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INVESTING IN A LIFE INSURNACE COMPANY

INVESTING IN A LIFE INSURNACE COMPANY. The benefits of an insurance GIC*. *An insurance GIC is an accumulation annuity issued by a life insurance company. My disclaimer. I am knowledgeable in Estate Planning techniques and concepts I Do understand the big picture and can help explain it

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INVESTING IN A LIFE INSURNACE COMPANY

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  1. INVESTING IN A LIFE INSURNACE COMPANY The benefits of an insurance GIC* *An insurance GIC is an accumulation annuity issued by a life insurance company

  2. My disclaimer • I am knowledgeable in Estate Planning techniques and concepts • I Do understand the big picture and can help explain it • I am NOT a tax expert • I am NOT a legal expert

  3. What we can learn today • Estate planning and probate • Understanding your intentions • Issues that can arise with your Estate • Understanding how an insurance company can help

  4. Estate planning and probate What is estate planning and how can it help? • Estate planning is the anticipating and arranging for the distribution of an estate • It can eliminate uncertainties • It can help maximize the value of the estate What is probate? • administration of the deceased estate • distributing property

  5. How does a bank GIC work? Bank GIC Estate Beneficiary

  6. Problems going through your estate 1.Lengthy 2.Expensive 3.Public

  7. Wouldn’t it be nice to skip the estate? Assets Estate Beneficiary

  8. What generally happens When the first spouse passes away... House Bank account Passed easily to spouse RRSP/RRIF Non-registered assets

  9. What generally happens When the second spouse passes away… House Sold - assets to the estate Bank account Frozen - assets to the estate RRSP/RRIF Sold & taxed - assets to the estate Non-registered assets Sold & taxed - assets to the estate

  10. What’s the solution? Bank GIC Insurance GIC Estate Estate Beneficiary Beneficiary

  11. What is an insurance GIC? • Guaranteed interest investment • Can only be offered by an Insurance company • Similar to bank GICs but with perks • Beneficiary designation available on both registered and non-registered investments • Coverage from Assuris* • Potential creditor protection • Payout annuity option available • Redeemable • Pension tax credit * For more information, please visit www.assuris.ca

  12. Case study • Aunt Susan wants to leave a gift behind for her favourite niece and nephew • GIC at her local bank for Steve • Insurance GIC at her life insurance company for Carol

  13. Steve’s story The timeline: Time taken to distribute inheritance Time passed after receiving inheritance Day 217 Day 365 Day 1 Day 90 Day 210 Notified of aunts passing & of GIC left to him Dispute is resolved and the estate is distributed Estate has been assessed Details of the handling of the estate shared Will is contested The cost: Bank GIC $50,000- Bank discharge $ 4,550- Probate fee $ 450- Executor fee $ 5,000 Steve’s inheritance $40,000

  14. Carol’s story The timeline: Time taken to distribute inheritance Time passed after receiving inheritance Day 5 Day 1 Day 14 Carol contacts the insurance company & receives required form to complete Notified of aunts passing & of insurance GIC left to her Carol receives proceeds of the insurance GIC The cost: GIC / AA $50,000 - Bank discharge n/a - Probate fee n/a - Executor fee n/a Carol’s inheritance $50,000

  15. Steve Took 12 months to receive inheritance Only received $40,000 of the intended $50,000 The moral of our story • Carol • Received inheritance in two weeks • Received full amount - intended $50,000

  16. It all starts with this… Insurance GIC Estate Beneficiary

  17. Summary Non-registered money with a life insurance company: • Reduces estate costs • Speeds up the process • Goes to the beneficiary • Provides more privacy

  18. Questions ?

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