Wealth management is a combination of comprehensive solutions to address the needs of clients. It is a consultative process whereby the advisors glean information about the client’s wants and they tailor a custom strategy utilizing appropriate financial products, services, and strategic alliances with other professionals such as lawyers, accountants, and private bankers.
Typically, permanent life insurance combines a death benefit with a savings portion. Death benefit meaning the gross amount of any payment made on or after death. Combining the two allows policies to build cash value, while still being able to withdraw cash to help meet needs like paying for a child’s college education or covering medical expenses. There are two types of permanent life insurance, ‘whole’ and ‘universal’. Whole life insurance offers coverage for the entire lifetime of the insured and its savings can grow at a guaranteed rate. Universal life insurance offers a savings element and a death benefit, but offers different types of premiums and earns.
When a term policy is active, and the insured passes away, a death benefit will be paid. When you compare term with permanent life insurance, cost is initially much less in a term life insurance policy. Unlike most types of permanent insurance, term has no cash value and has many different types of policies available. Many policies offer “Level Term” policies, which offer premiums for the duration of the policy, such as 10 years for example. Premiums for level term policies remain level for a set number of years, and after this time, the premium increases significantly. ‘Premium’ means the amount of money that an individual or business must pay for an insurance policy. Finally, most term policies allow you to convert to a permanent policy regardless of any changes in the insured’s health.
To put it simply, critical illness insurance is designed to help pay costs associated with life-altering illnesses. In the event of a big health emergency such as cancer, heart attack, or stroke, critical illness insurance would provide you with additional funds so you can focus on your health and not your finances. Many people assume they’re fully protected with a standard health insurance plan, but the outrageous costs of treating life-threatening illnesses are usually more than any plan will cover. Individuals and business owners can choose to receive all their money back if no health concerns arise in roughly 15 years.
Accidents, a serious illness, or a mental health issue that keeps you from work can be financially devastating. Statistically, 25% of workers will be out of a job for at least a year before they reach retirement age due to disability. This is where disability insurance comes in. It is designed to replace a portion of your income if you become disabled and are unable to earn an income.
Additional insurance protection for your investments. A segregated fund policy includes both a maturity guarantee and a death benefit guarantee. These guarantees range from 75% to 100% of your principal investment, depending on the guarantee option you select.
An IPP may be something to consider if you are an entrepreneur as an IPP can create additional contribution room over and above an RRSP, once you reach a certain age.
Client enters into a contract for a permanent life insurance policy, which creates significant cash surrender value in the policies early years. The policy is assigned to the Bank as collateral to secure a line of credit. Client pays the recurring insurance premium. Client replaces back up to 90% of the cash surrender value. (Or replaces the entire premium by providing additional collateral security.) Client uses the line of credit for business investment purposes – for example, to fund an
operating business, purchase real estate or invest in a non-registered investment portfolio. Steps 3-5 are repeated annually. When the life insured passes away, the outstanding loan is repaid out of the death benefit and the remaining proceeds are paid to the beneficiaries. The basic CFA concept assumes the client has sufficient income and qualifies to write off interest payments and take advantage of the collateral premium deduction.
Registered Education Savings Plan (RESP) is a dedicated savings plan to help you save for a future student’s post-secondary education. Registered Disability Savings Plan (RDSP) helps parents and others save for the long term financial security of a person who is eligible for the disability tax credit.
Tax-Free Savings Account (TFSA) is a way for individuals who are 18 or 19 (differs by province) who have a valid social insurance number to set money aside tax-free throughout their lifetime. Contributions, interest earned, dividends, and capital gains are not taxed, and can be withdrawn tax-free.
Registered Retirement Savings Plan (RRSP) is a way for you or your spouse or common-law partner to contribute to, essentially creating a personal pension plan. Pre-tax money grows tax free until withdrawal, at which time it is taxed at the marginal tax rate.