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Cash value is a type of life insurance policy that lasts for the lifetime of the policyholder. This type of life insurance also has a cash value savings component that the policyholder can use for different purposes such as loans or cash to pay policy premiums. Some other distinctive features of a cash value life insurance are that it is known to be more expensive than term life insurance and does not expire after a number of years. To simplify further, the cash value is the sum of money that accumulates in a cash-generating permanent life insurance policy or annuity which is held in your bank account. Your insurance provider allocates some of the money you pay as premiums to investments portfolios such as stocks and bonds and then credits your policy based on the performance of those investments.

How Does Cash Value Work?

Cash value is a type of permanent life insurance that provides insurance cover for the policyholder’s life. Most cash-value life insurance policies require a fixed-level premium payment. A part of it is allocated to the cost of insurance and the remaining is deposited into a cash-value account and invested in different financial investment portfolios. It earns a tax-deferred modest rate of interest. This ensures that the cash value of your life insurance increases steadily over time. The implication of this is that as the cash value increases, the risk of the insurance provider decreases because the accumulated cash value offsets part of the insurance provider’s liability. You can also use the earnings to increase the death benefits in your policy or other living benefits, depending on your preference. Bear in mind that as you make withdrawals from the cash value in your insurance policy, the death benefit will also reduce.

Example

Assume you have a life insurance policy with a $35,000 death benefit with no outstanding loan or prior cash withdrawals. The accumulated cash value of the policy is $10,000. Upon your demise, the insurance provider will pay the full death benefit of $35,000 but the money accumulated into the cash value becomes the property of the insurer. The implication of this is that because of the cash value of $10,000, the real liability cost of the insurance provider is $25,000. This is calculated by subtracting the death benefit from the accumulated cash value ($35,000 – $10,000).

Types of Cash Value Life Insurance

Cash value insurance is usually used to augment your life insurance policy. However, you need to understand how it works for each type of life insurance policy.

Whole Life Insurance

If you have a whole life insurance policy, having a cash value policy will augment your life insurance policy. When you take a cash value insurance policy, your premium stays the same for the rest of your life. A small percentage of your premium is diverted into a savings account to accumulate interest. The rate of interest returns varies depending on the insurance provider, but it is known to hover around 2%. You have access to the funds in the savings account during your lifetime.   

Variable Life Insurance

This is slightly different from the whole life insurance policy. With this policy, you can determine how your accumulated cash is invested. You have the opportunity to invest the small portion diverted from your premium into investment portfolios such as bonds and stocks. This requires a good knowledge of the investment market. Variable cash value life insurance has a higher premium than the whole and universal cash value life insurance.    

Universal Life Insurance

Under universal life insurance, you have a bit of control over what you pay as your premium. For example, you can pay more than you usually pay for a premium and you can divert the surplus into your savings account. The advantage of this type of policy is that if you cannot meet up with the premium payment in a particular month, you can use the money in your savings account to pay your monthly premium. There are three types of Universal Life Insurance: Guaranteed Universal Life Insurance, Variable Universal Life Insurance, and Indexed Universal Insurance.

Advantages of Cash Value Life Insurance Policy

• You can earn interest on a cash value savings account
• You can overpay on your premium and divert more money into your cash value account
• You can spend from your cash value account while you are alive
• You can earn returns on a cash value investment account

Disadvantages of Cash Value Life Insurance Policy

• Your returns are capped at a certain amount
• If you remove money from your cash-value account, your death benefit decreases
• You have to pay fees associated with your cash-value account

Tax Advantages

There are various tax benefits you and your beneficiaries enjoy with a cash value insurance policy. One of the benefits is that your beneficiaries can receive your death benefits tax-free. This is an advantage your beneficiaries get to enjoy with your cash value life insurance policy. Another tax advantage is that the earnings on your invested accumulated cash value are tax-deferred. Therefore, as your cash value grows, you do not need to worry about the CRA deducting from your earnings. One of the things you can use your accumulated cash value for is collateral for loans. When you borrow money against your policy, you do not have to worry about paying taxes on the loan as long as the policy is still active. However, if you withdraw your accumulated cash value or take the surrender value and terminate the policy, you may be taxed on the portion of the money that came from interest or investment gains on your invested cash value.  You should understand the tax rules before making withdrawals from your cash value policy.

Bottom Line

There are other minor considerations and questions you may have when considering this approach. Talk to us about your options.

Executive Summary

Business owners regularly face complex retirement planning and insurance needs. It is not uncommon for business owners to have a large amount of their wealth tied up in their corporation.  This can create a complex need for both insurance coverage to protect that wealth and the flexibility to use that wealth.  The Corporate Retirement Strategy was developed to address both of those needs.  This strategy can provide insurance protection and a flexible income stream in the future.

Below are the basics of how this particular strategy can work for a business.

What You Need to Know

The Corporate Retirement Strategy has two key components.

The first of which is a permanent life insurance policy.

The idea is that the corporation will purchase a permanent life insurance policy on the business owner to provide them with the insurance coverage needed to protect the company assets.  On top of the monthly insurance premium, the business would direct any surplus earnings into the permanent life insurance policy. These surplus funds would build up significant amounts of tax-advantaged cash value within the policy. This policy serves a dual purpose.  The insurance provides much needed protection for the company all the while accumulating funds that could be used by the business owner in the future.

The second component to this strategy is utilizing the funds that the insurance policy has accumulated. 

The corporation may be able to pledge the policy as collateral in exchange for a tax-free loan from a lending institution.  The corporation could then use these loaned funds to supplement a shareholder’s retirement and the loan would be repaid by the life insurance policy when the insured dies.  On death, a portion or all of the life insurance proceeds are used to pay off your loan. Even though the benefit was used to pay off the loan, the corporation may still post the death benefit amount to its Capital Dividend Account.

This strategy may be good for any shareholder or key person of a Canadian Controlled Private Corporation who has a successful business with either excess income or a large corporate surplus.  With proper planning this strategy can help reduce taxes, supplement retirement, and provide insurance protection fort the company.

The Bottom Line

While this strategy may work for some business owners, it is not the right fit for every corporation.  It is important that the strategy is executed carefully to be successful and fulfill its intended purpose.  It may be prudent to work with a tax professional, your insurance advisor, financial planner, and the lending institution to ensure that your corporation will benefit from the Corporate Retirement Strategy.

By: William Henriksen, CFP

Congratulations! Officially becoming the professional that you studied so long to become is an amazing achievement and that deserves to be recognized! The path to becoming a professional such as a doctor, dentist, or lawyer requires almost a decade of post secondary education or more. Take a moment here to acknowledge your achievement. Think of all the work you’ve put into those years and think of all the various paths you can take your career from here. It’s exciting, scary, stressful, and wonderful all at once. Let’s explore how you can best position yourself for the future.

Managing your cash flow as a professional

The moment you start making an income, you begin feeling the biggest cashflow flip that you’ve ever had. This is where you have an opportunity to set up a great habit for yourself by creating a budget that incorporates your values, priorities, and the wellness of your future self.

Things to consider when creating a budget:

1. Your fixed expenses: This establishes a baseline for all future lifestyle expenses so be careful.
2. Your insurance premiums: If you are running your own practice you may need to get individual insurance and should factor the premiums into your budget early on.
3. Your savings rate: How much should you be putting away for your future self and for your long-term goals? Do you have an emergency fund in place and how much should you aim to have in it? The amount will vary from person to person and should be discussed in the context of your unique goals and situation. As a professional, keep in mind that you will likely need to fund your own pension as you may not have an employer to fund a pension plan for you.
4. Debt repayment: Many professionals come out of school with significant student debts. Should you focus on paying it down first? If so, how aggressively? This will also depend on your unique situation.
5. Automation: Having all the above automated will create the possibility to implement point number 6.
6. Guilt-free spending: What’s left over in your budget is non-allocated money. In the real world the amount will vary from month to month depending on how often you get paid, but if you’ve automated everything to come out on the same date, once it’s past you can confidently spend money that’s left over with a clear conscience because you will have already allocated money to pay your fixed expenses, protect your income, health and family through insurance, and you will have paid yourself through saving and debt repayments. If the amount you’ve allocated to points 1-4 allow you to reach your goals, the amount left over can be spent guilt free.
7. Reviewing regularly: Keep in mind that being financially organized is a continuous process, so learning and adapting your strategies as your financial status evolves is key.

Following these steps and living below your means is a huge step toward reducing the stress or uneasiness you may feel about your financial situation. It will also have the effect of increasing your confidence that you’re doing the right things to align your capital with your values and priorities.

Protecting your future self and your loved ones

It’s easy to avoid thinking about what happens if life doesn’t go the way we plan because we don’t want to believe bad things can happen to us. We tend to avoid difficult conversations until we’re prompted to have them. As a planner I have a responsibility to have these kinds of conversations with clients when evaluating their insurance needs. More often than not, people don’t know what would happen if they got sick or injured to an extent where they can’t work to receive an income. They aren’t sure if they would be leaving enough financial support for their loved ones should they pass away. Ask yourself now, what kind of financial impact would something like that have on you and your family? Without insurance, your potential income you’ve studied for would go down to zero. If you passed away, those who depend on you may be left with financial hardships. You may want to consider if your current needs are going to change down the road and structure your insurance to account for those potential needs. Disability insurance, life insurance and critical illness insurance are ways to ensure that you and your loved ones will be financially taken care of if you’re faced with such events which are out of your control.

A common reason people avoid looking into insurance early on is that they believe it will be too expensive. This doesn’t have to be the case. Not only does it cost less to get insurance the younger you are, but you can also structure insurance plans as starter policies that are easily graduated into more robust long-term policies later. This keeps costs low until you have a handle on your cash flow and protects you right away with the coverage you need. If your insurance need today is relatively low compared to what it will become, you may want to have the option to buy more later when your situation changes without needing to prove you’re insurable. This is possible and should be discussed when evaluating your insurance needs.

Incorporating

As a young professional, you may be considering starting your own business or working as a freelancer. If you plan to grow your business, you may want to consider incorporating. Incorporating means creating a corporation, which is a separate legal entity from its owners.

Why should you consider incorporating? Here are some reasons:

• Limited liability protection: One of the main benefits of incorporating is limited liability protection. As a corporation is a separate legal entity, the corporation’s creditors cannot go after your personal assets. This means that your personal assets are protected from any lawsuits or debts incurred by the corporation. This can be particularly important for businesses that are exposed to higher risks or liabilities.
• Tax advantages: Another benefit of incorporating is tax advantages. A corporation pays corporate income tax on its profits, which is typically much lower than personal income tax rates. Additionally, as a corporation, you are subject to many different rules that create opportunities for various tax planning strategies.
• Insurance strategy benefits: Incorporating can also provide benefits for your personal insurance strategy. When I mentioned graduating your insurance policies earlier, this would be the place to graduate them to. Some of them anyway. This point could be an article on its own and is not the focus for today, but seeing the full game plan from a bird’s eye view can make the action plan for your current stage easier to understand.
• Credibility: Incorporating can also enhance your business’s credibility. It shows that you are serious about your business and committed to its success. It can also give your business a more professional image, which can help attract more clients or customers.
• Access to capital: If you plan to raise capital to grow your business, incorporating can make it easier to do so. Corporations can issue shares or bonds to raise funds, which can help you grow your business faster.

However, incorporating also comes with some drawbacks:

• Higher costs: Incorporating can be more expensive than other business structures. You will need to pay fees to incorporate and file annual reports with the government. There may also be legal fees associated with incorporating.
• More paperwork: As a corporation, you will need to keep detailed records and file annual reports with the government. This can be time-consuming and requires a higher level of record-keeping than other business structures.

In conclusion, incorporating can be a smart choice for young professionals who want limited liability protection, tax advantages, insurance strategy benefits, credibility, or plan to raise capital. However, it also comes with higher costs and more paperwork. If you are considering incorporating, it is important to speak with a financial professional or legal expert to determine whether it is the right decision for your specific circumstances.

Creating Options 

All things considered, there are a lot of big topics to approach at this stage of your life and of your career. You likely have some degree of uncertainty regarding the future and it’s very possible that your life changes significantly in your early career as you juggle your personal goals and your professional ones. To get off to the best start, and to account for these possible changes, it’s important to create options for your future self. Finding the right financial planner for you, creating a budget, getting the right type and amount of insurance in place, and working with your planner and their team to build your vision are the best things you can be doing now for your future self. Your future you will thank you!

If you would like to discuss this – book an appointment with us, we would love to hear from you!

By: Louai Bibi, Advisor Associate

Should I get mortgage protection or life insurance?

If you have a mortgage, your mortgage lender has likely brought this up to you, and for good reason.

It’s important to have insurance when you have people who depend on your income, whether it is a spouse and/or child. It’s also important that you know what you are paying for and how it may or may not benefit you.

Term insurance is generally cheaper, allows for you to cover other insurance needs like leaving behind income replacement for your spouse or ensuring your children experience a fully funded post-secondary education if you aren’t around to contribute to their RESP, and allows you to structure coverage for a shorter, longer or permanent period as insurance needs change.

With mortgage protection through your bank/mortgage lender, your coverage reduces as you pay your mortgage down (which makes sense in theory, until you realize your insurance payment stays the same), the bank is the sole beneficiary of that money and every time you renew or switch lenders, you need to re-apply this coverage to your mortgage and are subject to whatever increase in cost is offered.

These are just a few differences between the two products. More listed in the snapshot below!

By: Shawn Todd, CFP

Being a business owner is exciting.

You’ve thought of an idea for a business, made it work, helped it make its mark in whatever you do. It also brings with it challenges that can be overlooked as the business grows.

The topic that gets avoided

If you are a business owner and have avoided talking about what happens in the event of your business partner’s sickness or death – then you aren’t alone.  It’s a tough topic, one that gets avoided a lot. Talking about death and sickness is tough, and it’s hard to bring up.

It’s a common situation we run into often, where a business has been started with multiple partners, and it is now running smoothly, and may be experiencing some strong success.  The balance sheet may be positive, and the owners may be enjoying some smoother sailing than when the business first started.  If we broke down business growth into four time periods – early, growth, expansion, and mature times.  We often see this issue first, once the business hits a strong growth period, and achieves higher valuations of the company than owners expected.

What happens if a business owner dies, gets sick or injured and cannot look after the business in their capacity?

The shareholder’s agreement & buy sell agreement

Some of these initial pains to these questions can be somewhat worked out within the shareholders agreement and a buy sell agreement between the parties.  Some questions that a shareholder’s agreement may help solve will be; what responsibilities do the parties have to each other, when is a sale triggered if there is long term sickness, what happens at death of a shareholder, and some key discussions on evaluation and its formulation.  A buy sell agreement helps ensure this sale happens after death, or a triggering event.

The most common issue I see on this topic with business owners is an unfunded shareholders agreement. Often it has been talked about, but not put into place or solidified.  In the event of a shareholder’s death – normally the corporation would be expected to pay the estate of the deceased shareholder [in return – take back the shares], or there would be a well laid out insurance plan to offset this immediate cost, pay the estate, and have the shares returned in exchange.

In this example above, if Phil was to become sick long term or died, then Phil’s family or estate would be expecting a value for Phil’s shares. Ideally Olivia would rather not be in business or be left making business decisions with Phil’s family. What happens if the corporation doesn’t have enough to pay the value of Phil’s shares to the estate, or if there isn’t an insurance policy in place?

How to fix

There is a variety of ways to fund a shareholder’s agreement, the most common being with an insurance policy.  The policy can be paid personally or corporately, but the most common and most popular [for obvious reasons amongst owners] is to have the corporation pay the premiums.

Insurance policies can be set up to provide coverage for death of a business partner, loss of income due to disability, injury, or a critical illness such as Cancer.

It’s not too late to spend time with your business partner(s) to discuss these ‘what if’ situations.  Planning on what happens if a shareholder has to exit [especially under terrible & stressful circumstances] is a great way to strengthen your business in the back-end, and lower any fiscal risk.

Let us know if you have any questions, or please book a time with us to review your own shareholders agreement.  Click HERE!

Shawn Todd CFP – Partner – ECIVDA

By: Michael Lutes CFP, CLU

Certified Financial Planner

It’s a brand spankin’ new year, (2023 baby!). The calendar has turned, the slate is wiped clean, you’re at mile zero! You have twelve whole months to kick some butt when it comes to managing your money and financial planning! (Wow, I’m getting energized just writing this!!)

Perhaps you’ve already begun brainstorming ways to improve your finances in 2023. Maybe you’re hunting for new tax-efficient planning strategies. Or you think your investment portfolio could use a revamp. Or, after spending time with loved ones over the holidays, you’re inspired to audit your insurance and estate plans.

Or, like so many of us, you truly don’t know where to start.

Here’s a tip…

Start with your values. Let those values motivate your goals, life objectives, dreams. Whatever you want to call them, start there.

So, what are your values? Seriously, yours, what are they? Take a moment, take a minute, take whatever time you need…

No, no, no, not THOSE values…. those are the values you think you should have. The ones your brother incepted inside of you when you were chatting over the holidays. Or maybe those values are the ones your Instagram feed is telling you to have – fancy cars, fancy food, fancy vacations, fancy clothes, fancy blah blah blah.

Not those.

I’m talking about YOUR values. The ones that truly reflect the deepest sense of what cultivates happiness in you. The ones that make you feel authentically happy to just be. The ones that when you’re living in alignment with them you are at your most satisfied, most at peace, most content, and most fulfilled.

THOSE are your values.

(Ummm, I thought this was a financial planning blog…no?)

How does this apply to financial planning?

While considering all the calculator stuff – tax, investment returns, insurance, etc. – the best financial planning is done in a space where decisions of how to use your money – or capital (more on capital later) – are in alignment with your values. This is where financial confidence builds. This is where the real financial planning magic happens.

In this space, you stop obsessing over moves in the stock market, you don’t really care what shows up in the daily financial news, you can genuinely listen to your neighbor’s stock tip from their cousin who “worked on wall street” and effortlessly separate opinion from truth and move on.

This is the space where you can be totally and completely confident and fulfilled in your financial decision making, because you know it aligns to your values and your life objectives.

So, when it comes to financial planning this year, start with your values – dig deep, be real, be honest, be reflective – and let your values motivate your goals that ultimately drive your decision making.

Do this, and you’ll be kicking butt in 2023!

And if you’re one of us who, like most, need help uncovering their values and articulating their goals, we recommend talking to a trusted advisor who can help you through the process. If you don’t have a trusted advisor, schedule some time with us – we love to help!

It is always a good day to review your financial plan! Knowing what you have and haven’t accomplished is vital to reaching both your long and short-term goals. Below is a list of financial planning priorities that should be reviewed regularly.

What You Need to Know

Insurance

• Did you buy a new house?
• Did you have a baby or add to your family?
• Did you get married?
• Did you take on new debt?
• Did you get a new job or have a change in income?
• Did you experience a marriage breakdown or divorce?

Liabilities (new or changed)

• Mortgage
• Business Loan
• Student Loan
• Line of Credit
• Credit Card Debt
• Car Loan
• Any other liabilities?

Assets (new or changed)

• Art
• Jewelry
• Cash
• Real Estate
• Land
• Stocks
• Bond
• Life Insurance Policies

Short Term Goals (New or Changed)

• Save for a House
• Save for Vacation
• Pay off High Interest Debt
• Start Emergency Fund
• Major House Repair or Renovation

Long Term Goals

• Retirement Dates
• Education Savings
• Mortgage Elimination

Investments

• Adjusting Risk Tolerance
• Reviewing Asset Allocation
• Savings Strategies
• TFSA
• RRSP
• RESP
• RDSP
• Un-Registered Accounts

Accounting for Big Changes

• Did You Move?
• Did You Sell Major Assets?
• Did You Change Jobs?
• Did You Take on More Debt?
• Did Your Family Grow?
• Did You Lose a Loved One?
• Is There a Critical Illness in the Family?
• Did You Receive a Gift or Inheritance?
• Was Someone in Your Family Diagnosed with a Disability?

The Bottom Line

Your advisor is here to help you and guide you through each step of the financial planning process. The above list should be used as a starting point to address basic financial planning needs.

Book an Appointment with us today – CLICK HERE

Financial terminology is crystal clear for those folks who work in and are exposed to the financial industry on a regular basis; everyone else finds the definitions and implications difficult to understand. “Universal” and “Whole Life” life insurance is not exempt from this reality.

What you need to Know

Whole Life

Whole Life Insurance is also called ‘permanent’ as it provides a lifetime of coverage. As long as the premiums are paid, the insurance stays in-place permanently. At the beginning of the Whole Life policy the death benefit and premiums are usually guaranteed, and remain fixed.

Whole life policies pay the death benefit when the insured person passes away. They can also accumulate additional cash value inside of the policy. The invested premiums fund the death benefit, and whenever excess premiums occur they are then invested by the insurance company on your behalf and create a Cash Value.

Typically, Whole Life insurance is less expensive to purchase than Universal Life, and is the ideal option for those people who desire level premiums and a predetermined death benefit.

Universal Life

Universal Life Insurance is a slightly more complicated financial solution as it is considered both a Whole Life policy and a tax-preferred savings account, combined together. At the beginning the death benefit is set, and then any premium payments above what the life insurance policy requires can be used to increase the death benefit or be held in a tax-preferred savings account.

This last point is important for those people who may have maximized allowed RRSP contributions and are looking for additional ways to shelter income and wealth from taxation.

The Bottom Line

To understand the differences between Whole Life and Universal Life Insurances be sure to consult with your Advisor.

Click HERE to book an appointment with us today!

Many people tend to neglect the insurance part of their portfolio, but it is one of the most important tools you can have as a part of a financial plan.  Just like your investments or other assets it should be reviewed regularly to ensure it is still protecting you in the ways that you need it to. The steps below will help you get started on your own life insurance audit.

What You Need to Know

Step 1: What is the Purpose of My Current Coverage?

Ask yourself what purpose the life insurance serves you and your family. Your insurance could be used for any of the following purposes:

• Debt Elimination
• To Fund an Estate Strategy
• Income for a Survivor or Dependent
• To Fund a Buy Sell Agreement Between Business Partners
• Investment
• Charitable Donation

It is essential that the type of insurance you own is compatible with your plan for its proceeds. For example, if your intent is to leave the insurance proceeds to a charity upon your death, a term policy would not make sense as it’s possible the term would be expired years before your death. This should be the first part of your review. A trusted financial advisor can help you determine if your current coverage is suitable, and if it is not, what options are available that could better carry out your last wishes.

Step 2: Do My Beneficiaries Need to be Updated?

Beneficiaries are typically named when a life insurance is purchased, and they determine who will be eligible to receive the proceeds of the policy upon your death. Therefore, it is important to regularly review who your named beneficiary is.  Marriage, divorce, and death of a loved one are all reasons to do a review of your beneficiary and potentially assign a new one if necessary. Beneficiaries can be individuals, a corporation, business partners, a registered charity, or your estate.

Step 3: Have I Experience Any Major Life Changes?

Insurance needs change as life changes. Major life events warrant a total insurance review. Examples of life changes can affect your insurance needs:

• Marriage
• Divorce
• Purchasing a Home
• Birth of a Child
• Owning a Business
• Death of a Partner
• Gaining custody of a dependent
• Taking on significant debt

You may find your insurance need is greater than when you initially purchased your life

insurance policy.

Step 4: Have I Reached Any Financial Milestones?

Have you paid off your mortgage? Paid off your business loan? You may not require the same amount or type of insurance policy.  Reaching a big milestone like this could mean you could be better served by different type of policy. For example, if your $5 million business loan was covered by a term policy of the same amount, you may no longer require such a high face value. It may be more beneficial to convert the policy for a smaller amount (i.e… $1 million) to a more permanent policy.

Step 5: Have My Premiums Changed?

This is particularly relevant when it comes to term policies. At the end of a term, a term life insurance policy automatically reviews. This can drastically increase the premium. Since policies renew automatically, it is possible your premium has increased since purchasing the policy.

The Bottom Line

As a rule, you should do a life insurance review every 2-3 years.  You may be surprised at how much your life has changed!  Your life insurance advisor can help you review your policies and make recommendations based on your ever-changing situation.

Book an appointment to discuss your insurance needs – Click Here

A recent study, Understanding and Managing the Risks of Retirement, by the Society of Actuaries has shown that only 52% of pre-retirees and only 44% of retirees are consulting a Financial Advisor. That means that roughly half of the population is seeking financial advice outside of a financial professional, whether that be friends, family, colleagues, or Google. We live in a time where we turn to technology for everything. We can quickly search anything we want to know, and as a result, we are inundated with information. When it comes to dealing with our finances, this approach can be confusing and overwhelming. By making your financial advisor your first point of contact, you know that you are being provided with knowledge that is relevant to your financial situation.

What you Need to Know

Working regularly with your financial advisor can bring incredible value to your financial plan. A study by Morningstar found that investors who consistently work with an advisor generate returns that are 1.82% higher than those who do not. Their research also found that investors that actively seek out advice from their advisor accumulate 29% more wealth for retirement than those investors who do not.

A Financial advisor can provide you with the kind of expertise and guidance you deserve. You work hard for your money, and while seeking advice from the internet or advice from friends can be convenient, you can’t always trust that it is accurate or relevant. Every investor has specific needs, and there is no one size fits all when it comes to investing. Inaccurate or irrelevant information can lead you to make costly decisions. By talking to your advisor, they can act as a sounding board for the information you read or hear about. An advisor can offer guidance on whether a new concept or product could benefit your portfolio, or if it’s just a trend that offers you no value.

One of the greatest risks to your financial plan is making uninformed decisions during a downturn in the markets. In bearish markets, we are flooded with market information and down-right bad news. Before turning to potentially unreliable sources, consult with your advisor first. Research by the Investment Fund Institute of Canada has shown that individuals who have worked with a financial advisor and have a customized plan are twice as likely to rebalance appropriately during a downturn. Making your advisor you first contact will allow you to filter out the panic and allow you to see the facts, therefore keeping your goals on track!

The Bottom Line

By getting in the habit of talking to your financial advisor before looking for advice elsewhere, you can reduce the risk of falling prey to inaccurate and irrelevant information. If you trust in the expertise that your advisor can provide, you can reap the benefits of higher returns and higher level of wealth in retirement. In other words, you can reach your financial potential!

Click HERE to book an appointment with us today!

Building a home is not for the faint-hearted. A lot of sacrifices and planning are required, especially on the financial side. You do not want to bring your children into the world without proper financial plans. It is even advisable to start planning for kids long before they come. Before having children, you should try as much as possible to settle all debts, budget for child care and support, and apply for tax breaks and other benefits that may be available for children. A lot of questions pop up when trying to plan for your kids and with enough research, you can get adequate answers. We would try as much as possible to answer some of these questions for you.

How Much Insurance Should You Carry On Your Life Once You Have A Family?

When it comes to the type of insurance you should do once you have a family, experts advise that your coverage should be 7 to 10 times your annual income for adequate cover for your family. Surveys show that 74% of Canadians have a life insurance policy but 70% majority are worried that their life insurance is not adequate to take care of their family in the event of their death. Determining what will be considered as enough for life insurance is almost an impossible task because families differ but there is a general formula you can use. This formula is known as DIME – Debts, Income, Mortgage, and Education. DIME is the total sum of:

• All your current and future debts;
• The multiplication of the number of years your family will need your income with your current annual income;
• What you owe on your mortgage and any expense on renovation or expansion; and
• How much will cost to send your kids to school up until the level you wish.

What you want in your life insurance cover depends on what you want to leave behind for them. Life insurance is not for you but your family.

 Do You Need A Living Will?

A living Will, also known as Personal/Advance Directive is a document that contains your preference and wishes for your personal and medical needs for when you are unable to make such decisions. The document takes care of your end-of-life affairs whilst still alive. You need a living Will to take care of things for when you can’t make key decisions. It also spares your family from making difficult decisions in your absence. A living Will protects you and your family, just like insurance. Anything could happen at any time, it could be a ski accident, stroke, or bike crash that may incapacitate you, with a living Will in place, you are still in control of your life. A living Will must include who to make medical and financial decisions on your behalf, the level of their authority, your medical wishes, and the welfare of your family if you are incapacitated. Ensure you find out the laws that govern a living Will in your province.

How Early Do You Need To Begin Estate Planning To Ensure That Your Child Is Given Your Inheritance?

Estate planning is an important decision you need to make so as to adequately provide for your family. It is a detailed plan on how you want your assets to be distributed when you depart. It has its tax benefits, and it helps you structure and manages your finances both when you are alive and after you are gone. You can engage the services of a lawyer or use estate planning kits, apps, and websites with estate planning templates. If you choose the latter, it is advisable to give a lawyer to review for you. Estate planning involves documents like a Will, power of attorney, and a living Will. which is why you may need to consult, lawyers, tax experts, and financial planners when you want to come up with an estate plan.

There is no rule of thumb that states the exact time you should start your estate plan. Experts will say once you cross the threshold of being a minor, you can start your estate planning while some people choose to come up with an estate plan when they clock 40 or are diagnosed with a terminal disease. This means that you could start as early as when you clock 18 or when you are close to the great beyond of which you must still have the legal capacity to come up with an estate plan. it does not really matter when you begin your estate planning as long as you meet the legal requirements of making and your plans and wishes are clearly articulated. You should also make sure you update your estate plan every 3 to five years.

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I’ve been reading a lot of material in the past few weeks about posting content on Linked In. The last few articles that I have written, have been received with moderate success from the financial planning community. I absolutely love getting onto a topic that I’m passionate about, and helping people connect with what might be a new way of looking at things! Ottawa local and Linked In guru Michaela Alexis preaches vulnerability in her article 5 Must Read Tips for Writing a Killer Linked In Article If you haven’t had a chance to read this article – and are interested in writing content – it’s a really great start.

So let me be vulnerable.

In May 2011 on a day long ATV ride ride with some friends, colleagues and clients in the Calabogie area – I had a terrible accident. It was probably our fourth or fifth annual ride with about ten riders. I had just spotted a beautiful long hill in a sandy field, and I was determined to drive my ATV up to the top to have a look. Half way up this rolling hill the ground just ended – it was a cliff. With absolutely no time to react – I went over the side of the tall cliff first (large unforgiving 800lb ATV came second), and the ATV fell with me landing hard right on top of my back. Immediately, I knew I was badly injured. At the end of the day – I had broken 5 vertebrae, 3 ribs, and split my liver.

So I’ve gotten the accident out of the way, and this helps with the setup of this article. I’m really trying to let you in on what was happening for me the moments after that accident. I was absolutely terrified. Not only was I worried that I may not survive this incredible accident, I was worried as I had a family that I wanted to get back to. I had three kids to raise, and when my beautiful girlfriend (now my amazing wife) walked in the hospital room – it gave me all the energy I needed to get charged up to start my mending!

Once the dust settled, and I had days and days of lying and healing – there were a few things that I really had on my mind;

• If I end up not being able to walk again – will I have enough income from my group and disability plans?
• Was my will set up the way that I wanted it? Does it contain my last set of instructions in the way that I really intended?
• What would I change about my life insurance and risk plan if I could?
• Would I be able to climb Mt Kilimanjaro with my girlfriend? (we had just made plans and booked our trip)

Months later – I had healed and made a recovery.

So I’ll be honest with you – I didn’t have enough set up for my disability plan (and would have probably had to live a life I wouldn’t have enjoyed), and my will and life insurance program needed some tweaking. Sometimes, we get a good bounce in life – and this was my second chance.

I’m going to share with you the reasons why I reviewed these questions, and set up a robust insurance program after my accident;

1. I have a family that I absolutely love. My wife and my kids are what gets me up in the morning, and what keeps me inspired every single day. Sometimes we’re busy, sometimes we’re laughing and goofy, and sometimes we’re all doing separate activities (especially as the kids get older). At the end of the day – what we have in our home is my entire life.
2. It’s the best way to have a couple Million dollars sitting on the sidelines when you need it. I once had a client ask me to build him a financial plan – “but please don’t use life insurance – I don’t like it. So I did. I built a beautiful financial plan – and it showed a need to save $17,000 / month for five years (and assumed that he didn’t get sick or die for that period). It wasn’t a hit. He ended up liking the insurance in the plan – and it ended up saving him a lot of money. I enjoy having knowledge that when I need it – regardless of how much I’ve saved, or where I am at in my life cycle – the money will be there.
3. I don’t like spending money when I don’t have to. Structuring my plan right made it cash flow neutral. It may be a monthly expense – but having return of premiums or some cash value features allowed me to have a plan that returns this to me later on. A typical 35 yr old could easily spend $20,000 – $30,000 on premiums between now and retirement age (as an net negative expense) or they can re-arrange what they are doing and make this neutral, or an treat it like an investment, and come out with thousands in savings, and a nest egg.
4. I’m a business owner. I like risk, and growing my business. Some elements of my world I can’t afford risk. My business, and my income is one of them. Walt Disney wouldn’t have been able to keep trucking on his Disneyland idea without it – a good read here What? Walt Disney used Life Insurance?
5. I enjoy travelling, having goals, and just simply not worrying about uncertainty. It’s incredibly re-assuring to be able to book that scuba dive trip, or take a hike on a beautiful Caribbean island without worrying about mortality.

6. It’s immediate. Sometimes you just don’t get that second chance. It’s the ATV day with your pals, or it’s that golf game with your friends. It may just feel like another day, and give you no second thoughts. Sometimes and somewhere – your day doesn’t end the way you wanted. On an average, we are supposed to be here until 85 yrs of age, but sometimes we get sick, a medical result comes back we didn’t expect, or someone runs into our car. It can be totally unplanned, unexpected, and change of world forever. It might mean your income ends, or it could mean you don’t go home (ever). Having an insurance plans allows me to know that (a) the money is all there (b) every person that I love has something I wanted them to have (c) if I live through whatever terrible day I’ve had – I’m going to have an income (and then I can start with my game plan on recovery and overcoming whatever has just happened)

By the time I was done healing I had renewed my insurance strategy. I talk about this day with my clients – because sometimes people have a hard time imagining something terrible happening to themselves. I don’t mind sharing my story – it has a good ending. I made some great changes – and I also was also able to climb that mountain with Michele!

I’m excited about my life and the future adventures coming, and excited about knowing that I have a strong plan to support me. Think about your plan, and make those changes you’ve been thinking about. It’s one of the best steps you could take (and then consider travelling to Africa and hiking Mt Kilimanjaro – it’s incredible! “Go Climb a Mountain: – my buddy said. Click here to get this on your bucketlist.

Just my thoughts for the day,