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Life insurance to reduce business owner risks

Start-up firms and smaller companies are especially vulnerable to potentially devastating financial risk because they often lack big company sophistication and in-house risk-control expertise. We will help you gain control of your financial risk.

Life Insurance We help business leaders provide appropriate life insurance to pay off debts and/or the mortgage, educate the kids, and/or provide income for a spouse or a disabled dependent.
Disability Income Replacement Insurance We will examine your need for income replacement insurance that can help replace your paycheque in case you get hurt or sick.
Key Person Insurance We will assess your need for an insurance policy designed to provide money to help you hire the right person if a key individual became sick or died.
Critical Illness Insurance If a business owners develop cancer, a heart attack, or a stroke, the illness can wipe out a small business. We have many plans to protect you from such concerns.

Universal Life Insurance (UL) offers cash accessibility

When you purchase a Universal Life policy you have certain amount of flexibility and accessibility to your money.

• Premium payments are flexible. You can pay what is referred to as a minimum premium. If you want to pre-fund the policy with more money, you may be able to increase your annual premium on a monthly, annual, or occasional lump sum basis, up to a specified maximum. A maximum premium is calculated and pre-set in order to keep your policy exempt from accrual taxation. Once your cash value increases, you may be able to reduce or skip premium payments altogether, without jeopardizing insurance coverage, while the cost of the premium (insurance, administrative charges, any additional benefits, and riders) is eventually paid from within the plan. A well-funded policy’s money reserve (cash account) can continue to grow even as it pays for the cost of insurance.

• Borrow against cash account’s reserves. The cash surrender value (CSV) is just another name for the remaining cash in the policy. For example, if you had $100,000 in a policy’s tax-exempt fund, you would be able to borrow against it or withdraw it with some potential taxation.

Is probating an estate expensive?

It is a significant job for the executor to probate a will. The original will must be submitted with an inventory listing the estate’s assets recorded at their fair market value to the court in the jurisdiction where the deceased last lived. There may be increased fees if a lawyer is retained to cross-examine the asset list or if the executor charges a percentage of the asset base to do the work.

Probate fees are paid from an estate to the provincial court. These fees are approximately .5% to 1.5% of the estate’s assets, depending on the size of the estate and the province. Provincial lawyers complete the necessary ‘letters of probate’ or ‘grant of probate document.’ In Ontario, they are now referred to as ‘the certificate of appointment of estate trustee with a will.’

Because probate is calculated on assets, regardless of liabilities, an estate with assets of $1 million and liabilities of $200,000 would pay probate on the entire million. In addition, if these same assets are transferred to your spouse, probate fees may be due again the second time around when these assets are transferred through his or her will. These fees are paid with after-tax dollars, as they are not deductible on the final income tax return. There is no law stating that a simple will and estate needs probating.

How can I minimize the need for estate probate?

There are a few tactics whereby you can reduce the need for an estate to be probated by the government:

Defer possible probate by holding assets jointly. Probate fees may be charged when that asset is transferred later through the will of the second spouse.

Establish a person as a beneficiary on your life insurance policies independent of the estate. This way, all monies pass to the heirs tax-free. If the estate needs probating, this portion of the assets will not be included in the estate, as the death benefit will flow directly to the heirs circumventing scrutiny. Life insurance strategies are excellent financial tools to circumvent probate on larger wealth transfers to heirs. Family wealth can be positioned to pass through life insurance policies, delivering tax-free benefits without probate. This method has frequently been used to transfer inter- generational estate wealth in the millions.

Name your beneficiaries on your RRSPs and RRIFs. Insurance companies’ products will allow you to sidestep probate in this way. To protect themselves, banks and trust companies will probably require probate or a letter of indemnity from the estate’s lawyer if the assets are significant. If your spouse is your beneficiary, consider a secondary beneficiary should your spouse die at the same time you do.

Consider setting up a spousal testamentary trust in your will to avoid double probate. When the second spouse dies, the assets can be distributed via the trust directives as opposed to a will.

With your spouse, set up mutually owned property as ‘joint tenants with rights of survivorship to transfer these assets automatically outside of the will.

Once the will has been probated (if necessary) and the executor confirmed, he or she could start transferring assets as directed by the will. Some assets can be transferred easily within a short period of time. Others have to wait until the estate expenses have been paid, including any final income taxes due to Canada Revenue Agency (CRA), after which they will issue a tax clearance certificate.

Note: The Estate Administration Tax (ETA) in Ontario, will replace some of the previous probate processes, and may add more complexity to the above scenarios. If your estate is large, it would be wise to seek the advice of a good tax accountant.

Life insurance to protect heirs from debt

The expansion in the growth of using credit is partially due to lower interest rates. The paradox is that low-interest rates lessen the interest payments to reduce debt while at the same time motivate people to assume much more debt.

Beware of little expenses; a small leak will sink a great ship. Benjamin Franklin

Debt Affects Family Savings Increased spending is often supported by increasing debt loads. When debt overburdens your resources to repay what you owe, you may need debt counselling that may lead to debt consolidation.

Do Your Math If your expenses exceed your income, you will increase your debt if you rely on credit. Amassed debt can undermine otherwise healthy finances and the ability to invest for retirement. Saving indicates a stewardship that respects the fact that money is the only symbol of trade for a company’s goods and services exchanged for an individual’s energies.

Reduce Debt and Save More The amount of savings often advised is based on the age-old recommendation to save 10-20% of your disposable income.

Interest rates on borrowed money can always increase so it important to realize that low-interest rates do not last forever. Always plan to service the debts that you take on today.

Beware of the potential consequences of taking on significant debt. Life events such as loss of employment or income, a change in family status or a serious illness, can cause a huge drain on finances.

Life insurance protects your heirs It is important to insure all your household debt with life insurance as these liabilities can be paid off tax-free in the event of death. If you are one of the main breadwinners in a family, call your life insurance specialist today.

Talk to your advisor about life insurance to protect your heirs.

What insurance protects travelers and visitors?

These insurance plans can offer emergency medical protection for visitors, immigrants, international students and residents who are not covered by government health insurance. Visiting guests can be covered by valid medical health insurance, which begins upon arrival here insofar as it is bought ahead of travel.

Emergency medical expenses While travelling outside your country or locality, your government health insurance may partially cover some costs. Daily or annual coverage is great if you travel to warmer climates in the winter or travel year-round.

What about travel coverage? International travel covers an insured individual with emergency insurance which pays for expenses related to an emergency medical condition (covered by the plan). These expenses may be a hospital stay, prescription drugs, ambulance transportation, etc. Please refer to the policy for more details.

Coverage can include these expenses:

Bedside companion travel and sustenance allowance
Ambulance transportation
Diagnostic (X-ray, lab tests)
Hospital (semi-private room)
Flight and travel accident coverage
Prescription drugs
Physician or surgeon
Return transportation to the location of travel departure if emergency medical attention is needed
Emergency dental treatment by a licensed dentist and associated cost of prescription drugs while the insured is travelling.
Accidental injury, dismemberment, or death by accident where the accident occurred during travel
Loss/damage of baggage and personal effects
Trip cancellation and interruption

Understand the details. It is better to fill in a form and get a copy of the questions and answers within a contract pertaining to any age-related or medical underwriting processes, if not in person, via a digital meeting and signature. File these documents in case of the need to claim against travel insurance. Avoid policy cancellation due to misinforming the insurer concerning medical questions, which must reveal all medical history and medications used, plus retain a hard copy as your proof.

Note: Refer to the policy, which may vary. Individual plans may be purchased outside of an employer’s group plan.

The most important business insurance coverage

Financial products and services can address specific needs in your financial security plan and help you build a successful business. I have access to a broad range of insurance, investment, employee disability and group benefit products to help meet your individual and business needs and goals. You may have put all your focus and hard work into your business. It makes sense to protect it properly against the risks that can bring financial hardship.

How to Protect Your Business

I offer unique planning solutions using:

• Life insurance

• Disability insurance

• Critical illness insurance

How to Protect Your Employees

The people employed in your business or organization help you succeed regardless if you depend on three key employees, or a team of 100. We can offer your firm a comprehensive group benefit plan which may help you to retain your most important staff:

• Benefits plans for small business

• Health care and dental care benefits

• Wellness and disability benefits

• Life and accidental death and dismemberment benefits

Essential Estate Planning protects your financial security

A comprehensive estate plan includes a will, a plan to minimize the capital gains liability and provide for any family income needs. This often involves life insurance which is an effective tool to maximize the size of your estate and pay any tax liability cost effectively. I will design an estate plan tailored specifically for your situation because every person is a unique individual.

Providing both personal and business insurance solutions to protect your financial security.

Business Insurance solutions:

• Partnership insurance
• Buy/Sell agreements
• Key Person insurance
• Business disability insurance
• Business/office overhead
• Collateral loan insurance
• Group health benefits

Personal Insurance solutions to protect you and your family:

• Life Insurance
• Critical Illness Insurance
• Long-term care insurance
• Estate Preservation
• Individual health and dental plans

How can I reduce business owner risks?

Life Insurance. Start-ups and smaller companies are especially vulnerable to potentially devastating financial risk because they often lack considerable company sophistication and in-house risk-control expertise. We will help you gain control of your financial trouble. We help business leaders provide appropriate life insurance to pay off debts and the mortgage, educate the kids, and provide income for a spouse or a disabled dependent.

Disability Income Replacement Insurance. We’ll review your need for income replacement insurance to help replace your paycheque in case you get hurt or sick.

Key Person Insurance. We will assess your need for an insurance policy designed to hire the right person if a key individual becomes sick or dies.

Critical Illness Insurance. A critical illness can wipe out a small business if business owners develop cancer, a heart attack, or a stroke. We have many plans to protect you from such concerns.

Note: Life insurance taxation varies in accord with the strategies used by the life insurance specialist, changing legislation, and hiring an accountant to guide significant business strategies relative to succession or an estate.

Considerations when designing an Estate

Estate planning is a process that allows one to determine how their assets will be distributed upon death. As we prepare to pass our lifetime assets to our heirs, there are key components of an estate plan that should be given careful consideration.

The fundamental component of any estate plan is the Last Will and Testament commonly referred to as the will. It is also important that an individual maintains and updates their will and two powers of attorney documents: 1) for property such as real estate, bank accounts, and investment assets, and 2) a power of attorney for personal health care.

Review your estate planning documents

Life changes can affect the integration of each of the above strategic solutions. Therefore, it is important to review the above aspects of an estate plan every three to five years. For example, there may be a change in family structure, so beneficiaries may need to be reviewed. Or, if you remarry, your existing Will may automatically become nullified.

Your net assets can change Keep an eye on your net worth. Other life changes that require updating your estate plan include changes in your net worth, or if the value of your residence or investment changed. If you have significant changes in net worth, have your accountant make sure that the best tax arrangements are in place.

Business strategies to protect your net assets If you are the shareholder of business assets, make sure that a buy-sell agreement is in place in the event of your death or disability, assuring that every owner is covered with life and disability (income replacement) insurance.

An estate plan may benefit from using formal trusts to reduce taxes. Life insurance products such as segregated funds and term funds can also be used to circumvent or minimize probate or government estate administration taxes (EAT) or attending legal fees. In most cases when a beneficiary is named in a life insurance policy, proceeds will pass and the capital in most cases will transfer on a tax-free basis to beneficiaries, thus avoiding probate or EAT scrutiny.

For an estate plan seeking to transfer large capital assets to named heirs, it would be wise to discuss these capital-transfer techniques with an accountant and/or tax lawyer.

How can I minimize the need for estate probate?

There are a few tactics whereby you can reduce the need for an estate to be probated by the government:

• Defer possible probate by holding assets jointly. Probate fees may be charged when that asset is transferred later through the will of the second spouse.
• Establish a person as a beneficiary on your life insurance policies independent of the estate. This way, all monies pass to the heirs tax-free. If the estate needs probating, this portion of the assets will not be included in the estate, as the death benefit will flow directly to the heirs circumventing scrutiny. Life insurance strategies are excellent financial tools to circumvent probate on larger wealth transfers to heirs. Family wealth can be positioned to pass through life insurance policies, delivering tax-free benefits without probate. Any tax due on policy investments will be taxed to the estate of the deceased policy owner. This method has frequently been used to transfer inter-generational estate wealth in the millions. Your advisor can keep you up to date on potential taxes in the estate.
• Name your beneficiaries on your registered investments such as RRSPs and RRIFs. Insurance products may allow you to side-step probate in this way. To protect themselves, banks and trust companies will probably require probate or a letter of indemnity from the estate’s lawyer if the assets are significant. If your spouse is your beneficiary, consider a secondary beneficiary should your spouse die at the same time you do.
• Consider setting up a spousal testamentary trust in your will to avoid double probate. When the second spouse dies, the assets can be distributed via the trust directives as opposed to a will.
• With your spouse, set up mutually-owned property as ‘joint tenants with rights of survivorship’ to transfer these assets automatically outside of the will.

Once a will has been probated paid the estate administrative tax (EAT), the executor can start transferring assets as directed by the will. Some assets can be transferred easily within a short period of time. Others have to wait until the estate expenses have been paid, including any final income taxes due to Canada Revenue Agency (CRA), after which they will issue a tax clearance certificate.