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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?
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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.
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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.
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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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Parkinson's
Disease
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Loss
of Limbs
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Cancer
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Major
organ transplant
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Paralysis
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Stroke
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Loss
of speech
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Blindness
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Kidney
Failure
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Coma
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Heart
bypass surgery
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Multiple
Sclerosis
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Motor
Neuron Disease (ALS)
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Deafness
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Alzheimer's
Disease
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Severe
burns
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Occupational
HIV
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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.
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