If your client is purchasing life insurance for the first time, they may have many unanswered questions. For example, they may be wondering about the types of life insurance available to them, and how much coverage they need to protect their families financially. This article will help answer some of their questions, as well as give them various aspects of life insurance to think about before and after they have made this important purchase. Ultimately, it will address five common misconceptions about life insurance that clients may have when purchasing it for the first time.
With countless misleading rules of thumb on the internet, it can be confusing for clients to know what to expect in terms of how much coverage their family requires. Continue reading “Debunking Life Insurance’s Rules of Thumb”
Although the answers to basic life insurance questions may be clear to us, some clients will appreciate a simple explanation of what it all means. Helping your client gain a better understanding of what life insurance is can be a great way to start a conversation about why it is so important.
Share the client article below to get your clients’ initial questions answered.
Do you have clients who are business owners yet don’t have the right insurance plan in place because they are so focused on trying to build their business? They may not be aware that business insurance can help mitigate risks and provide opportunity when it comes to growing their business.
As a business owner, insurance can provide not only protection, but also opportunity when it comes to growing one’s business. Life insurance policies can protect shareholders and their family members, the corporation itself, and key persons to the business. And, it can also enhance the cash flow to the corporation by assigning the policy as collateral for a loan.
As an advisor who runs your own practice, you are likely aware of how this works. But do your clients who are business owners need a little help in learning more about their options? Do they have a shareholders’ agreement, key person insurance, or understand how corporate insurance can be used tax effectively to benefit a charity?
Here’s a client article that helps explain how business owners can utilize insurance to provide both opportunity and security while building their assets in a tax-effective way for their retirement or estate plan.
If your clients are uncertain on whether joint life coverage is right for them and their spouse, highlight the following benefits for them:
- The cost of insurance used at the time of issue will be lower than the single life cost currently charged and is fully guaranteed
- The tax free death benefit receipt coincides to the payment of taxes on the death of the surviving spouse
- It can help achieve intergenerational wealth transfer, charitable giving and legacy planning
Read the article below that explains this in more detail and share it with your client from thelinkbetween.ca, our client-friendly insurance blog.
Segregated Funds have been around for over 50 years yet many Canadians have never heard of them. As their advisor, you can help your clients understand more about them so they can explore all their options and achieve the right balance for their retirement.
Share the short client article below and educational video that explains what segregated funds are and provides examples of two portfolios in a bull market and a down market.
Contact your client today to help them achieve that peace of mind.
The following is an excerpt from the 6th edition of Estate Planning with Life Insurance, by Glenn Stephens, released November 2016. This has been updated to consider changes to the passive income rules introduced in the 2018 budget.
The March 22, 2016 budget eliminated the income tax advantages of many policy transfers from individual shareholders to corporations. However, the changes primarily affect transactions that involve consideration significantly greater than a policy’s cash surrender value (CSV) or adjusted cost basis (ACB), and there is no requirement that a transfer from shareholder to corporation takes place at any particular price. In many cases, it will be to the client’s advantage to transfer a policy to his or her corporation for a lesser amount (generally not exceeding the greater of the policy’s ACB and CSV). Consider the following:
- Where a policy’s ACB is greater than its CSV at the time of the transfer, it may be sold to the individual’s corporation for an amount equal to the ACB without tax consequences.
- Where a policy’s CSV is greater than ACB, the difference will be taxable on any policy transfer from an individual to his or her corporation even if the consideration paid is less than CSV. In such cases, it may be advisable to set the purchase price at CSV as that will represent the minimum proceeds of disposition in any case. It may still make sense to transfer the policy if the resulting tax liability is not considered onerous.
Running a family business has challenges that include head and heart issues which aren’t typically present in other businesses. However, the proverb about shirtsleeves to shirtsleeves – that family enterprises often fail by the third generation – does not need to be a reality for these families. Family enterprises can improve their chances of achieving intergenerational continuity by building their knowledge and skills – and by working with advisors who understand their unique needs and goals.
When your client is ready to create a financial plan, your role is to analyze their particular situation and help them choose the best combination of coverage and payment options. The decision-making process and the various available options can be a bit perplexing and stressful.
Share the client article below and accompanying short video that introduces what options are available and the process of purchasing a policy.