If you are an active investor, your investment holdings probably include many different asset classes. For many investors, diversification is a very important part of the wealth accumulation process to help manage risk and reduce volatility. Your investment portfolio might include stocks, bonds, equity funds, real estate and commodities. All these investment assets share a common characteristic – their yield is exposed to tax. From a taxation standpoint, investment assets fall into the following categories:
The income from these investments are taxed at the top rates. They include bonds, certificates of deposits, savings accounts, rents etc. Depending on the province, these investments may be taxed at rates of approximately 50% or more. (For example, Alberta 48.0%, BC 49.8%, Manitoba 50.4%, Ontario 53.53%, Nova Scotia 54.0%). Read more
Once you have decided on how much life insurance you need, your next decision is whether you are going to use term insurance or permanent insurance to provide it. For many Canadians, while permanent cash value life insurance offers a significant opportunity for them, many initially utilize renewable and convertible term life insurance. Most life companies in Canada offer 10-year, 20-year and 30-year renewable term policies. In deciding which one is right for you, attempt to match the need to the term. While 10-year term might have the lowest entry level cost, the renewal premiums will be significantly higher. If you have a young family, ask yourself, will I still need protection beyond the 10th year? If that answer is yes, then a longer renewal period is more appropriate.
In making your choice, it is important to understand how renewable term policies function. In Canada, the renewal of the coverage is automatic (unless you decide not to renew) and guaranteed. The premium on renewal, however, will increase dramatically. Anyone who has 10-year renewable term insurance, instead of renewing it, should re-write the policy for a new term period. Read more
One of the many advancements in medicine has been the use of genetic testing in determining the probability that an individual will develop a life- threatening illness or condition. Knowing that you or your children are not at risk of a major illness can be of great comfort while knowledge to the contrary can be of great value in preventative treatment and planning. There was a growing concern, however, that individuals would be very reluctant to undergo genetic testing if knowing the results could affect their ability to properly insure themselves or impact their opportunities for employment. As a result, a private member’s bill, Bill S-201, was introduced in the senate resulting in the Genetic Non-Discrimination Act being recently enacted into law.
What does the Act do?
It is now illegal for employers, insurance companies, or any other entity or individual to require anyone to undergo genetic testing or to disclose the results of a genetic test before entering into a contract which provides goods or services. Now, if you apply for life, disability or critical illness insurance living benefit coverage, you cannot be denied coverage due to the results of a genetic test. Insurance companies and their agents are also prohibited from “collecting, using or disclosing” the results of a genetic test without an individual’s written consent. Penalties for not complying with the new law are severe. Read more
Many business owners understand the important role that life insurance plays in effective corporate planning. Whether it is the funding of a shareholders’ agreement, life insuring corporate debt, or protecting against loss from the death of a key employee, life insurance is of great value in underpinning the financial success of a corporation.
Just as life insurance needs for families change over time the same is also true for requirements of a business. If it has been some time since you last reviewed your corporate needs then it is probably time for a corporate insurance audit. This is especially true if the company has grown in value since the time the insurance was first implemented. The scope of the audit and the insurance related issues include the following: Read more