FAQ

Frequently Asked Questions

GENERAL
'Creditor Proof' - What does that mean to me?

INSURANCE
Bank mortgage insurance plans - Are there alternatives?
Health & Dental - Can any one buy it?
How do I get more information on a topic?
How can I get Mortgage & GIA rate Quote?
How can I get the best Term Life Insurance rates in the country?

SAVINGS & INVESTING
GICs & GIAs - Is there a difference?
GLIC - What is it?
Mutual & Segregated Funds - What is the difference?
Mutual & Segregated Funds - Are my choices limited to a few?
RRSP - What does it stand for?
RRIF - What does it stand for?
Universal Life - Investment Grade Life Insurance - Is there a limit to tax deferred investments?
Universal Life - How competitive are the investment returns?

BUSINESS OWNERS
How can I take money out of my holding company tax free?
How do I protect profits from a catastrophic illness of a key employee, like me?
Health & Dental - Can any one buy it?

ESTATE PLANNING
IRP - What is it?
How Can I make a sizable tax deductible charitable gift and
increase  the value of my estate.

FREQUENTLY ASKED QUESTIONS

RRSP - What does it stand for?

Registered Retirement Savings Plan.  Any investment that is in an RRSP has met CCRA statute and regulation that allows pre-tax dollars to be used in the plan. The government or Revenue Canada, does not guarantee in anyway, either the capital or the performance of the investment vehicle.

RRIF - What does it stand for?

Registered Retirement Income Fund.  Any investment that is in a RRIF has met CCRA statutes and regulation that allows pre-tax dollars to be held in the plan. RRIFs are the income generating version of RRSPs and all RRSPs must be converted to RRIFs (or annuities) by no later than age 69. The government or Revenue Canada does not guarantee in anyway either the capital or the performance of the investment vehicle in a RRIF.

Mutual Funds and Segregated Funds - What's the Difference?

Both Fund types utilize professional money managers to invest directly or indirectly into a basket of stocks, bonds T-Bills or a combination of each. Mutual Funds regulated under the Securities Act are offered by licensed advisors through Independent Dealerships or directly by Banks, Trust Companies, Mutual Fund Companies. Segregated Funds are regulated by the Insurance Act and are offered exclusively through Life insurance Companies and their licensed distribution networks. The key differentials between the two Fund types are the minimum guarantees of capital;creditor proofing; liquidity; and investment variety. Segregated funds are of particular interest to those Canadians that are looking for some base guarantees of capital like seniors or professionals exposed to creditor liability.

Both offer a guarantee of the principal and a rate of interest earnings over its term of 1 year or more.

Guaranteed Investment Certificate (GIC) 
is offered by Banks & Trust Companies - backed by CDIC

Guaranteed Investment Annuity (GIA) 
is offered by Life Insurance Companies - backed by COMCORP

* Some GIAs give "locked-in" rates, yet allow to redeem before end of term   (subject to redemption charge and or market value adjustment).

* GIAs offer longer terms, often up to 10 years. 
* GIAs can be made "creditor proof" 
* Because GIAs are offered only by Licensed Life Insurance Agents, you can get 
"shop at home service". You can also get shopping for the best rates.

While we have a selection of preferred fund companies, we have access to well over 900 funds Our preferred are based on 

• Solid performance historically
• Excellent Money Management Team
• reasonable management fees.

• AGF *  Fidelity * Elliott & Page * Templeton * Dynamic
• AIM * CI Funds * AIC * Mackenzie * Synergy
• Canada Life * Imperial Life * Maritime Life * National Life
• Empire Life * NN Financial * Manulife Financial

We have three programs, insured individual, or group and self funded individual or group. The group plan is available only to employers. As an employer you are either self employed as a sole proprietor, in a partnership arrangement or incorporated. As an employer you must be prepared to finance the cost of the group premiums  to at least 50%. Groups of 10 or less employees must have 100% participation. While the minimum employees that may be eligible for coverage is one, the above  specifications must be observed. Self funded programs for individuals are designed for incorporated professionals so that can pay their medical bill through their corporations as a deductible business expense, yet not a taxable employeee benefit. The plan works and is acceptable to CCRA if structured properly.

With Proper planning you can make gifts of assets to various non-profit and not for profit organizations like religious, educational and governmental agencies and get a tremendous tax savings. e.g. Gifting life insurance proceeds gifted to some charitable organizations can get you a 100% tax credit of either the cash value, future premiums, or the death benefit depending on how it is structured.

Investment Limits of UNIVERSAL LIFE - Are there any?

In a Universal life policy to create the tax sheltered long term savings vehicle, you need the fundamental element, life  insurance. The unit cost of the life insurance is a function of the insured's age, sex health status and other insurability factors. Any additional amounts deposited towards the contract is the savings component. The maximum additional amount that may be placed in the contract is based on a complicated formula called MTAR. Simplistically, it is relational to the insurance amount and the cost of that insurance. In other words, the higher the insurance the larger the savings corridor.

It is a perfect vehicle, in that most every one needs and has life insurance for one reason or another. Maximizing on this need creates the tax shelter vehicle. Roughly speaking the maximum savings component is 4 times the insurance cost at the younger ages and double at the older ages. So if you need life insurance anyway, its a great way to integrate this program into your RSP program. 

To understand Universal Life a little better see Universal Life. 

The investment returns in a Universal life contracts tend to be on the conservative side as apposed to the investment choices in Mutual Funds. The investment rules for insurance contracts tend to lean toward fixed instruments like bonds, mortgages and T-bills. Some creative insurers have mad the most of this by using T-Bills and derivatives to emulate stock market indexes around the world. This financial technique allows world wide diversification within the investment rules. An added value is the virtual elimination of the foreign currency risk by doing daily buy & sells.

This makes some Universal Life policy investment yields quite attractive and competitive.

Certain financial instruments (assets) created under the Ontario Insurance Act can be structured to retain a special status that exempts them from seizure by creditors of the owner of such assets. Recent Supreme Court decisions upheld this unique protective status. Financial instruments of assets that fall under this category are all Life Insurance and Annuity products. This would include RRSP, RRIF and Universal Life plans issued by Life Insurance Companies. It also includes unregistered annuity plans like GIAs, GLICs and prescribed and non prescribed annuities.

I don't have creditors!

May be not yet? On the other hand, if you have or should have professional liability insurance; or Errors & Omissions insurance; or not incorporated you are a prefect candidate for future creditors created by criminal or tort liability. Your life savings can be insulated from these unfortunate circumstances.  Call for details. 

Guaranteed Lifetime Income Certificate (GLIC) is the name we gave this creative system that combines two financial instruments to

1) Guarantee a pre-determined monthly income for life. 
2) Guarantee the capital to your estate; 
3) Guarantee a significantly higher after tax income than GICs. 
4) Allow the flexibility of "creditor proofing" funds.

If you like GICs, you'll love GLICs! Contact us for a quote.

A creative retirement planning system that compliments RRSP savings. It is of particular interest to Canadians who find that RRSP limits are curtailing their ability to save. This curtailment stems from Pension Plan limit constraints; or the flat RRSP maximum; or your effective tax planning that reduces taxable income to levels that limit RRSP savings. IRP savings levels are independent of RRSP limits.

The investment growth component of an IRP is tax deferred much  like an RRSP. The creative feature of an IRP is two fold.

a) It integrates RRSP and IRP savings on a tax deferred basis,  and

b) Creates tax free cash flows during retirement.

Complete the inquiry form and mail or fax it to Creative Solutions Insurance Agency Ltd.  

With the several levels of wellness we can find the best term rate for you through  term rate search engine. (See section Life Insurance)

BANK MORTGAGE INSURANCE PLANS -
Are there alternatives?

Advantages - Bank Plans 

* convenience - its right there  - no hassle. 
* It is group insurance so it usually has a low unit cost 
* Simplified issue, there are few or no qualification questions 

Disadvantages - Banks Plans 

* It's a group policy & not portable -    you can't take it with you. 
* Cost changes -  every time you renew or re-negotiate. 
* It is discontinued -   after mortgage paid off or if house sold 
* You los your health privacy ..,   placing your negotiating 
position at a disadvantage. 
* It's inflexible -    the bank owns it. In the event of death its 
not paid to your beneficiary. 

On balance and if practical, it is almost always best to own your own protection  policy that you "earmark" or pledge for a specific purpose.

You may change its purpose over course of time.  First its mortgage protection, then its collateral for a business start up loan, after which it may become funding instrument for a "buy sell" agreement and last it may be used to pay capital gains or RRSP tax liability. The policy didn't change, its purpose did.

In practical terms its analogous to owning a car versus "daily renting". The cost per rental is cheap, but there are severe restrictions on what you can use it for, how many miles you can put on it or who can drive. On the other hand, if you have a life long need for a car on a semi regular basis its much more cost effective and practical to "own it" outright. Life insurance is the same.

The price of individual term life insurance, especially for healthy non-smokers is becoming very competitive with the bank rates.~