Term Insurance
Term insurance is a type of life insurance that provides coverage for a specific period, or "term," typically ranging from 5 to 30 years. During the term, if the insured person dies, the policy pays out a death benefit to the designated beneficiaries. It's designed to provide financial protection for a specific time frame, such as until the insured's children are grown or until a mortgage is paid off.
Term insurance does not accumulate cash value like some other types of life insurance, such as whole life or universal life. As a result, it tends to be more affordable, making it an attractive option for individuals looking for temporary coverage to protect their loved ones in case of premature death. Once the term ends, the coverage typically expires, although some policies may offer the option to renew or convert to a permanent policy at a higher cost.
LIFE INSURANCE
Permanent insurance, also known as whole life insurance or universal life insurance, is a type of life insurance that provides coverage for the entire lifetime of the insured person, as long as premiums are paid. Unlike term insurance, which provides coverage for a specific period, permanent insurance offers lifelong protection.
One key feature of permanent insurance is its cash value component. A portion of each premium payment is allocated to an investment account within the policy, which grows over time on a tax-deferred basis. Policyholders can access this cash value through withdrawals or loans while they are alive, providing a potential source of funds for various purposes such as supplementing retirement income, paying for education expenses, or covering emergencies.
Permanent insurance premiums are typically higher than those for term insurance, reflecting the lifelong coverage and cash value component. However, permanent insurance provides a level of financial security and flexibility that can be appealing for individuals seeking long-term protection and potential wealth accumulation.
Permanent Insurance
Guaranteed Issue
Guaranteed issue life insurance is a type of life insurance policy that is available to individuals without the need for a medical exam or health questionnaire. This type of policy guarantees acceptance regardless of the applicant's health status or pre-existing medical conditions.
Guaranteed issue policies typically have lower coverage amounts compared to traditional life insurance policies, and they often come with higher premiums to offset the insurer's increased risk. They are designed to provide a basic level of coverage for individuals who may have difficulty obtaining traditional life insurance due to health concerns or other factors.
Because guaranteed issue policies do not require a medical exam or health questionnaire, they can be a convenient option for individuals who have been declined for other types of life insurance or who want to ensure their loved ones have some financial protection in place without the hassle of medical underwriting. However, it's essential to carefully review the terms and conditions of the policy, as well as the cost of premiums, to ensure it meets your needs and budget.
living benefits
CRITCIAL ILLNESS
Critical illness insurance is a type of insurance coverage that provides a lump-sum payment to policyholders upon diagnosis of a serious medical condition covered by the policy. These conditions typically include major illnesses such as cancer, heart attack, stroke, organ transplant, or other life-threatening diseases. The lump-sum payment is made regardless of whether the policyholder is able to work or not, and it can be used to cover various expenses such as medical treatments, rehabilitation, modifications to living arrangements, or to replace lost income during recovery. Critical illness insurance offers financial protection and peace of mind by helping policyholders manage the financial impact of a serious illness without depleting their savings or retirement funds.
DISABILITY INSURANCE
Disability insurance is a type of insurance coverage designed to provide income replacement in the event that the policyholder becomes unable to work due to a disability or illness. It offers financial protection by replacing a portion of the policyholder's income, typically a percentage of their pre-disability earnings, during the period of disability. Disability insurance can be short-term or long-term, depending on the duration of coverage needed. Short-term disability insurance usually covers disabilities lasting up to six months to a year, while long-term disability insurance covers disabilities that extend beyond that period, sometimes until retirement age. The benefits provided by disability insurance can help cover essential expenses such as mortgage or rent payments, utilities, groceries, and medical bills, providing financial stability and peace of mind during challenging times.
INVESTMENTS
RRSP
Canadians can use a Registered Retirement Savings Plan (RRSP) to save for retirement. It is tailored to provide tax benefits, allowing you to save and grow your money while deducting your RRSP contributions from your current tax bill. Once you are ready to withdraw the funds, you'll pay taxes on the withdrawal amount, but likely at a lower rate than current taxes.
FHSA
The Tax-Free First Home Savings Account (FHSA) is an investment account that Canadians who have reached the age of majority can use to save up to $40,000 for their first home. Annual contributions are limited to $8,000 and are tax-free, and withdrawals are also tax-free, similar to a TFSA.
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TFSA
A Tax-Free Savings Account (TFSA) is a registered investment account that aims to assist Canadians to save their money while holding qualified investments. Eligibility requires Canadians who have reached the age of majority in their province and have a valid Social Insurance Number (SIN). All income earned within the TFSA, including capital gains, dividends, and interest, is tax-free. Additionally, any withdrawals you make from the account are also tax-free.the funds, you'll pay taxes on the withdrawal amount, but likely at a lower rate than current taxes.
LET'S COMPARE
RRSP, TFSA & FHSA
SEG FUNDS
Segregated funds are investment products offered by life insurance companies, akin to mutual funds but with added insurance features. They blend investment growth potential with insurance protection. A key feature is principal protection, where a portion of the investor's contributions is guaranteed, safeguarding against poor market performance. Segregated funds also offer creditor protection and the ability to bypass probate, along with death benefit guarantees for beneficiaries. They invest in various asset classes, allowing for portfolio diversification, though they often entail higher fees due to insurance features. Suited for investors seeking capital protection, estate planning advantages, and growth opportunities within a tax-advantaged framework, careful consideration of terms and costs is essential before investing.
BUSINESS OWNERS
Immediate Financing Arrangement (IFA) strategy allows affluent business owners and investors to fund their permanent life insurance protection without disrupting their cash flow. The corporately owned life insurance is used as collateral for a tax-free loan, and the interest on the loan and part of the life insurance premium will be tax-deductible to the corporation. The strategy helps incorporated business clients fund future tax liabilities, key person, buy-sell agreements, and leave a tax efficient legacy to heirs or favourite charities. If the policy beneficiary is a corporation, there may be positive capital dividend account balance left over for other assets following the distribution of the net insurance death benefit. If the policy is being used to fund a buy sell agreement, and if there has been adequate time for the cash value to grow on a tax deferred basis, you may surrender the policy when you retire and use any net excess cash value to enhance you’re retirement lifestyle with a living buy out.
GROUP BENEFITS
TRADITIONAL GROUP INSURANCE
Traditional group benefits in Canada are employer-sponsored packages comprising health, dental, vision, prescription drug, and paramedical coverage, along with disability and life insurance. Health benefits cover medical services and medications, while dental and vision benefits include dental care and eye-related services. Prescription drug coverage offsets medication costs, and paramedical coverage may include therapies like physiotherapy. Disability insurance provides income replacement for disabled employees, and life insurance offers financial protection to beneficiaries. Typically, both employers and employees contribute to premiums, with coverage varying based on the employer's plan and employee choices. It's important for employees to be aware of waiting periods, coverage limits, and exclusions when enrolling.
HEALTH SPENDING ACCOUNTS (HSA)
A Health Spending Account (HSA) is a type of employee benefit plan that allows individuals to set aside pre-tax dollars to pay for eligible medical expenses. It works similarly to a personal savings account, but the funds can only be used for qualified medical expenses as defined by the Canada Revenue Agency (CRA).
Employers typically establish HSAs for their employees, contributing a predetermined amount each year. Employees can then use these funds to cover out-of-pocket medical expenses not covered by their primary health insurance plan, such as deductibles, co-payments, prescription drugs, dental care, vision care, and other eligible expenses.
One of the key benefits of an HSA is that the contributions made by the employer are tax-deductible, reducing the overall taxable income for both the employer and the employee. Additionally, employees can also make contributions to their HSA on a pre-tax basis, further maximizing tax savings.
HSAs offer flexibility and control over healthcare spending, allowing individuals to use the funds for their specific medical needs. Any unused funds in the HSA typically roll over from year to year, providing an opportunity for long-term savings for future medical expenses.
Overall, Health Spending Accounts can be a valuable tool for employers and employees alike, offering tax advantages and flexibility in managing healthcare expenses.
TRavel insurance
Travel insurance protects travelers from financial losses due to unexpected events before or during a trip, covering issues like trip cancellation, medical emergencies, lost baggage, and delays. Policies vary in coverage and cost, offering options for single trips or frequent travelers, with additional features such as emergency evacuation. It aims to provide peace of mind by assisting with expenses like medical treatment, trip cancellations, or lost belongings. Before buying, travelers should carefully review policy terms, coverage limits, and exclusions to ensure suitability for their needs and trip details.
