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Whole Life Guaranteed 20 PAY Plan

This is a non-participating, Guaranteed Permanent Life Insurance plan.

With the 20 pay option, you pay for 20 years only, and the policy becomes fully paid up, you are guaranteed covered for life. In addition, the plan also has guaranteed cash values, starting as early as the 5th year, in some cases, and reduced paid up insurance starting from the 10th year onwards.

Other options available:

  • Guaranteed 10 pay

  • Guaranteed 15 pay

  • Guaranteed Pay to age 65

  • Guaranteed Life Pay

The above plans are available for coverage starting from as low as $10,000. Coverage available from age 0 until age 85. These plans are offered by well established insurance companies such as Manulife, RBC Insurance, Industrial Alliance, Sun Life, AIG, Canada Life, Transamerica Life, Unity Life and Empire Life.

Call 416 898 8889 or 905 282 0800 (24/7) for a no obligation quote or click here to apply online.

Why I cannot Buy Insurance Now

Age 18 ~ 25   I’m young. There’s plenty of time. I’ll wait until I start making a little more money, then I’ll buy insurance.
Age 26 ~ 45   I’ve got a growing family on my hands and it takes all that I earn to keep them going. As soon as they are a little older, it will cost less. Then I’ll buy insurance.
Age 46 ~ 55   I have two children in college. It's all I can do to pay off their expenses. I can’t buy a penny’s worth of
insurance. Wait until they’re out of college and on their own. Then I can afford to pay the insurance premiums.
Age 56 ~ 69   I know I should buy more insurance, but things aren’t breaking the way they should. It’s not easy for someone my age to step out and get a better job. Maybe something will break later.
Age 70   We’re living on our own, but my pension check doesn’t go far. I wish I had purchased more insurance years ago.

Using realistic tax rates

An important consideration in financial planning

by Jamie Golombek Forum, July 2005

Are you sure you are using the correct, current and most up-to-date tax rates when engaged in retirement planning for your clients? For example, ask the man on the Clapham omnibus how much tax he would pay on $100,000 of income and the answer might be, “Oh, about 50 per cent or so.”

The answer, of course, is that lie would pay far less than 50 per cent tax, but the question illustrates one of the most overlooked, yet fundamental, concepts in Canadian taxation — the concept of average tax rates versus marginal tax rates. Lets explore the difference by attempting to calculate how much tax is indeed owing on $100,000 of income.

 The calculation of our client’s average or effective federal tax rate on $100,000 then becomes straightforward, as follows:
Income $100,000
$ 35,995 @ 16% 5,695.20
$ 35,995 to $ 71.990 @ 22% 7,830.90
$ 71,990 to $ 100,000 @ 26% 7,490.60
Less personal credit @ 16% (1,303.84)

Total federal tax

 $ 19,713
Effective / average tax rate: 19.71%
 

Federal Tax Rates

To answer the question, we must first begin with an exploration of the federal tax brackets common to all Canadian individual taxpayers, regardless of province. The chart below illustrates the income brackets and rates for 2005:

Provincial tax rates

Other than Alberta, which has its own flat tax of 10 per cent, each province has its own set of tax rates and brackets, which can differ significantly from the federal brackets. In addition, each province also has its own basic personal amount.

Using Alberta for simplicity an Albertan who earns $100,000 of income would pay a flat 10 per cent provincial tax of $10,000 but, to compensate for the lack of progressively in Alberta’s tax system, the basic personal amount is set at $14,523 — considerably higher than both the federal basic personal amount and other provinces’ personal amounts. So our Albertan would pay net Alberta tax of $8,548 [$10,000 - 10 per cent ($14,523)].

So, if we tally our taxpayer’s federal and provincial tax liability, we find that on $100,000 of taxable income, his marginal tax rate would be equal to 36 per cent [26 per cent + 10 per cent), while his average tax rate is a mere 28 per cent [(19,713+8,548)/$100,000) - a far cry from the proverbial “50 per cent tax bracket,”

Lets ensure that we are using realistic tax rates in our financial planning models.

2005 Federal tax rates

  
$ 0 - $ 35,995 16%  
$ 35,995 - $ 71,190 22%  
$ 71,190 - $ 115,739 26%  
$ 115,739 +   29%  

It’s interesting to note that the top federal tax bracket of 29 per cent only kicks in once an individual’s taxable income is over $11 5,739, Keep in mind, of course, that this is taxable income and is, therefore, after all deductions have been claimed. For the client who maximizes her RRSP deduction in 2005 to the tune of $ 6,500, this translates into taxable income of over .t 132,000 before she even enters the top tax bracket.

Note that there is no longer any federal surtax payable. The general three per cent surtax was eliminated in 1999 and the higher income deficit-reduction surtax of five per cent was eliminated in 2000.

The other thing to keep in mind is the basic personal credit, which essentially shelters the first $8,149 of income from federal tax by providing a tax credit of 16 per cent, thus also lowering the client’s effective or average tax rate.
   

RETIRE ON YOUR LIFE INSURANCE POLICY

Accountants favour plans that offer income potential in golden years.

The Gazette, Montreal, Monday, June 18, 2001

If you are in the top marginal tax bracket, you are probably only now recovering from the tax bill that hit you in April.

This might have finally forced you to plead with your financial advisors for some tax-deferral ideas. If you have maxed out your RRSP, paid off your mortgage, built up an investment portfolio and enjoy an above average income flow, your accountant might suggest you consider universal life insurance. The ability to defer tax on investment growth now and create tax-free retirement income later results in a combination that accountants find virtually irresistible.

 

Universal-life insurance policies allow you to pay into the policy amount in excess of those required to simply pay for the insurance coverage. These supplemental amounts can then be invested in a variety of investment options such as term deposits, equity-based indexes, growth or balanced funds, The advantage is that the investment portion grows on a tax-deferred basis. This is one of the reasons accountants tend to love the product. The other reason comes later on, when you are ready to retire.

 

Using universal life insurance to help fund your retirement works best if you have a number of years ahead of you until retirement. This allows the additional premiums (subject to annual maximums) that you pay into the policy to grow over time into a respectable pool of capital, better known as the policy’s cash value.

 

At retirement, up to 90 per cent of the cash value can be pledged to a bank in exchange for a series of loans. Because these are loans, the corresponding retirement income they create is not considered taxable income. Amazing, but true.

 

At the policyholder’s death, the accumulated cash values first go toward paying off the retirement loan (plus interest) with the remaining balance, plus the policy’s face value (remember this is a life-insurance coverage that you have been paying for), going to beneficiaries, also tax free.

 

Life-insurance proceeds paid out at death are non-taxable. Consider this example: a non-smoking male, 50, purchases $500,000 of universal life coverage with the intention of depositing $19, 420 of premiums per year for 15 years (for a total of $291,300). At age 65, he elects to draw down a tax-free retirement income of $22,005 per year for 15 years (for a total income of $330,075). Regrettably, the gentleman dies at his life expectancy – age 81, at which time the projected death benefit of the policy is $1,503,547 (based on an assumed rate of return of 6%). A total of $752,656 is taken from the death benefit to pay off the bank that loaned the tax-free retirement income and the balance of $750,891 is paid out to his beneficiaries tax-free. Do the math yourself and you will see why this concept is so popular.

 

Universal life insurance offers unique premium payment flexibility and tax-deferral opportunities making it subject to some creative applications.

CONSIDER BUYING UNIVERSAL LIFE
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