too much tax at the time of my
death?
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How can I make sure my
estate is distributed the way I want it to
be?
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How can I accumulate
wealth for my loved ones?
We believe that planning to
protect your family’s well-being is just as important as planning to
accumulate wealth. The income you work hard to accumulate in
building your wealth can get wiped out along the way due to
unemployment, sickness or injury, critical illness or
death.
An Insurance Needs
Assessment
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A "What if?" analysis
projecting the income and required living expenses to your
heirs at the time of your death, critical injury or
illness.
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An overview of
insurance
products and options that are appropriate for you, given your
current financial situation and
goals.
An Estate Planning
Strategy
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An
overview of your wishes. How much and what do you want to
leave for your heirs? When and How?
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A
calculation of projected taxes and probate fees at the time of
your death.
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An
Overview of possible strategies and tools to maximize the
amount going to your heirs and minimize the amount going to
taxes.
Knowing that you have thoroughly
planned for your family’s well-being in all circumstances will put
your mind at ease. You will have the comfort of knowing that your
family will be taken care of. You are protecting what you have
accumulated and you will know that you have addressed all necessary
issues to benefit others for generations to come.
Insurance
Overview
Life insurance is one
of the most important steps you will take in the development of a
sound financial strategy. It can provide both peace of mind and
future security to those who depend on you.
Generally, life insurance guarantees the payment of a pre-specified amount of money upon your
death and is paid tax-free to the beneficiaries chosen by you. Life
insurance is
unique in its ability to create financial certainty in a changing
world.
Life insurance is
typically used to provide for final expenses, to retire outstanding
debts, provide income for dependents, preserve capital for the next
generation and ensure business continuation. It is also used to
create estates and to shelter investments from taxation while
accumulating.
Insurance provides numerous benefits in the distribution and planning of an
effective financial strategy. Life insurance
proceeds are paid directly to your named beneficiaries, by-passing
your estate. This means a fast and efficient settlement of the
insurance proceeds to your chosen beneficiaries. By-passing your estate also
means that there are no probate, legal or executor fees levied on
these assets.
Insurance products need to be considered as part of many financial,
retirement, and estate planning strategies.
Establishing Your
Needs and Goals
Adequate life insurance coverage can provide you and your family with a guarantee that your
current lifestyle and family goals will be provided for should
something happen to you. While life insurance is
considered a key component of most financial plans, the first step
is to assess your personal situation and establish your
needs.
Do you have an up-to-date
financial plan based on your family's requirements? By making a
thorough assessment of your circumstances. We can work with you to
define your goals and assist you in determining both the proper
amount of life insurance and
which type of insurance is
right for you.
There are two types of life
insurance: term
and permanent. Generally, term insurance covers
temporary or short-term needs, whereas permanent insurance is
purchased for long-term or lifetime needs. A comprehensive personal
financial review, which includes an insurance needs
analysis, will help you evaluate your situation. Let's review what
your needs and goals might be.
If something were to happen to
you today, which meant that you were no longer contributing
financially to your family's income, would their financial security
be in jeopardy because of debt? The goal is to assess all the
immediate expenses that would need to be paid if you were to pass
away. The key objective is to leave your family and loved ones
without any financial worries. Immediate expenses include any
current debts. Under this category, you would need to consider any
outstanding balances on your credit cards or a line of credit. An
outstanding mortgage would also fall into this category, under the
umbrella of current debts to retire.
In addition to eliminating any
current debts, you may also want to provide enough insurance coverage to create a children's education fund. Other basic goals,
like providing for future income needs, also need to be assessed. A
thorough insurance-needs
analysis will assist you in reviewing your requirements.
If your death triggers tax
liabilities, these would be considered long-term debt. Your
Registered Retirement Savings Plans (RRSPs), Registered Retirement
Income Funds (RRIFs) as well as your stock portfolio, possibly some
business interests, and real estate may all be sources of potential
tax liabilities.
As an example, let's consider
what happens at your death to your RRIF. If you do not have a
surviving spouse, then the total fair market value of your plan must
be taken into income, and taxed in your final return. However, by
designating your spouse as beneficiary of your plan, he or she would
be eligible for a spousal rollover of your RRIF assets. On the death
of your spouse, the total fair market value of the plan becomes
taxable as income to him or her in the year of death.
Let's assume at death your RRIF
is worth $300,000. If you are in a 50% tax bracket, then half of the
plan's assets, or $150,000, would be owed as tax.
Assets that may trigger capital
gains at death include property such as a family cottage. If you
have held property or assets over a long period of time and have had
even a moderate growth rate, you may be surprised at what you
owe.
Let's illustrate the impact
using a cottage, which is considered a second property and not a
principal residence. Let's assume it was originally purchased at
$20,000 and today's market value is $200,000. Of your $180,000
growth, which is a capital gain, 50% is taxable. Therefore, only
$90,000 would be taxable. In a 50% tax bracket, you would owe
$45,000 in tax. If you want your family to continue to own and enjoy
the cottage you'll need to plan its transfer to the next generation
in the most tax-efficient manner possible.
Life insurance can
often provide the solution to many financial needs and objectives.
Whether you have a temporary or permanent need to offset a financial
risk, life insurance may be
the answer you're looking for.
A needs analysis will assist you
in analyzing all your requirements. A Prudent Asset Management Inc.,
Financial Advisor can work with you to evaluate your personal
situation and help you to design a plan that meets your
goals.
Meeting Your Needs
With Term Insurance
Term insurance is
usually recommended to meet the needs of families with young
children as a way to supplement financial obligations. In
particular, it is ideal for situations to offset the risk of a
family losing one of its key income earners. If your insurance needs
include immediate expenses, like short-term debt obligations, then
term insurance is
probably the right choice for you.
Term insurance only
provides protection for an established period of time or until a
certain age. If you die within this period, then your beneficiary
receives the insurance proceeds. However, if at the end of the term you are still alive,
then the policy terminates and the protection ceases. Most companies
will allow you to renew your term insurance until
age 75 or 80.
Term insurance is
generally priced so that it is more affordable while you are
younger. As each term expires, the renewal for the next term would
be at a higher price. Therefore, the popularity of term
insurance is
"geared towards" younger age groups.
In assessing your short-term
expenses and needs, you should also provide for all final expenses
and any necessary income replacement needs. It may often be
difficult to assess the exact amount of your personal debt, because
it may vary from month to month. However, overall it would include
any outstanding credit card balances and personal lines of credit.
By using insurance to
provide a lump-sum payment of cash to your beneficiaries, you'll be
providing an alternate income source to meet these needs.
Finally, if the expense of
insurance is an
obstacle, you may want to consider a term policy to bridge the gap
until you can afford either a longer-term policy or a form of
permanent insurance.
Additionally, if you've reviewed your needs and have determined you
require coverage for such obligations as paying taxes or capital
gains, then term insurance is not
an appropriate choice - you'll need to consider permanent
insurance.
Meeting Your Needs
With Permanent Insurance
Insurance proceeds are very flexible and can be used to meet the needs of many
various financial obligations and tax planning strategies. Permanent
insurance is
designed to last for your life to provide for long-term
needs.
Permanent insurance can
remain in force until you die. When you pass away, the amount of
your coverage, also called the sum insured, is paid to your named
beneficiaries.
Permanent insurance is
available on single or a first-to-die or second-to-die basis. The
factor to consider when making your selection of which option is
best for you and your family is, simply, when will the money be
needed? If you need individual coverage than single option is for
you.
If cash is going to be required
immediately after the first death, then a first-to-die policy is
appropriate. One example of a need that requires a first-to-die
policy is business insurance for
business partners. At the death of the first partner, the policy
proceeds are paid to the surviving partner, who would use the money
to buy-out the portion of the business from his or her deceased
partner's family.
However, if the insurance proceeds are only required at the second death, then a second-to-die
policy would be appropriate. Examples of needs that would require a
second-to-die strategy include planning for payment of tax
liabilities, which would be triggered at the death of the second
spouse. Assets to consider include Registered Retirement Savings
Plans (RRSPs) and Registered Retirement Income Funds (RRIFs) as well
as your stock portfolio, possibly some business interests, and real
estate.
Once it has been established
that the need for insurance is
permanent, there are a variety of plans available. Generally, the
three popular forms of permanent insurance are:
term to 100, universal life and whole life.
Depending on the kind of
permanent insurance that
you choose, you may also be able to build additional cash values in
a tax-sheltered manner. Some policies allow you to increase your
insurance premiums and will maintain the excess in an investment environment.
Each form of permanent insurance allows
for a range of options. Generally, the cash values provide your
insurance plan
increased flexibility to build up additional savings or
insurance coverage as required.
A thorough assessment of your
current and long-term goals will assist you in the selection of
features and options that best meet your needs. Insurance
solutions form an integral role in most financial plans.
Critical Illness
Insurance
Critical Illness insurance is a
relatively new form of protection that provides money while you are
still alive. It has tremendous flexibility if you become critically
ill because there are no requirements for how you spend the lump-sum
of money that you receive. You don't have to get approval for
expenditures, you don't have to provide any receipts, you don't even
have to spend the money on medical expenses.
Critical Illness
insurance provides you with a lump-sum payment to be used however you see fit.
If you want to try alternative therapies, you want to be treated
outside of the country, you want to hire someone to take care of
you, you want to hire a nanny to take care of your children...you
choose how to spend your money.
If you die while the policy
is in force, your beneficiary receives a refund of 100% of the
premiums that you paid into your Critical Illness
policy.
Critical Illness insurance covers
specific illnesses only.
Do I need
Critical Illness Insurance?
It
is a fact that one out of every three Canadians will contract a
life-altering illness during his or her lifetime.
Few people
are prepared for the financial burden that comes with surviving a
critical illness: convalescence, private nursing costs, reduction or
loss of income, child care, medical equipment, home refitting... the
expenses can be overwhelming.
Critical Illness Insurance can
protect your finances against the high cost of rebuilding your
lifestyle following a critical illness.
It offers a lump-sum cash
payment while you are living, usually just 30 days after the
diagnosis and with no requirement on how you spend the
money.
Most of Critical Illness
Insurance policy
will cover following long term illness;
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Heart Attack
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Loss of Limbs
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Major Organ Transplant
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Stroke
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Blindness
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Coma
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Multiple Sclerosis
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Deafness
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Severe Burns
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Disability Insurance
What would you do if your income
stopped today?
Where would the money come from for your
living expenses?
Would your business survive if you, a
partner or an employee were disabled?
Disability
insurance provides you with financial security when an accident or illness
causes you to be disabled and unable to work or earn an income.
What is
Disability Insurance?
Disability insurance replaces a portion of your income if you become unable, through
injury or illness, to work. Policies differ on how soon you would
collect benefits and for how long. They also vary in whether
disability benefits are received if you can't perform the duties of
your own occupation, a job in your field, or any job at
all.
A life insurance benefit is usually payable in a lump-sum, and this payment ends the
contract. Disability insurance benefits are almost always payable on a monthly basis, while
disability continues. Upon recovery from a disability, the policy
continues. Benefits could potentially be payable again for
subsequent disabilities or for the recurrence of a prior
disability.
Why Do I
Need Disability Insurance?
Most
people are unaware of the startling disability statistics. Often
they have purchased life insurance to
protect their families in the event of death.
In fact, the
odds are far greater that a person will become disabled in a given
year than that he or she will die. There is at least an eight times
greater chance of suffering a disability of at least 90 days as
compared to the chances of death (up to age 37). While death may be
inevitable, disability is more probable at any given age.
Health Insurance
Everyone who enjoys good health
hopes it will last for a lifetime. But it doesn’t always turn out
that way. Sometimes life throws a curve.
Injuries can happen. A illness
could dramatically change your life, your future, your family's
lifestyle, as well as your financial security. A chronic disease or
disability could keep you from working. Someone in your family could
become injured and require personal care services. Insurance can't
prevent those things from happening. But it can help you and your
family cope.
Drug and Dental plan supplements
provincial health plan. Many medical expenses such as dental work,
prescription drugs, eye glasses, private and semi-private
hospital accommodation and many other costs, are not covered by the
provincial health plan.
Travel Insurance
Plans
Health Care costs in Canada are
very expensive. Hospitals can charge thousands of dollars per day.
Without emergency hospital and medical insurance, you
and your family could be responsible for these high cost - which can
create several financial burden. New Immigrates to Canada generally
have to wait three months before they receive provincial health
plan. Visitors to Canada Emergency Hospital / Medical Insurance can
protect you. The available coverage ranges from $10,000 to
$150,000.
Let us help you
in…Getting Started. | 
