Leave a Legacy by Using Your Life Insurance Policy
Whether you’re in your 20s or 40s, being a new parent is one of the most exciting and frightening events that can happen in one’s lifetime. In one fell swoop, you are suddenly completely responsible for another human being. Term life insurance can replace the income needed to cover bills, but it can also pay for hopes and dreams. You want to make sure your new bundle of joy will always be cared for, even if you aren’t around to do so. Like most types of insurance, you hope to never need it, but your loved ones will be thankful you planned for the unexpected.
Not to scare anyone, but $233,610 is the estimated amount needed to raise a child to the age of 18. Whether you are single or a couple, are a one-income or dual income household, this is a lot of money and it doesn’t include the cost of college. If you were to die prematurely, you need to have a back-up plan for your children. Term life insurance is that back-up plan and it can fit in most budget.
1. Term life insurance is affordable financial protection and it can be set up to provide enough money to:
- Allow your child to grow up in the home they know
- Pay for day care, school, and everyday needs
- Cover college tuition and their future dreams
2. Term Life Insurance is Easily Customized
The magic of term life insurance is that it can last as long as you need it to. You can purchase a policy to last only until your child reaches adulthood, or you could choose a longer term for additional protection. Most term policies are also convertible. Lifestyle needs change and you may decide you would like to have more than just a term policy. Having a conversion option means that if you decide you want permanent life insurance, you can convert regardless of your health as long as you convert before the deadline on your policy.
Life insurance is very customizable for your individual situation. While you have various term and permanent products available, you also have policy add-ons that can supplement a life insurance policy with more coverage. These add-ons are known as riders. Riders vary by insurance company and by policy, as do their workings and costs.
3. All Parents Need Life Insurance
If you’re a single parent, it is essential to have life insurance to protect your child. Some life insurance is better than none at all, and term life insurance is very affordable, especially if you’re young and healthy. If you are a couple, both parents should have life insurance. Even stay-at-home parents should consider life insurance. Stay-at-home parents may not provide income, but they save the family money by being a chef, teacher, daycare provider, housekeeper, and transporter. Not to mention all the boo-boos they heal every day.
3 Tips for Reducing Your Taxes before the Holiday Season
This time of year is hectic. At work and at home, we’re all busier than ever. But why not take advantage of this energy to take another look at your taxes and make sure you have effective strategies in place?
Andrei Tasevski, a financial planner in Mississauga with AWealth, has some ideas to help you do that by the end of the year.
Here are 3 tips for reducing your taxes before the Holiday Season:
1. Make a donation
Donating to a registered charitable organization entitles you to a tax credit. If you’re a first-time donor, you can get an extra 25% credit, but only if you make your donation by December 31, 2017.
You can also donate publicly traded securities that have appreciated in value to a charitable organization. You get a charitable tax credit and the capital gain is eliminated.
Why now? You’ll be helping someone in need and you’ll enjoy tax advantages!
2. Contribute to spousal RRSP
You can contribute to a spousal RRSP as long as your spouse is younger than the age of 71. You’ll keep enjoying the resulting tax deductions, if you still have contribution room and you can take advantage of income splitting in your retirement.
Why now? Contributing just before December 31 of each year makes it easier to respect the 3 year rule, so that the income will be taxed in your spouse’s hands and not yours.
3. Contribute to RESP
A Registered Education Savings Plan (RESP) is a gift to your child. Contributing to an RESP doesn’t give tax savings, but the federal government tops up your contribution 20% in Ontario. That’s the amount of the grant that can be paid to children up to and including the year the beneficiary turns 17. Also, if you open an account with Industrial Alliance, you are entitled to additional 15% bonus.
Why now? In order for a child to receive grants up to age 17, the RESP must be opened by December 31 of the year in which the child turned 15. The contributions must total at least $2,000 or contributions of at least $100 a year must be made in any 4 previous years.
Enjoy the Holidays!
5 What is my RRSP Contribution Limit?
The month of March is fast approaching and a popular question is “What is my RRSP contribution limit”? On top of that, there are other questions surrounding RRSPs that require answers. I’ve compiled some answers to some of the more frequently asked questions around RRSPs.
1. When is the deadline?
February 28, 2018 is the deadline for contributions for the 2016 tax year, and that means the latest you can contribute is by the end of business day on March 1st. If you plan on contributing in person, be sure to check your financial institution’s hours that day so you don’t show up to find the lights out. There’s no pleading for an extension.
2. What is my RRSP Contribution Limit?
There are limits to how much you can contribute and financial penalties for contributing too much.
Your RRSP contribution limit for the year is the lesser of 18 per cent of your earned income for the previous year, or the maximum contribution amount for the current tax year: $26,010 for 2017.
However, you might be able to put in more than that if you have carry-forward room from past years when you didn’t contribute. You can find this information on your notice of assessment from the previous year and will want to know what that number is to avoid over-contributing.
If you don’t have the extra money around but have decided it is necessary to make the contribution, consider taking it from your TFSA [tax-free savings account] or other savings.
3. Should I consider borrowing?
If you don’t happen to have a small chunk of change in a savings account but want to contribute toward those tax-deferred, tax-sheltered savings, look at other options.
Some of the lowest cost borrowing available is for RSP contributions.
There’s an RSP loan and RSP line of credit, both of which tend to have very quick approval times.
4. How much should I invest into RRSPs?
When you’re scrambling to get a contribution in, it’s easy to overlook important details like your financial needs and goals, both short- and long-term. In an ideal world, contributions would be considered within a broader, comprehensive financial plan.
At this time of year, advisors and investors might not have the time to do a full risk and investment analysis to make a full investment recommendation. If you’re parking the money, be sure to follow up to ensure it gets invested properly.
5. Should I consider other investments?
Despite the benefits of having an RRSP, it’s possible it’s not the right savings vehicle for you. A TFSA may be a better option. Generally, low-income earners (less than $35,000) should look at tax-free savings accounts, since they’re not going to reap the advantages of the tax savings of RRSPs the way higher-income earners do.
Plus, in retirement, withdrawals from RRSPs and RRIFs can lead to clawbacks of Old Age Security and other government programs like the Guaranteed Income Supplement. “The lower the income, the more likely people will be recipients of those government income-tested benefits in retirement.
Reach out to the financial professionals in your life to see if it makes sense for you to contribute to an RRSP.
6. Are RRSPs right for me?
Remember that RRSPs are meant for the distant future.
You don’t want to put money into an RRSP only to have to dip into it two years later. If you have excessive existing high-interest consumer debt (such as credit-card debt) or you’re lacking an emergency savings fund, you may be better off eliminating or reducing that debt or directing your hard-earned money elsewhere.
Financial experts suggest having savings to cover at least three to six months’ worth of expenses on hand. If you have to withdraw from your RRSP, that money will count as income and you’ll pay taxes accordingly.
7. What kind of refund should I expect?
If you don’t happen to have a small chunk of change in a savings account but want to contribute toward those tax-deferred, tax-sheltered savings, look at other options.
We’ve run the numbers to see what kind of refund you can expect to pay if you’re a salaried employee with no company pension. These numbers were run based on Ontario tax rates and assume you have paid federal and provincial taxes all year long. They also assume you have made the maximum RRSP contribution of 18% of last year’s income for your salary level, or the maximum allowed, as in the case of the $150,000 earned income example.
| Annual earned income | RRSP contribution | Tax refund due |
| $50,000 | $9,000 | $2,356 |
| $80,000 | $14,400 | $4,360 |
| $120,000 | $21,600 | $9,376 |
| $150,000 | $25,370 | $11,301 |
Buy Life Insurance with Pre-Existing Conditions
Whether you’re in your 20s or 40s, being a new parent is one of the most exciting and frightening events that can happen in one’s lifetime. In one fell swoop, you are suddenly completely responsible for another human being. Term life insurance can replace the income needed to cover bills, but it can also pay for hopes and dreams. You want to make sure your new bundle of joy will always be cared for, even if you aren’t around to do so. Like most types of insurance, you hope to never need it, but your loved ones will be thankful you planned for the unexpected.
Not to scare anyone, but $233,610 is the estimated amount needed to raise a child to the age of 18. Whether you are single or a couple, are a one-income or dual income household, this is a lot of money and it doesn’t include the cost of college. If you were to die prematurely, you need to have a back-up plan for your children. Term life insurance is that back-up plan and it can fit in most budget.
1. Term life insurance is affordable financial protection and it can be set up to provide enough money to:
- Allow your child to grow up in the home they know
- Pay for day care, school, and everyday needs
- Cover college tuition and their future dreams
2. Term Life Insurance is Easily Customized
The magic of term life insurance is that it can last as long as you need it to. You can purchase a policy to last only until your child reaches adulthood, or you could choose a longer term for additional protection. Most term policies are also convertible. Lifestyle needs change and you may decide you would like to have more than just a term policy. Having a conversion option means that if you decide you want permanent life insurance, you can convert regardless of your health as long as you convert before the deadline on your policy.
Life insurance is very customizable for your individual situation. While you have various term and permanent products available, you also have policy add-ons that can supplement a life insurance policy with more coverage. These add-ons are known as riders. Riders vary by insurance company and by policy, as do their workings and costs.
3. All Parents Need Life Insurance
If you’re a single parent, it is essential to have life insurance to protect your child. Some life insurance is better than none at all, and term life insurance is very affordable, especially if you’re young and healthy. If you are a couple, both parents should have life insurance. Even stay-at-home parents should consider life insurance. Stay-at-home parents may not provide income, but they save the family money by being a chef, teacher, daycare provider, housekeeper, and transporter. Not to mention all the boo-boos they heal every day.
What is Term Life Insurance?
Whether you’re in your 20s or 40s, being a new parent is one of the most exciting and frightening events that can happen in one’s lifetime. In one fell swoop, you are suddenly completely responsible for another human being. Term life insurance can replace the income needed to cover bills, but it can also pay for hopes and dreams. You want to make sure your new bundle of joy will always be cared for, even if you aren’t around to do so. Like most types of insurance, you hope to never need it, but your loved ones will be thankful you planned for the unexpected.
Not to scare anyone, but $233,610 is the estimated amount needed to raise a child to the age of 18. Whether you are single or a couple, are a one-income or dual income household, this is a lot of money and it doesn’t include the cost of college. If you were to die prematurely, you need to have a back-up plan for your children. Term life insurance is that back-up plan and it can fit in most budget.
1. Term life insurance is affordable financial protection and it can be set up to provide enough money to:
- Allow your child to grow up in the home they know
- Pay for day care, school, and everyday needs
- Cover college tuition and their future dreams
2. Term Life Insurance is Easily Customized
The magic of term life insurance is that it can last as long as you need it to. You can purchase a policy to last only until your child reaches adulthood, or you could choose a longer term for additional protection. Most term policies are also convertible. Lifestyle needs change and you may decide you would like to have more than just a term policy. Having a conversion option means that if you decide you want permanent life insurance, you can convert regardless of your health as long as you convert before the deadline on your policy.
Life insurance is very customizable for your individual situation. While you have various term and permanent products available, you also have policy add-ons that can supplement a life insurance policy with more coverage. These add-ons are known as riders. Riders vary by insurance company and by policy, as do their workings and costs.
3. All Parents Need Life Insurance
If you’re a single parent, it is essential to have life insurance to protect your child. Some life insurance is better than none at all, and term life insurance is very affordable, especially if you’re young and healthy. If you are a couple, both parents should have life insurance. Even stay-at-home parents should consider life insurance. Stay-at-home parents may not provide income, but they save the family money by being a chef, teacher, daycare provider, housekeeper, and transporter. Not to mention all the boo-boos they heal every day.