Business owners: What happens if your plans get interrupted?

If you’re a business owner, you know it takes plenty of time, work and effort, and you do whatever you can to be successful now, and in the future. For example, you want to protect your business today while making sure you plan for retirement and the legacy you’ll leave behind.Protect your Business with Insurance

But what happens if your plans get interrupted? What would happen if you:

  • Were seriously injured?
  • Battled an illness and wanted to spend more time with your family?
  • Died suddenly and the business had to go to someone else?

Of course these aren’t things we really want to think about, but part of running a successful business means dealing with tough issues – and preparing for the unexpected.

You’ve worked hard to grow your business and make it a success, that’s why protecting it is important.

Protect your business today

While your business may be running smoothly now, you need to be prepared in case the unexpected happens. There are a number of options you can consider as part of your financial security plan; insurance is one of them. The right insurance coverage can help you:

  • Protect your business, if you, or a key employee is suddenly unable to work
  • Pay off business loans
  • Provide you or your business partner with the funds to buy the other person’s share of the business
  • Cover expenses for you or your family

Ensure you have a smooth exit strategy

At some point, you may want to retire and pass on your business. That’s why it’s important to have a plan in place to ensure a smooth transition. Have you thought about your options?

Leave a legacy for those you care about

It’s important to think about what will happen to your wealth for your family in the future:

  • Do you have a plan in place to help take care of loved ones?
  • Are you growing your wealth in a tax-efficient way?
  • What about your estate? Will it be easy to split fairly between family members?

Insurance is one way to help maximize what you leave behind.

Plan to see the whole picture

You’ve worked hard to grow your business and make it a success, that’s why protecting it is important.

I can show you options that may work best for you, and how insurance and other options can help fund, or plan, for unexpected events.

Protect Your Business from the Loss of a Key Person

Like many smart business owners you’ve insured your assets from theft or damage.

What would happen if you or one of your key people died prematurely or suffered a life-threatening illness?

Every Company has Key PeopleKey Person Insurance

You probably don’t have to look far to identify people essential to your company’s success.

These are people with:

  • Proven ability to grow sales
  • Highly specialized technical skills
  • Personal relationships with valued customers
  • Responsibility for major projects

Whether it’s a valued employee, a business partner or yourself, each key person brings energy and expertise that can be difficult and costly to replace.

How would losing a key person impact your business financially?

Consider the effects of a key person’s critical illness or premature death.

  • Could it affect your short-term or long-term profits?
  • How much will it cost to replace the key person?
    • Recruiting $     ?
    • Training    $     ?
    • Relocation $     ?
  • Will creditors shorten payment terms or call in loans?

Insurance on you and your key people can help prevent an unexpected loss from financially harming – even destroying – the business you’ve worked so hard to build.

Key Person Protection – It’s Simply Good Business

Two proven building blocks for key person protection are life insurance and critical insurance.

Your business can use the insurance funds to:

  • Pay debts and expenses to help keep operations running
  • Find and train a suitable replacement
  • Increase cash flow to compensate for lost revenue
  • Assure creditors and suppliers that funds are available to meet commitments
  • Show customers that the business has the means to continue

Determine the value of your key people

Ask me how you can implement key person protection as part of your business plan. 519-860-4223

What’s the Best Life Insurance for You?

To build the right financial plan for you, it’s important to know:

What are your life insurance options?

When it comes to life insurance, you have two choices: term life insurance and permanent life insurance. Both are great choices that protect you and your family, but each has different features. Deciding what’s Life Insurance for Familyright for you depends on what you need.

Term life insurance is temporary, lower-cost insurance coverage initially, where your payments stay the same for a set period of time. When that time’s up you can renew your coverage or convert it to permanent life insurance without having to answer further health questions.

Permanent life insurance also helps protect those you care about and provides you with more security because it lasts a lifetime.1 Initially, it costs more than term life insurance but includes features that can grow money inside your policy over time (called cash value). You can access this money while you’re still alive to help you achieve what you’ve always wanted – more retirement income or perhaps to start your own business – or leave a larger legacy for those you care about.

Deciding which option is right for you can be difficult. Here’s some information to help you make a decision.

So which option do you feel best suits your needs: term insurance, permanent insurance or a combination of both?

No one knows your situation better than you do. However, I’m here to help you. I can review your needs, help you choose the right insurance option and work with you to build a financial security plan to protect what matters most.

Universal Child Care Benefit (UCCB) Increase

The Universal child care benefit (UCCB) is designed to help Canadian families, as they try to balance work and family life, by supporting their child care choices through direct financial support.

The Government of Canada is introducing changes to the law to increase and expand the UCCB. Enhanced payments for the universal child care benefit would take effect as of January 2015 and would begin to be reflected in monthly payments to recipients in July 2015.

Universal Child Care Benefit

The UCCB is increasing for children under the age of six. Effective January 1, 2015, parents will receive a benefit of up to $160 per month for each child under the age of six, up from $100 per month. If the changes to the law pass, parents will receive up to $1,920 per child per year.

The UCCB is also expanding to children aged six through 17. Effective January 1, 2015, parents will receive a benefit of up to $60 per month for children aged six through 17. If the changes to the law pass, parents will receive up to $720 per child per year.

The first enhanced payment will be issued in July 2015 and will include any retroactive payments for the period ofJanuary 2015 to June 2015.

Note
It is the CRA’s longstanding practice to administer tax and benefit measures on the basis of proposed legislation, which has been accepted in principle by Parliament pursuant to a Notice of Ways and Means Motion, unless this legislation or a motion to implement the measures is defeated in Parliament.

Financial Planning Process

FINANCIAL PLANNING PROCESS

  1. Introduction
  • Who I am
  • What I do
  1. Understand Situation
  2. Determine Goals & Objectives
  3. Review Investment and Risk Management
  4. Present Financial Security Plan
  5. Present Analysis and Go-Forward Strategy
  6. Implement Plan
  7. Annual Review and Monitoring

Financial Planning Overview

I work with my clients to create a financial security plan that addresses their concerns in four key areas: financial security at death, living benefits, liquidity and retirement. Their financial security plan will be tailored to their needs, risk tolerance and the goals they want to achieve.

Cash Flow and Debt Management

My financial planning process will involve an analysis of your current cash flow and debt levels through a comprehensive budget review.  I will make recommendations on how you can make the most effective and efficient use of your cash, expenses and what you can do to best structure your debt and most effectively pay it down.

Investment Services

I pride my practice on my commitment to a proven process. Before ever making any investment, I first work with clients to develop a complete understanding of their financial position, concerns, tax position, goals & objectives and estate planning. I then work with my clients to help them determine their financial goals and objectives in short, medium and long term. I create a financial forecaster assessment that quantifies my clients ability to meet their goals and objectives given their current financial realities with varying growth assumptions. I believe this is an important tool in determining how much risk NOT to take and establishes baseline investment parameters. I believe this holistic approach allows me to make unique and tailored investment recommendations.

Risk Management

In most cases, the ability of my clients to achieve their intended financial objectives relies on their ability to earn an income. I work with my clients to help ensure the sustainability of income in the event of a disability or critical illness. Using an innovative array of products designed for families, business owners and professionals. I can help mitigate the financial impact in the event of an unexpected medical event.

Estate Planning

I work with families, business owners and professionals to build an estate plan to help ensure their financial matters are distributed the way they would like them to be after their death. It can also help reduce taxes, so more of the estate is left for heirs.

Insurance Solutions

Unexpected events can leave your family without the cash flow needed for day-to-day expenses. I offer a range of products that can provide temporary or permanent coverage to replace your income, fund expenditures that arise due to a death (ie. taxes or final expenses). I can help determine your needs and decide which insurance product solution is best for you.

However, there are other features of life insurance that benefit families, business owners and professionals depending upon their current and long term financial positions. I provide three basic insurance solutions to my clients.

  • Insurance needs over time
  • Alternative investment vehicle for fixed income
  • A strategy for corporate asset efficiency
  1. Temporary and permanent needs over time

Life insurance meets different needs at different stages of your life. You should update your coverage to reflect important events in your life.

  1. Insurance as an alternative investment asset class for taxable fixed income

The major advantage of using life insurance (permanent participating) as an alternative asset class is:

  • Tax advantage on growth
  • Low fees
  • Asset protection
  • Estate tax reduction
  • Stable yields

Tax advantage life insurance products are structured such that a certain amount of life insurance is purchased to ensure that the policy will qualify under the MTAR rules and therefore remain an exempt policy, while at the same time providing the maximum amount of tax advantage income accumulation.

Depending upon client circumstances, funds can either be used to provide an income stream during their lifetime (living benefits) or enhance the value of their estate upon their death.

  1. A strategy for corporate asset efficiency

Save it – Redirect your company’s excess cash from taxable investments to tax advantaged permanent insurance. Growth inside the policy is not eroded by income tax, within prescribed limits. Save on taxes to keep more money working for you.

Spend it – Access the policy’s accumulated cash value by using the policy as collateral for a line of credit. Use loan advances to provide your business or yourself with a stream of income.

Leave it – At death, the policy’s death benefit pays off the loan. The full death benefit payable to your company (less adjusted cost basis, if any) is eligible for distribution to shareholders – including your successors or heirs – as tax-free dividends.

 

The Team Behind Your Financial Security Plan

My support team consists of specialists in:

–       Retirement and investment –       Living benefits
–       Life insurance –       Employee benefits
–       Banking and mortgages –       Tax and estate planning

 

Choice of Participating Life Insurance Dividend Options

Your participating life insurance dividend options give you considerable flexibility now and in the future. You can use your dividends to:

  • Buy additional insurance, on a tax-advantaged basis, without evidence of insurability
  • Lower your out-of-pocket premiums

This means you can choose how to balance affordability today and growth tomorrow. Historically, dividend scales increase and decrease over the life of a policy. Keep this in mind as you consider these dividend options. The reduced example in the life insurance illustration shows you the effect of a decrease in the dividend scale on the non-guaranteed values. Actual proportions for paid-up additions and Econolife vary by such factors as age, risk class, amount of life insurance, out-of-pocket premium payments and declared dividends.

Paid-up additions

With this dividend option, you use your dividends to buy additional, fully paid-up life insurance. Here are some advantages of paid-up additions:

  • Your coverage increases annually, with no need to prove insurability. This gives you a way to offset inflation, so your coverage doesn’t erode over time.
  • You buy the additional coverage on a pre-tax basis. Dividends used immediately to pay premiums in the same policy don’t incur income tax.
  • Paid-up additions generate further dividends, similar to your base policy.
  • The cash value of your paid-up additions, once credited to your policy, is vested and cannot be reduced or used in any way without your authorization, other than to pay premiums. Most contracts allow dividends, including those already applied, to be used to help keep the policy from lapsing if a premium is unpaid, for example by the use of an automatic premium loan.

Econolife

With the Econolife dividend option, you use your dividends to buy a combination of permanent life insurance and term life insurance. This gives you access to the coverage you need today, at a very affordable price. Econolife coverage offers these advantages:

  • You buy the Econolife term life insurance with pre-tax dollars. Dividends used immediately to pay premiums in the same policy don’t incur income tax.
  • In years when your dividend is larger than the cost of the Econolife term life insurance, some of the dividend buys permanent paid-up life insurance. Over time, this permanent life insurance can completely replace the temporary life insurance. After that, your death benefit begins to increase. You can use Econolife to strike a balance between affordability today and growth in cash value and death benefit tomorrow.
  • You can convert the temporary Econolife term life insurance component to a separate permanent policy any time before reaching age 65.

Econolife gurantee

  • With the Econolife guarantee (lifetime or 10-year), if your current dividends can’t pay for the Econolife term life insurance, London Life won’t ask for extra out-of-pocket premiums or surrender existing dividends to cover any shortfall while the guarantee is in effect.
  • If the guarantee expires or is forfeited, you may need to make additional premium payments to pay for any shortfall, or reduce your Econolife coverage.
  • Some options will end or forfeit the Econolife guarantee. If you use dividends for a Premium Vacation or withdraw them from the policy, the Econolife guarantee ends. Policy loans don’t affect the Econolife guarantee.
  • If the dividend scale increases, permanent paid-up insurance can replace the Econolife term life insurance even faster.

Accumulation

With this dividend option, your dividends accumulate with interest. The accumulated amount increases the death benefit. The interest rate is adjusted from time to time and interest is credited on each policy anniversary.
Interest on the accumulated dividends is taxable. Some or all of the dividends may be taxable.

Cash payment

With this dividend option, you take your dividends in cash. Some or all of these dividends may be taxable.

Loan reduction

With this option, you apply your dividends to any outstanding policy loan. Other uses for dividends

Premium Vacation

With the Premium Vacation option, you use current and accumulated dividends to pay some or all of your premiums, rather than paying them out of pocket. This flexibility is useful if you have a short-term need for cash, like a career change, tuition or new mortgage, or a long-term need like retirement. It’s a convenient way to balance your cash flow with your need for continuing coverage.

Premium Vacation relies on the dividends earned and retained in your policy. Over the life of the policy, increases and decreases in dividends affect how much is available to pay premiums, how much of each premium you can pay with dividends and how long you can take a Premium Vacation.

Cash payout

With this dividend option, you withdraw dividends to take advantage of an opportunity or meet cash flow needs. This reduces the policy’s death benefit and cash value. Policy illustrations demonstrate how this works.

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Policy illustrations

I can provide an illustration to show how your policy works. It shows which values and benefits are guaranteed and how dividends affect the growth of non-guaranteed values and benefits, depending on your dividend option. The illustrated growth of non-guaranteed values and benefits assumes the dividend scale continues unchanged over the life of the policy.

While policy illustrations are useful, the illustrated dividends aren’t guaranteed and aren’t an estimate or prediction of future performance. To better understand the sensitivity of the policy values to changes in dividends, compare the illustration’s primary example to its reduced example. For more information on policy illustrations, ask me for a copy of Your guide to life insurance illustrations.

Choice of additional benefits

You can customize your participating life insurance policy by adding a variety of optional benefits. Consult your policy for full details of your benefits. These descriptions cover the main points.

Supplementary term life insurance

You can add term life insurance to the total coverage, without paying the annual policy fee for a separate policy. This is useful if you need additional coverage and affordability is an issue or the need is temporary. This term life insurance is renewable, and the renewal premium rates are guaranteed. You can convert this temporary life insurance to permanent life insurance from London Life.

This conversion option expires on the date shown in your policy.

Total disability waiver of insurance

London Life pays the premium in the event of the insured person’s total disability as defined in your policy.

Premium waiver insurance

In the event of death or disability, as defined in your policy, of the person with premium waiver insurance (usually the premium payor), London Life waives all future premiums, to the end of the specified period. An alternative option simply covers the death, but not disability, of the person with premium waiver insurance.

Accidental death insurance

If the insured person dies as a result of an accident, as defined in your policy, this benefit provides additional insurance. The accident must occur before the policy anniversary when the insured person turns 70.

Guaranteed insurability benefit (GIB)

This benefit gives you the right to buy additional life insurance at certain future dates, without evidence of insurability. You can exercise this option up to two years before or after each option date. The new policy can be for permanent or term life insurance from London Life, subject to administrative rules then in effect.

Where to get more information

  • You can find out more about London Life participating life insurance by calling me (519-860-4223). You can also ask me for an updated policy illustration.
  • Each year on the anniversary of your policy, you receive a statement that updates you on the status
    of your policy.
  • If you have a question about your policy or would like a copy of the most recent London Life
    participating life insurance financial facts (form 41-4031), call the client service centre at 1-877-566-5433.
  • Visit us on the Internet at www.londonlife.com.

Notes:

  • Performance data is provided for illustrative purposes only and represents past performance, which is not necessarily indicative of future performance.
  • The tax information in this guide is based on Canadian legislation at the time of printing and is subject to change. This information is of a general nature only. For further information, discuss the tax implications of your policy with your accountant or tax advisor

Flexibility of a Participating Life Insurance Policy

Choice of basic participating life insurance policy

All three of these basic policies give you permanent life insurance protection. The policy doesn’t terminate at a certain age, as long as you pay premiums as described in the policy.

20-Pay Life

This policy gives you lifetime protection with premiums payable for 20 years. After that, your basic coverage is fully paid up and no further premiums are due. 20-Pay Life gives you the highest early cash surrender values, compared to the other two products. It also gives you excellent long-term cash value and growth of the death benefit.

Life Premiums to 65

This policy gives you lifetime protection with premiums payable to age 65. After that, your basic coverage is fully paid up and no further premiums are due. Life Premiums to 65 is available for issue ages up to and including age 45.

Jubilee Whole Life

This policy gives you lifetime protection with premiums payable to age 100. This popular policy gives you the lowest annual premium of the three basic policies.

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Choice of death benefit

The death benefit is the money a beneficiary is eligible to receive on the death of the insured person. Jubilee Whole Life and 20-Pay Life are available as single- or joint-life protection. Life Premiums to 65 is available only as single-life protection.

Single life

The policy insures the life of one individual. The death benefit is payable when the insured person dies.

Joint first-to-die

The policy insures the lives of two individuals. The death benefit is payable when the first insured person dies. Depending on risk, class and age, the policy may include other features, such as:

  • Exchange option – You can exchange the original policy for two single-life policies, each up to 60 per cent of the original death benefit, for any reason during the first five years. There are some limitations after five years.
  • Interim insurance benefit – If both insured people die within 60 days of each other, there’s an additional death benefit payable.
  • Survivorship option – The surviving insured person can purchase insurance, within 60 days of the death of the first insured person, without evidence of insurability.

A joint first-to-die policy lets you cost-effectively:

  • Replace income
  • Insure a mortgage
  • Fund a buy-sell agreement for a business

Joint last-to-die

The policy insures the lives of two individuals. The total death benefit is payable only when the second insured person dies. This means you shouldn’t buy a joint last-to-die policy if you need the funds on the first death. A joint last-to-die policy usually costs considerably less than two single-life policies.

There are two types of joint last-to-die policies:

  • Pay premiums to the first death
  • Pay premiums to the last death

You can use a joint last-to-die policy to:

  • Pay taxes on the last death
  • Preserve your estate for your heirs
  • Give a gift to your favourite cause or charity

Value of Participating Life Insurance

Here is more information on the key components that determine the value of your participating life insurance policy.

Policy cash values

The cash value of your policy is composed of guaranteed cash values, as stated in your policy, plus non-guaranteed cash values generated by dividends credited to your policy. If you surrender your policy, you receive the total cash value, less any indebtedness.

Investment performance for the long term

Participating life insurance is, first and foremost, life insurance. However, the investment performance of the participating account is an important component in the long-term value of your policy. The participating account assets are managed by London Life’s investment division. This is the experienced group of professionals who manages assets for London Life. The assets in the participating account include publicly traded government and corporate bonds, residential and commercial mortgages, corporate lending, real estate, equity-related investments, short-term investments and policy loans. The investment returns associated with the participating account are reflected in the dividend scale through the dividend scale interest rate. Historically, even during times of rapid economic change, the participating account’s dividend scale interest rate has been relatively stable.

The high quality of investments, and the long-term investment strategy help stabilize the variation in the investment returns used to determine policyowner dividends.

London-Life

If you’re looking for life insurance built on a foundation of guaranteed values with an established history of proven performance, London Life participating life insurance may be right for you.

London Life participating life insurance policies have an excellent track record of
investment performance.

As with any financial vehicle, a small change in investment returns can have a significant long-term impact on the dividends, values and features in your policy. To better understand this sensitivity for your specific policy, refer to the policy illustration your financial security advisor gave you and compare the reduced example to the primary example.

For more information on the investment returns of the participating account, ask your financial security advisor for a copy of London Life participating life insurance financial facts.

Increasing life expectancy

This is a unique feature of participating life insurance. As people live longer, positive mortality experience is passed to policyowners through dividends. In general, every decade of the last century has shown continuous mortality improvement based on data from Statistics Canada. Each year we review our mortality experience and take it into account in determining policyowner dividends.

Expense management

London Life has the largest Canadian participating account, as measured by assets. This provides economies of scale for expenses and investments. Expense management focuses on controlling expenses for the benefit of participating policyowners and shareholders.

Dividends

One of the unique benefits of participating life insurance is the opportunity to earn policyowner dividends. As a participating policyowner, you benefit from the success of the pool of participating policies, through the receipt of policyowner dividends. Dividends are not guaranteed and vary up or down from those illustrated, depending on future dividend scales. The dividend scale is affected by investment returns, mortality experience, expenses, taxes and other factors associated with the participating account.

The dividends credited to your policy have a cash value. Once credited, this cash value is vested and cannot be reduced or used in any way without your authorization, other than to pay premiums. Before the first dividend is credited, the premium due on the first policy anniversary must be paid. A policy loan, including a premium loan, doesn’t reduce your dividend. Your policy continues to receive dividends as if the loan didn’t exist. Any outstanding loan, including interest, is repaid from the cash value if you surrender the policy, or from the death benefit when the insured person dies. When determining the net cost of your policy, you should consider both the premiums charged and the dividends returned over time. The philosophy behind London Life participating life insurance is to provide participating policyowners with life insurance at a cost that takes into account the long-term performance of the participating account.

Strength of London Life

Life insurance is a promise that may not be put to the test for 30, 40, 50 years or more. This means the long-term financial strength and claims-paying ability of your insurance company are vitally important.

  • London Life – a vital Canadian business since 1874
  • London Life has helped Canadians meet their financial security needs since 1874.
  • London Life has distributed policyowner dividends, providing value to its participating policyowners, every year since 1886. The participating account has experienced more than a century of sound management, and that dependable management approach still applies.

London Life is a subsidiary of The Great-West Life Assurance Company. Together, Great-West Life and its subsidiaries, London Life and Canada Life, serve the financial security needs of more than 12 million people across Canada. Great-West Life, London Life and Canada Life are members of the Power Financial Corporation group of companies.

Participating Life Insurance at a Glance

London Life participating life insurance gives you a foundation of guaranteed values and tax-advantaged growth. It also gives you the opportunity to receive policyowner dividends, based on your participation in a pool with other participating life insurance policies. It gives you stability and flexibility in a permanent life insurance solution.

Foundation of guaranteed values

  • Guaranteed premiums
  • Guaranteed death benefit
  • Guaranteed cash value

Tax-advantaged growth

  • Cash value grows on a tax-advantaged basis.
  • The death benefit is not subject to income tax.

Strength of London Life’s participating account

  • Largest participating account in Canada, as measured by assets
  • Long track record of stable investment returns
  • Strong history of dividend payments

Choices to match your needs

  • Fund your policy in 20 years or pay premiums to age 65 or age 100.
  • Use your policyowner dividends to buy more insurance, reduce premiums or take a Premium Vacation™.
  • Access your cash value through policy loans.
  • Select from a wide range of riders and benefits.

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How participating life insurance works

  • When you purchase participating insurance, the premiums you pay go into an account called the participating account, together with funds from other London Life participating policies.
  • To determine your guaranteed premiums, guaranteed cash values and guaranteed death benefits, London Life uses long-term assumptions for factors such as investment returns, mortality, expenses, lapses and taxes.
  • If the actual and expected future results in the participating account are collectively more favourable than the assumptions supporting the guaranteed values, earnings are generated and become part of the participating account surplus (retained earnings).
  • Each year, London Life may distribute a portion of the earnings as participating policyowner dividends, as approved by the board of directors.
  • Surplus is held in the participating account to maintain the strength and stability of the participating account into the future.

Value, strength and choice

Each section of this guide deals with an aspect of participating life insurance that clients have identified as important. Here’s an overview of each section.

Value of participating life insurance

In this section you learn about the key components that contribute to the performance of your policy, the long-term benefits and the cost of your coverage. You also learn how you and over one million other participating London Life policyowners share in the results.

Strength of London Life

In this section you learn about the company that stands behind your participating life insurance coverage. It’s important to select a strong company and a strong participating account. Here you learn about London Life’s strength and stability over the long term.

Choice and flexibility

In this section you learn about the different features and options that are available to tailor your coverage to your specific needs. Participating life insurance is not one-size-fits-all. You can choose how you want to balance affordability with future growth and flexibility. You can combine permanent and term life insurance to meet long- and short-term needs.

I can help you make the best choices to meet your needs and goals.