Universal Life Insurance
Life Insurance Services in Brantford, Ontario
With universal life insurance, you can insure the financial security of you and your loved ones through one and the same contract and at the same time accumulate additional tax-sheltered amount.
- Individuals or families seeking financial security and wishing to accumulate additional funds (for example, to carry out retirement plans).
- Young dual-income professional couples that can pay the insurance premium more quickly.
- Persons with a higher than average income who are looking for a taxsheltered savings vehicle other than a registered retirement savings plan (RRSP).
- Business people, to finance a shareholders’ agreement or insure a key employee.
Advantages of Universal Life
- You obtain affordable permanent life-insurance protection combined with an attractive taxsheltered savings account.
- You can choose and modify the amount of insurance, the cost options, the payment frequency, and the premium amount in accordance with your needs.
- You can diversify your savings though a range of investment options.
- You have the opportunity to make partial withdrawals to carry out your projects.
- You may insure multiple persons under the same contract.
You have the opportunity to maximize the growth of your tax-sheltered savings through a full range of investment options offering competitive returns.
Life Insurance's most obvious and significant benefit is the lump sum payment it provides when the insured person dies. This lump sum is paid directly to the beneficiary designated in the life insurance policy and it's not taxable.
Need for Life Insurance
The most common use of life insurance is to protect a person's dependents. If that person dies, his or her dependents could have to deal not only with the loss of a loved one, but also the loss of that person's present and future income.
The tax-free, lump sum payment that a life insurance policy provides can replace the deceased person's earnings, pay debts and other liabilities, and cover education costs and daily living expenses.
Another use of life insurance proceeds is to pay debts, tax liabilities and other Estate costs so the estate's assets don't have to be eroded or borrowed against to cover these expenses.
Below are some of the financial liabilities that can threaten your estate and how life insurance can help protect the assets you worked so hard to build.
- Capital Gains Taxes
Life Insurance can provide funding to pay for capital gains tax that you owe.
- Registered Plans and Tax Liabilities
When you pass away any registered funds you own will create a tax liability of the estate. Life insurance offers an effective way to offset that liability.
- Estate Taxes
You may be liable for estate taxes in other jurisdictions when your loved ones die.
- Probate Fee and Other Estate Costs
Life Insurance can provide the funding that is estimated will be needed to cover probate cost as will as other estate costs. Other estate costs could include funeral and burial expenses, estate administration costs such as executor's fees, evaluator or appraiser fees, and legal accounting fees.
- Building and Preserving an Estate
As we all know, it's not easy to accumulate money and it's even harder to amass significant funds to leave behind.
Because exempt life insurance policy's proceeds are paid tax-free to the beneficiary, life insurance can be an efficient way to create an estate and to transfer wealth to later generations.
Some people are interested in protecting their assets from creditors' claims. Life insurance can offer this protection, depending on provincial laws and how the policy is set up.
Withdrawals, Policy Loans and Leveraging
Once a significant cash value has accumulated within an exempt life insurance policy may be accessed directly through a cash withdrawal or policy loan. These transactions would be considered dispositions of the policy and are potentially subject to taxation.
Leveraging is another option that allows the policy owner to access the value with the policy without triggering the tax consequences that often accompany a disposition. It involves creating an income stream by using the life insurance policy as collateral security for a loan.
Life Insurance can also help you get a loan from a lending institution. Lenders will often require a life insurance policy as collateral security for a loan.
Inter-generational Wealth Transfer
A life insurance policy can serve as a vehicle for transferring accumulated wealth to the next or succeeding generations while you are still alive. This is possible because, under specific conditions, ownership of a life insurance policy can be transferred without triggering tax consequences.
Long Term Care Insurance
Long term care insurance is a form of insurance intended to pay for expenses incurred as a result of some form of disability. The care involved can be either at home to maintain a level of independence and security or in a facility to provide a certain standard of accommodation and care. This type of insurance will pay for some or all of your long term care needs, depending on the coverage selected. Introduced in the 1980s in the United States and only recently in Canada, it is a relatively new type of insurance.
You most likely should not buy long term care insurance if:
- You can't afford the premiums.
- You have limited assets.
- Your only source of income is Old Age Security and Guaranteed Income Supplement benefits.
- You often have trouble paying for utilities, food, medicine or other important needs.
You should, however CONSIDER buying Long Term Care Insurance if:
- You have significant assets and income.
- You want to protect some of your assets and income.
- You want to personally pay for any care you may need.
- You want to stay independent of the support of others.
- You want to gain peace of mind.