Segregated funds diversify your investment

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Segregated funds have their shares protected to a certain degree by insurance.

The insurance protection advantage The notable advantage is that some segregated funds offer to insure up to 75% or higher, of the principal invested in a segregated fund if held for a number of years, typically 10. Depending on the situation, there may be some creditor protection if an investor went bankrupt if he owns segregated funds.

Diversification advantage Segregated funds offer the investor the benefit of maximum diversification, with minimal exposure to any one stock. You pool your investment with the combined capital of other investors, which allows everyone to invest in many companies, not just focus on two or three larger stocks.

Segregated Fund managers usually diversify among at least 20 companies, investing no more than 10% of the fund’s total dollars into any one security.

Other advantages of Segregated Funds

• You can buy additional shares of a segregated fund at any time.

• An automatic purchase plan called dollar-cost averaging (DCA) lets you invest equal amounts at regularly scheduled intervals. You buy more fund shares when the prices are lower, fewer when prices are higher, thus averaging out the price of the shares purchased.

• Segregated fund contracts can be registered in RRSPs or RRIFs.

• Dividends, where applicable, are easily reinvested.

• Some fund companies allow transfers between their funds without charge.

• You can borrow against segregated fund assets (unless the contract is registered).

Legal Terms of Use Agreement

LEGAL TERMS OF USE AGREEMENT

 

 

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Where a company directs design for any website for a head office, or a representative of their company, or for advisors of the company, the company shall be liable for all development and promotion of all websites associated with this website or the websites of their representatives using the company name or associate company, logos, terms, phrases, web pages or urls, and all projects directed by such company shall not be wholly or partially at the expense of Adviceon, unless stated in a signed contract as agreed by Adviceon mutually with the company.

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Where there are queries emailed about copyright concerns and there is no reply, or where it is possible articles could be copied from Adviceon’s dbases, or where proper cancellation fees are not paid in advance, Adviceon retains the right to suspend website use.

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Adviceon® defines SEO strategies via the document The Truth about SEO to enhance SEO and the rate charged for those interested in optimizing Google’s search (via the use of Google AdWords, Google My Business, comparative to the use of content and advisor blogs in a very competitive financial world dominated by banks also using SEO). A Special Rate for SEO work for by Adviceon® at 50% off for clients will apply, which billing will not apply and will revert to the hourly rate for SEO where any other SEO consultant further admixes strategy and confounds the process (many are deceptively claiming the ability to bring someone to the top of a Google search). Where a client is assigning any SEO service authority to advise on an existing Adviceon® website or any alternate strategy which may seek to compete with Adviceon® website services, an SEO agreement must be signed by the advisor.

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Website Design

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Where any erroneous application of any information on any website built by Adviceon occurs, or by use of Adviceon’s data content, online libraries or articles, it shall not be deemed the responsibility of Adviceon.

Anyone who views this website is strongly advised not to rely on information on these websites as infallible or as accurate Financial information or as Financial advice even if the term “Financial Advice” or “Advice on Money” or “Advice” or “Advisory” or “Financial Planning” or “Financial Plan” or “Planning” or “Financial Advisor” or “Advisor” or any other term that could signify Financial planning advice or any other type of advice, is used. The information on this website does not constitute an offer or solicitation by anyone in any jurisdiction in Canada or outside of Canada for any product or service in which an offer or solicitation cannot legally be made, or to any person to whom it is unlawful to make a solicitation.


References to Goods and Services or Trademarks

 

References to Goods and Services or Trademarks References in this website or Internet page, or to any party’s goods or services or trademarks or trade names or brand names or links or widgets from services other than owned by Adviceon, Financium, or Canadian Financial Publishing Group, should not be regarded as an endorsement of these goods or services, nor is Adviceon, Financium, or Canadian Financial Publishing Group responsible for the use of such information as it is only offered as an Internet link to such information which is available online, and Adviceon, Financium, or Canadian Financial Publishing Group are not responsible for a misuse or inappropriate application of knowledge from the said information or sites nor any liability caused by such information and as such, any and all Errors or Omissions are Excluded.


Regarding Interpretation of Services

 

No interpretation, assessment or judgment or bias by any party regarding the services offered by Adviceon shall reflect upon money owing to Adviceon. Adviceon is not responsible for any representative’s, mutual fund dealership’s, mutual fund company’s, life insurance company’s, or Financial company’s, or any other party’s interpretation regarding specific compliance or content issues or updating issues or where any other corporation’s or individual’s or your own judgment or bias of the site is concerned, or if for any reason a mutual fund dealership or any other party requests your website to be reworked or access to your Internet site or data link be shut down for any period of time, and any payments due to Adviceon shall remain due even where a provincial or a national legislative body changes legislation, or where an assessment by any such legislative body shall necessitate a request to Adviceon to change certain elements of any website structure or shall effect the use of any of Adviceon’s websites by the contractee (even though Adviceon seeks to comply within a reasonable period of time). Adviceon seeks to meet all MFDA standards and to keep articles updated and will communicate with any compliance officer with good intentions and will acknowledge suggestions for improvement. Adviceon will remain open to addition or removal or updating or editing of certain portions of text upon request. Adviceon is not responsible for corrections or changes or additions or updates or editing requested by compliance officers or the representative if they are not proofed by the contractee or concerned parties and if there are not further directives issued to Adviceon for correction.

Regarding Co-op Funding For Websites

Though Adviceon offers Internet data more specific to the mutual fund industry, and life insurance industry, it does not take responsibility for any interpretation by any party that deems to pay or not pay for some portion of funding for these Internet websites. Payment by any party subscribing to Adviceon’s Internet services shall remain due irrespective of said interpretation. It is suggested that you do not co-op the website services, but Adviceon will seek to keep the services compliant.

Internet Website Interruptions

Where there is a technical difficulty or interruption of any Adviceon service for any period of time, Adviceon will seek to rectify the problem, yet such interruption shall not nullify this Copyright and Legal Terms of Use Agreement, or any payment for any Adviceon service due. Where a website or email service is noted as being non-functional for a significant period of time we ask that you first check your website’s connectivity through your Internet High Speed telephone or Cable service, or dial up line service, whichever is applicable (these are other non-Adviceon services that can directly affect functionality).

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By virtue of initial use or down payment, all parties contracting, leasing, or invoiced to use Adviceon data for their own website agree to all statements regarding copyright use in this Legal Agreement and shall be liable for payments of invoices issued upon receipt. Upon use of this Internet service, the purchaser automatically agrees not to share any URL or hyperlink with any Financial associate for their own use, and agrees to all the statements set forth herein.

Proofing A Change or Directed Work

When any change to a website is requested by any party with reference to your website, it is the responsibility of the client or contractee to examine and re-examine the requested change on the website until satisfied and Adviceon should be notified until such change is satisfactory. Where any change has been submitted, Adviceon will not necessarily update the website immediately, but may wait one to three days unless otherwise noted. Where work goes beyond the scope of a website build, taking more than four (4) hours for Adviceon to complete, or where multiple updates for one page are similar, Adviceon reserves the right to invoice for prolonged interpretive complexity or the extra time to design, or interpret, or build or re-impart information to a website.

Compliance

Adviceon and Financium are not responsible for compliance for the purpose of co-op advertising on any website though we seek to comply with all MFDA rules.

Adviceon seeks to operate within compliance rules but is not responsible for non-compliance relating to interpretations of the MFDA rules, or a mutual fund dealership’s rules, even though we seek where possible, to comply at all times. It is the Financial representative’s (the user of these website services) responsibility to inform Adviceon of any change, addition, or deletion required by his or her compliance department or officer, and where any party has a concern regarding compliance, Adviceon shall not be held responsible in any way.

Where Adviceon’s compliance management tool is used by a company, Adviceon is not responsible for the company’s compliance officers’ completion or maintaining of compliance on behalf of the company, or for the use of Adviceon’s tools offered for the company’s convenience; and it is not the responsibility of Adviceon to maintain compliance of the company’s manifesting online content.

Website Promotion Is Not Adviceon’s Responsibility

Initiating an agreement to pay for and access services rendered by Adviceon or Financium, does not imply that Canadian Financial Publishing Group is responsible for or guarantees that anyone browsing the Internet will visit your site through any search engine or by entering your URL in their browser. All promotion and advertising of anyone or any company using access to a website designed by, or services rendered by, Canadian Financial Publishing Group is the responsibility of the contractee or client. The user’s promotion of their site location is their own responsibility and will not set forth any argument for discounting or annulment of payments due, past, present, or future. Adviceon websites can offer reasonable Search Engine Optimization for fees rendered.

Contract Period & Cancellation Policy

The minimum period of initial Internet access to Adviceon’s copyright data shall at least be automatically contracted for a minimum of three (3) years without a formal signed contract or for the term as indicated by a formal singed contract, from the first date of any access to Adviceon’s copyright Internet data or website built by Adviceon, or to any service as indicated on an invoice, and will automatically renew for at least three (3) years, following the initial period, or upon the revision of any website, or upon continued manifestation of Adviceon data libraries on a website which is the responsibility of a non-Adviceon webmaster to remove, or when a website revision is paid for at a special price, or Adviceon data is viewed as not being utilized, the service shall remain payable for another minimum three (3) years irrespective of payment periods or invoicing cycles that are of a shorter duration.

To terminate a website or any copyright access to Adviceon Internet data, a registered letter must be received 90 days in advance of the time of such termination. Where an invoice has been paid in full or in part for a new term, monies are not refundable upon the conclusion of a 90 day cancellation period after the receipt of a registered letter; however Adviceon shall consider transferring monies to an alternate service. In all cases all outstanding fees not yet paid, relating to website hosting, copyright data access, revision or changes, edits, and domain registrations shall be due, including up to the date of requested termination, even where the Internet service has been shut off as per a directive from the client, or for non-payment or for conflict regarding terms of access. Where a dispute arises, Adviceon shall determine the actual initial anniversary date, as the first day of the first copyright Internet access period as stated on Adviceon invoice records, and/or the date of any website revision upon which a new automatic contract period begins for three years at the current monthly rate as established by Adviceon regardless if a contract has been signed or not, even where such revision was done without charge, and the remaining amount shall be due. To seek to circumvent payment of any invoice, or remaining fees due at termination for any reason, not in accord with this agreement, will be deemed an infringement of copyright and prosecuted by law. Termination letters may not be deemed legal if given verbally over the phone or by facsimile or by email, without utilizing a distinct registered mail or courier service that offers a registered receipt as proof of receipt, or where an agreement to settle has been accepted via email with Adviceon and all accounts are attested as paid in full. Nor will past due invoices or monies owed be overlooked where data links are removed from websites for the purpose of evading payment; and it should be seriously noted, that without receipt of a registered letter of cancellation as proof of cancellation, a client will have no legal recourse if payment is overlooked for any reason.

Where any initial website build, or special update, or design work, or website refurbishing or website design switch has occurred to a different designed website from the original website, and a three year period has not evolved from the date of completion of said work, Adviceon reserves the right to charge fees commensurate with any of these said services as noted above, plus the inclusion of retroactive normal monthly fees from the beginning date of said work for an initial website build or date of update, plus any associated administration transfer fee, prior to a release of any domain under Adviceon’s payee jurisdiction.

Any company that has given direction to Canadian Financial Publishing Group, Financium, or Adviceon, by letter or by email, on behalf of, or in union with, or by a representative, or advisor, or owner, or co-owner, or director, or president, or officer of the company, who later fails to pay an account, and has authorized a website build, all parties coporately and personally shall be responsible for any non-payment of account for work so directed on behalf of the comapny or representative who is currently, or was employed by the said company at the time the directive was given.

Adviceon’s accounting shall suffice as final accounting, and can account for work not yet billed or missed billlings for directed or requested work going back three (3) years or where fiscal retainers (funds retained) did not cover such work; and any withholding of payment due shall be deemed an infringement of Adviceon’s copyright from the date Adviceon’s data was historically accessed.

Continuance of Service after Contract

Even where the initial period of copyright Internet access has renewed, or continued past the initial contract period in order to retain pricing, or service, or due to non-cancellation, fees will be deemed due, until either a new contract is formalized or a cancellation is requested and completed as per the above stated method using a registered letter by mail or courier.


Prepayment

Full payment shall be due upon receipt of each invoice on a prepayment basis even where any payment has not been made prior to accessing the copyright Internet access data. Service may be interrupted until such payment is made. All initial set-up and ongoing service fees are to be paid as due when invoiced. Paid invoices for any Internet service are non- refundable for any reason.


Initial And Ongoing Contract Activation

The legal information supplied online in this website is activated for a minimum term of agreement for three years and is confirmed, agreed upon, and actualized by an order or request for services via email or letter or an applied payment to initiate Internet website building or to initiate access to any other Internet service offered by Canadian Financial Publishing Group or by the trade name of Adviceon. Upon activation, all established set-up fees and monthly access fees shall be due for a minimum of three years, or more if a contract is extended, and subsequent renewal periods apply and are due upon renewal where there is a continuance after the anniversary date of the initial purchase, and shall be prolonged for a minimum of three years. This entire legal agreement of terms of use may change or have additions applied and is openly and wholly accessible via direct links on your website and Adviceon articles for review and is incontestable.


Interruption of Service for Non-Payment or No-Contract

When service is interrupted for non-payment, an additional fee will apply upon reinstatement of services once the historic invoices are paid up to date. If for any reason the contractee or user or client deems to terminate an Internet service in relation to non-payment of an Adviceon invoice an additional fee shall apply to remove the website from service at the discretion of Adviceon. When services are halted or removed for continued non-payment, where any Adviceon invoice is left unpaid, all rates shall be deemed to revert to the current rate and all invoices may be submitted to a collection agency. Adviceon accounting will be the only record of reference to finalize any unpaid account. It is advisable to have a signed formal contract made legal by the agreed signatures including the signature of both the company and Adviceon’s president, which may offer special considerations or discounts on cancellation of remaining monthly service fees. All signatures must coincide within the same period of time of not more than 30 days of signing.

Adviceon reserves the right to demand full payment for all work directed by and rendered for a company and this is the only agreement operative where there has not been a signed formal agreement, and this entire Copyright & Legal Terms of Use Agreement set forth herein shall prevail in all disputes.


Restrictions to URL Use

The Internet copyright content URLs can be set up on an individual website or corporate website insofar as no page served from the servers of Canadian Financial Publishing Group (Adviceon) is rearranged or copied. All URLs must be accessed from websites or servers owned or leased by Canadian Financial Publishing Group. No other server is allowed to serve the content offered by Canadian Financial Publishing Group.


E-Newsletter of E-Magazine or E-Page URL, or Internet Page

All E-Newsletters, E-Magazines, E-Pages, Internet Pages, or any url offering up information created by Canadian Financial Publishing Group must be paid for in advance and only be sent from launching systems that Adviceon or Canadian Financial Publishing Group has approved. If any other system is used to deploy copyright information of Canadian Financial Publishing Group it must be pre-approved by email prior to use. Canadian Financial Publishing Group url pages are not to be sent in tandem with any other document, other than a simple introduction by a paying Adviceon client.


Website Readiness

Canadian Financial Publishing Group will not be responsible for premature advertisements or promotion by any user or client to anyone, by any method presenting their website as ready to view, until all configurations are proven to be working to the client’s total satisfaction as it often takes more time than anticipated to configure a website for multiple reasons. Adviceon may access monthly payments as soon as the architecture of the website or pages of the website are formed.


Financial Content Data URLs

Where Adviceon’s content is linked to a website by a paying client, such urls should be checked to see if more urls have been added, or if some have been changed or discontinued, and such management is the responsibility of the user.


General Disclaimer

All online statements and statistics set forth on any online page as offered by Canadian Financial Publishing Group are intended for educational purposes only and are believed to be true and dependable, however accuracy of content is not guaranteed, nor will Adviceon or a Financial Advisor or a company associated with the Financial Advisor or any party contracting the services of Adviceon assume liability for Financial applications or a securities trade or investment decision or life insurance purchase based on any article, graph or statistic on this website, even where an error or omission occurs. The reader is advised to seek additional professional advice and to evaluate strategies applicable to each individual’s objectives.

Investors and the general consumer referencing this website should inform themselves regarding securities, taxation or exchange control legislation which may affect them personally. This website is for general information only and is not intended to provide specific personalized advice regarding and including, without limitation, securities trading, mutual funds, segregated funds, investments, investing, Financial matters, legal matters, life insurance, estate planning, disability insurance, medical or psychological well-being, general insurance, travel planning or travel insurance, health concerns or problems, accounting or tax advice, or any other service deemed advice, consultation, or recommendation. Please consult an appropriate professional regarding your particular circumstances.

Information provided by Canadian Financial Publishing Group and other sources on this website is believed to be accurate and reliable when placed on this site, but we cannot guarantee it is accurate or complete or current at all times. Information on this site is for information purposes only and is not intended to provide Financial, legal, accounting or tax advice and should not be relied upon with regard to any decision affecting Financial planning or the purchase of a security, mutual fund, or life insurance.

We endeavour to keep legislative related information at this site current. However legislative related information is subject to change at any time without notice to users and the posted information at any Internet website serviced by Canadian Financial Publishing Group may not immediately reflect such changes. Information in this website is subject to change without notice and Adviceon and the owner of this website is not liable for any inaccuracies in the information presented.


Limitation of Liability for Public Use

The content in this website does not constitute an offer or solicitation. References in this Internet website to third party goods or services should not be regarded as an endorsement of these goods or services. This website is intended for Canadian residents only and the information contained herein is subject to change without notice. The owner and publisher of this Internet-based website are not liable for any inaccuracies in the information provided.

Trademarks and registered trademarks in association with Canadian Financial Publishing Group are owned by Adviceon. Reproduction by any means without written permission of the publisher is strictly forbidden. The publisher will consider authorization of reprints used only by their current clients who inform Canadian Financial Publishing Group prior to use and have received written authorization prior to such use. Contact the publisher at admin@adviceon.com

Canadian Financial Publishing Group does not sell financial products.


Legal Liability for Damages

Anyone attempting to cause damage to the files or stability of any website operated by Canadian Financial Publishing group or divisions or Trade-names such as Adviceon, or Financium, or Skyroom will be sued at the highest level of business law possible for all damages caused by either neglect or intention to harm.


General Mutual Fund Disclaimer

Only registered representatives of a Mutual Fund Dealer offer mutual funds; and segregated funds are also offered by life insurance representatives.

Before investing in any mutual fund, it is important to read the specific fund’s simplified prospectus. Commissions, trailing commissions, management fees, tax payable, and expenses may be associated with mutual fund investments. Mutual funds are not guaranteed. Their values change frequently and past performance may not be repeated. Any indicated mathematical return, including those set forth on graphs or tables in this online publication, is used only to illustrate the potential effects of the compound growth rate and is not intended to reflect future values of returns on any specific investment or any other financial product. It is strongly recommended that you seek professional advice to inform yourself regarding mutual funds or any other financial product as it relates to your circumstance.

Borrowing for investment purposes can magnify the risk as well as the reward of investing. All precautions regarding mutual funds also apply to segregated funds. You should not make any personal decision or act on any information in this online publication because it is meant for educational purposes only, and it may not be currently accurate or applicable to your circumstance. The publisher (and Canadian Financial Publishing Group) will not be held liable in any way for any financial planning application, or inaccuracies, or errors, or omissions in relation to the information in this online publication. Trademarks and registered trademarks are owned by the publisher (and Canadian Financial Publishing Group). Reproduction by any means without written permission of the Adviceon is strictly forbidden.


To Discuss Strategic Relationships

Canadian Financial Publishing Group supplies website content to existing websites as well as builds new Financial websites that yield Adviceon content. To order a website or discuss how to use website content please contact Canadian Financial Publishing Group at glenjackman@adviceon.com or call:

Tel: 1-800-819-8706
Fax: 1-888-329-2374

Address:

Canadian Financial Publishing Group
TD Canada Trust Tower
55 King Street West, Suite 700
Kitchener, ON N2G 4W1

 

 

 

How do I diversify my portfolio?

shutterstock_15283585By diversifying among carefully selected, different asset classes, you reduce the risk of being over-exposed to any particular asset class.

For example, an investor may hold assets such as bonds, GICs, balanced funds, equity funds, foreign equities, etc.   The adage of “not putting all your eggs in one basket” applies to a diversified portfolio of assets.  Having 10 different equity funds in a portfolio does not mean that an investor’s portfolio is diversified.

The Guardian Clause: Protect your children

A will can protect your children’s financial future

Very few Canadians have a will, and fewer have a currently updated will. Without a will, you cannot outline directives regarding your most “priceless asset” – your children. A will allows you to clarify your selection of a legal guardian for your children. Here are some steps to take to prepare for the transfer of parental responsibility when planning your will with your lawyer.

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Choose an individual. Perhaps your parents, a brother, a sister or a friend could assume the appropriate parental role in your absence. Consider their living quarters, age, health, ethics, financial means and current family stress load. More importantly, talk to them and get their approval first. Do not simply assume that your parents or siblings will take care of the children.

• Select a contingent guardian in case the first choice refuses the guardianship, takes ill or passes away.

• Ensure that the guardian will have sufficient capital to provide for the children, which may include the need for life insurance. Know your current financial net worth and how much income it can generate for your children.

The guardian clause is only an interim appointment. In your Will you can insert a provision that you are appointing someone as your child’s guardian – which most lawyers do. It is important to remember that any such appointment is only good for 90 days, because it is an interim appointment only. It therefore allows all interested people to appear before the court, and the court will make the final decision about who will be the guardian. Why include the guardianship clause if it is only an interim appointment? You should include it, because the guardianship clause provides strong evidence of the parents’ choice of guardian, although it is not determinative.

Include the following parameters in your will:

• Choose a trustee to invest and manage any money that your children may inherit.

• Express your financial directives regarding the maintenance and education of your children and the age when they may personally receive the balance of the inheritance.

• Update your directives when your circumstances change, reflecting for example, changes in your net worth; a new child in the family; a deceased beneficiary or desired guardian; or special wishes regarding the transfer of certain assets to specific children.

•  Choose a competent, informed, and trustworthy executor with the patience to follow time-consuming legal detail.

 

What is the difference between volatility and risk?

Volatility and risk are different concepts, but both have a role in determining your investment success.
 

Volatility is simply how much the market will increase or decrease, whereas risk is the amount of loss or gain you are willing to accept. How volatile your investments behave is often derived by the level of risk you are willing to accept. During periods of market volatility, it is important to stay focused on your asset allocation goals according to your predetermined risk profile.

Volatility is simply short-term instability that can affect all stocks, including good stocks or good equity funds, because of fear generated in the markets. The Euro-debt fears in 2012 are a good example of this. When markets are down, even a company that provides a useful, durable product may be affected. When the market calms, however, the company’s stock price may rise again.

What is an Estate Bond?

Life insurance can ensure estate-planning tactics

Prominent in the ’90s, the term “estate bond” is an old concept of the life insurance industry that mathematically proves how life insurance can protect and transfer certain assets that may otherwise be left vulnerable to market-related erosion or taxation.

Although investment assets and life insurance are indeed different parts of your strategic financial goal-setting. They can work in unison to create wealth. How they work together goes far beyond the adage “buy term and invest the difference,” which simply uses term insurance at the level of basic financial protection, unlike the alternative, advanced features of the estate bond, built right into a tax-planning manoeuvre.

How does an estate bond help to defer taxes?

This concept is an estate’s all-encompassing wealth preservation strategy because it is designed to work upon the death of the insured. Although an estate bond is not an investment designed for short-term financial planning, it can increase the tax-free wealth that you pass on to heirs.

The estate bond is ideal for the investor who has already maximized his or her tax benefits using an RRSP or has significant investments in vehicles to defer capital gains tax. This investor may enjoy a thriving business enterprise, hold a large fund or stock portfolio, and want to maximize some of the capital that will be left to heirs.

Consider a situation in which a couple of age 65 would like to leave funds to their grandchildren to help them purchase their first homes as well as enhance their future.

How does it work? For example, with an initial investment of $150,000, you can acquire a joint last-to-die life annuity. This life annuity will pay $7,000 per year after tax (after the marginal tax rate is paid). This $7,000 payment is then used to purchase a permanent joint last-to-die life insurance contract  – on either one spouse’s life or both spouses’ lives – with a face value of $350,000. At this stage of the financial planning, the $150,000 of estate value grows to $350,000, which will one day pass to the estate tax-free! Note: The figures vary based on circumstances and interest rates.

Note: Note: Joint last-to-die Life Annuity based on a male, age 65; female, age 65, single premium non-registered deposit of $150,000, joint survivor annuity. Life insurance is based on a male age 65, non-smoker, female 65, non-smoker, joint last to die for $350,000 death benefit (with a level cost of insurance, and increasing death benefit). Ask your financial advisor to compare the projected growth of permanent life insurance (some use tax-sheltered GICs and tax-advantaged segregated funds to enhance the face-value growth) versus taxable investments (such as equity investment funds and/or GICs). In most cases, the estate bond, along with certain guaranteed benefits, will far outperform the initial capital invested with respect to the after-tax value passed on to the estate.

The estate bond is definitely an estate-planning tool to maximize wealth payable to heirs after death. It is true that there is far less liquidity in the life insurance contract. Therefore, consider this advanced planning concept if you have already amassed enough money to guarantee a good retirement lifestyle. Because life insurance proceeds are paid to your beneficiaries tax-free, you can be assured that the government can’t take any tax bite out of this wealth bequeathed to your loved ones.

Life Insurance is the foundation of your net worth

Life insurance has been called the foundation of net worth planning. If you have a spouse or children, the initial stages of your financial plan should include adequate life insurance coverage.

There are two types of life insurance You can either buy pure term insurance coverage, or a plan that can last a lifetime with various investment vehicles that can gain value and enjoy tax advantages while the policy remains in force. You can also mix pure term insurance with an investment in one policy, with certain types of whole life.

The cost of lifetime insurance coverage is higher. Yet the tax-free death benefit can solve estate-planning problems such as paying an estate’s tax liability on capital gains.

However, if you can’t afford the premium for lifetime coverage, consider term insurance or a combination of both. Term plans are quite affordable.

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Ask your advisor to do a capital needs analysis You may want to replace the income of the life insured—either yourself or your spouse. It is easy to calculate the capital needed over any short or long period of time in any situation if the life insured were to die. There are many professional calculators that allow advisors to prepare accurate life insurance assessments.

Review your life insurance during these life stages As we journey through life, our circumstances change dramatically. So do our needs for life insurance. It may be time to review your life insurance and verify beneficiaries, policy amounts, any riders associated with the plans.  As you evolve financially, so do your life insurance needs.

When you have a young family When you are newly married and starting a family, life insurance is purchased to provide tax-free capital in case one of the parents should die. A young mother would not be forced to go to work, reduce her lifestyle, or leave her children to cared for by others.

When your children are going to college When children go to college, many of us tap into our savings to help meet their tuition and housing expenses. We may purchase a child’s first car, or pay him/her an income for one or more years. If you die without providing continuing support, your young adult child may need to quit seeking a higher education due to a shortage of funds.

When your estate will face a large tax bill As you approach retirement, you may have accumulated assets that will be taxed on capital gains: such as a cottage, a business, large equity mutual fund holdings, or a stock portfolio. Life insurance can help pay the income tax due in your estate. This can include paying for taxes on remaining RRSPs or RRIFs, as these funds are fully taxable to the estate (where there is no surviving spouse or dependent child). It can also pay off large business debts that may be left as an ongoing liability, weighing on a surviving spouse’s financial security.