Dollars for Pennies Apiece ...

It is unfortunate that the public often thinks insurance is expensive for people in their late fifties and sixties. The reality is that insurance can be the best decision to conserve your estate for your family and to provide alternative funding to pay tax on your death.

A recent article in our local newspaper drove the point home that the public desperately needs to consider options when planning their estate. The article described a single mother in her late sixties who passed away.The Canada Revenue Agency (CRA) assessed about $100,000 tax on her registered and life income funds. Her surviving child felt these taxes were unjust.

The harsh reality is that many people don’t understand that upon death, unless the funds can be transferred tax-free to surviving spouse or dependant child (either under age 18 or a special needs child), investment holdings will be placed into income in the final tax return.

In the article, the writer mentioned life insurance as a tool that could have eased the burden. The surviving child stated “Well, it was too expensive to consider when mom retired”.

That caught my attention!

Let’s turn back the clock.

$100,000 Term to 100 plan at age 59 as a non-smoker could cover the tax!!  The annual cost for such a Plan could have been approximately $1,800 or $165 a month.

But why spend the extra for the Solution 100 with Values?

  1. The cost is less than $100 a year over the cost of Solution 100 Term
    (T-100 without values).

  2. Guaranteed Cash Surrender Values start after 20 years, growing to 100% of the estate benefit by age 100

  3. As she draws income from her investments and lives longer, her insurance need to cover the taxes may go down. In this case, another alternative is to select the reduced paid-up option. Reduced values start after 20 years, growing to 100% of the estate benefit by age 100 with no more insurance payments required when the policy becomes reduced paid up – guaranteed!

So in the long run, which would have been cheaper for the client and

their beneficiaries— paying $165 a month or paying $100,000 to the

Canadian government?


attribution to EMPIRE LIFE Insight

Ted Wernham
Ted Wernham
Ranked # 1 in London by MDRT, the Premier Association of Financial Professionals. retirement income manager, Host Retirement Ready! Radio on AM1290 Ted Wernham