Posted on: 22-09-04 18:42:32
Chopraji,
I agree with you.
Let us keep ourselves away from any ill feelings.
Regards
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There are basically three types of life insurance here in Canada. In simple terms they are
1. Term insurance- this is pure insurance. These are usually 10 year, 20 year and 30 year terms(very rare)and Term 100. If you opt for a 10 year term you will be covered for 10 years only from the day you start the insurance and your premiums will remain constant throughout this term: and then your premiums will increase dependent upon your age and health condition, should you decide to continue, otherwise you will cease to be covered. Likewise for 20 and 30 year terms. Term 100 is an insurance that covers you till you are 100 years old and some cash value can build up. Some term insurances also include terminal illness, i.e if you are diagnosed with a terminal illness you can draw upon it (upto a certain percentage usually 40% of the insured amount) for doctor’s fees, for drugs, or for anything during the period you are still alive. The balance is paid to the beneficiary.
Term insurance insured amounts are usually paid to beneficiaries mentioned in the policy after the insured’s death unless it is with a built in terminal illness policy wherein the insured can utilize part of the insured amount while he/she is alive.
2. Whole life insurance- this is a combination of insurance and cash value- it is valid till your dying day and the premiums remain constant throughout. You can use the cash value built into it to pay for your premiums by borrowing against the cash value in the policy.
3. Universal life policy- this is a combination of insurance, cash value and investments- a complex and excellent product. However as is set out in the basic insurance course it is not a product for everybody. It is usually meant for high networth individuals and those in business as the money put into it is protected against creditors. There are too many nuances in this product and it is best to talk to a qualified insurance agent on this.
Just as a rule of thumb- for new immigrants it is best to start off with a term insurance that is renewable and convertible. What this means is that at any moment within the term of a policy in force you can change it to a whole life or universal life policy, should you feel the need
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Hi guys, here is a simplified version of Universal life, which I believe to be a product that is very good for those who have excess money.
Universal life policy: A powerful tax-planning tool
While there are few tax shelters available outside of Registered Retirement Savings Plans, there is one that anyone can take advantage of: “exempt” life insurance
Exempt life insurance, such as universal life, works as an investment vehicle. You pay money to purchase life insurance coverage, then pay an additional premium that goes into a reserve fund to earn interest — free of tax.
Tax-deferred growth
This means that in a single policy, you get life insurance coverage plus investment earnings. Depending on your situation, this could be a useful investment vehicle. More importantly, it can be a powerful tax-planning tool because the funds that accumulate within the policy are tax-deferred until cash is withdrawn. If kept until your death, the funds are tax-exempt. While there are limits to the maximum amount of the policy’s reserve fund within the tax-deferred status, the rules are fairly generous. Take the example of a 40-year-old buying a $500,000 policy for as little as $2,900. With
a universal life policy, the premiums collected can run as high as $15,100 per year. The
$12,200 difference would be sheltered in the reserve fund. In addition to a tax shelter, the exempt life insurance plan offers two key benefits: control and flexibility.
Control. With this type of plan, you manage your own funds. You can choose low risk
investments or select from a variety of Canadian or global equity investments. The interest accumulates tax-free as long as you follow the government’s rules. You have
to keep a certain balance in the policy. If you pay too much into the investment fund compared with the insurance portion, you will lose the tax exemption. Professional guidance will help you keep the tax shelter intact.
Flexibility. An important advantage of a universal policy is its flexibility. In the first few years the charges will lower the investment yield, but you can eventually use the reserve fund to pay your life insurance premiums. For those in the top marginal tax bracket, this can cut insurance costs in half. Or you could, for example, make a withdrawal for four successive years to pay for your child’s university education. Alternatively, if you fi nd yourself with a lump sum of money one year, you could make an additional payment into the policy — up to certain legal limits — much like making an extra payment on your mortgage.
Estate-planning advantage
If you leave your funds with the insurance company until your death, the proceeds will be returned to your estate, and/or beneficiaries completely tax-free. With many other investments, the government could end up with half your assets and your beneficiaries could wait a very long time for the other half. The key to using exempt life insurance
successfully is to remember that it is a long-term plan. Call us to discuss whether an exempt insurance policy could be an effective tax-saving technique for you. .
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Quote:
Orginally posted by Pramod Chopra
Quote:
Orginally posted by bally minhas
Quote:
Orginally posted by Pramod Chopra
LIFE EXPECTANCY:
The Actuary tables( what is that? ) does not change over a period of one year.
In such a dramatic fashion to reduce premium by 10 $ a month!!!!!!!!>>??????
Please do not five a call for review with possibility of netting some UL policies and your commissions .
Sorry for being negative in terms of so many AFFLUENT people here. let us discuss and guide.. it is charcha and not more KHARCHA>
ANYBODY NEEDS TO DISCUSSS THEIR insurance .. please contact ..
Hi,
It seems I am missing somthing here.
Where did I mention about the actuary tables ? Though these do not change that often but I know for sure that the Insurance companies have brought their rates down for TERM INSURANCE. I advised only those people to get their Term Insurance evaluated who took it a couple of years ago. And that's exactly I did when I got my Term Policy evaluated and I could increase the coverage without increasing my premiums.
Where did I mention any thing about UL (Universal Life) insurance?
Where did you get the impression that I asked any one to contact me to discuss their Term Insurance Policy so that I can net some UL policies and make commission?
To me it seems that this could be in your mind when you asked people to contact you to discuss their policies. ARE YOU IN THE BUSINESS OF SELLING INSURANCE?
As far as I am concerned, I am a Mortgage Broker and NOT an Insurance Agent. And I hope you also know that for selling Insurance you have to have a license and I hope you also know that a person can not simultaneously held both Mortgage Borkering License and Insurance License.
well... there is some things missing..
1. After so many days on this site.... after checking so many people to promote their business. I offered to check if some people can be saved.. no business here.
2. Once someone gives advise for review, first thing which comes to mind is that there is someone trying to get business.. maybe for fellow advisors.. be it real estate, mortgage.. or Insurance. ( NOT FOR SELF)
my point is that the commission structure is too high as compared to the service given by these people. That is why there are so many people doing this business.. resulting in lower quality and utterly wrong advise.
Regarding Actury tables.. I am sure that if someone is writing about rates and life expectancy... he is really talking about actuary thing.
3. I am of the view that mostly it is misinformation about all kinds of financial services... there are not only a FEW bad apples.. there are more.
4. Waht i meant when i refrred about UL was that once a person gets a review done .. then it is a VERY VERY high possiblity that the agent would try to talk more ablout UL and then you know ... these compounding tables spin there magic on the minds of policy holders.
5. I am sorry if u took it as a personal attack. I once again state that I am only contributing for giving my input which is all there at other threads also.
I made previous post on this thread as PALLAVGT. Take it as my contribution.
Quote:
Orginally posted by the-entrepreneur
Universal life policy: A powerful tax-planning tool
While there are few tax shelters available outside of Registered Retirement Savings Plans, there is one that anyone can take advantage of: “exempt” life insurance
Exempt life insurance, such as universal life, works as an investment vehicle. You pay money to purchase life insurance coverage, then pay an additional premium that goes into a reserve fund to earn interest — free of tax.
Tax-deferred growth
This means that in a single policy, you get life insurance coverage plus investment earnings. Depending on your situation, this could be a useful investment vehicle. More importantly, it can be a powerful tax-planning tool because the funds that accumulate within the policy are tax-deferred until cash is withdrawn. If kept until your death, the funds are tax-exempt. While there are limits to the maximum amount of the policy’s reserve fund within the tax-deferred status, the rules are fairly generous. Take the example of a 40-year-old buying a $500,000 policy for as little as $2,900. With
a universal life policy, the premiums collected can run as high as $15,100 per year. The
$12,200 difference would be sheltered in the reserve fund. In addition to a tax shelter, the exempt life insurance plan offers two key benefits: control and flexibility.
Control. With this type of plan, you manage your own funds. You can choose low risk
investments or select from a variety of Canadian or global equity investments. The interest accumulates tax-free as long as you follow the government’s rules. You have
to keep a certain balance in the policy. If you pay too much into the investment fund compared with the insurance portion, you will lose the tax exemption. Professional guidance will help you keep the tax shelter intact.
Flexibility. An important advantage of a universal policy is its flexibility. In the first few years the charges will lower the investment yield, but you can eventually use the reserve fund to pay your life insurance premiums. For those in the top marginal tax bracket, this can cut insurance costs in half. Or you could, for example, make a withdrawal for four successive years to pay for your child’s university education. Alternatively, if you fi nd yourself with a lump sum of money one year, you could make an additional payment into the policy — up to certain legal limits — much like making an extra payment on your mortgage.
Estate-planning advantage
If you leave your funds with the insurance company until your death, the proceeds will be returned to your estate, and/or beneficiaries completely tax-free. With many other investments, the government could end up with half your assets and your beneficiaries could wait a very long time for the other half. The key to using exempt life insurance
successfully is to remember that it is a long-term plan. Call us to discuss whether an exempt insurance policy could be an effective tax-saving technique for you. .
My additons:
1. Flexibility: Yes there is but the policy holder must also know pitfalls of lapsing a policy. please add this item. i mean policy lapse after your cash value is gone in paying unpaid premiums.
2. No agent will tell the details and cautions given in this article .. if they do then ... investor/ policy taker takes a better decision...
3. how many affluent person with excess monet are there. Maybe one agent may not catch one affluent client. Correct me with exact figures.. let us have a poll
4.
YES it is a LONG TERM PLAN with HIGHER REGULAR payments exceeding your grocery payments.
Hi Rajniminhas,
I think the consumer should make sure that what he is buying is the right product and meets his needs. If he is not sure he can always seek a second opinion.
The life insurance industry, like the securities industry, is regulated one and hence a salesperson is obliged to provide some disclosures concerning the product being sold. He does have a fiduciary duty towards his clients. The regulators take it very seriously if a sales person is found lacking in his duties towards consumers.
Since life insurance products are so very important and occupy a crucial position in a consumer's financial plan that any wrong choice made today can have serious consequences in future when the plan comes to fruition.
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