Excerpts from the Book – Preserving Wealth – written by Jack Lumsden, MBA, CPA®
How much Life Insurance do we need?
“ A common rule is the amount of life insurance you need is linked to the amount of capital it would take to:
- pay off all your debts
- provide for your children’s education
- pay your final taxes, including capital gains taxes
- provide enough income to comfortably support your dependents when the remainder is invested; and
- create a legacy for your family and/or for a favourite cause or charity.
What you have to remember is that you’re not really insuring a life, but rather the income that the life would have produced.”
What was about capital gains taxes?
“When someone dies, Revenue Canada assumes that he or she has sold all their assets at fair market value the day before the actual date of death. So, if an applicable non-registered asset has increased in value from its purchase price, it is deemed to have produced a capital gain. Fifty percent of all capital gains are taxable upon the individual’s death, and those capital gains taxes are included as part of the person’s final tax bill. However, please remember that this does not apply to a spouse, as assets can be rolled over to a spouse tax-free. Sometimes this is called a spousal rollover.”
What is the difference between a term and a permanent life insurance policy?
Term Life insurance is like renting, and permanent life insurance is like buying a home. So, for shorter-term needs, you use term life insurance, and for longer-term or permanent needs, you use permanent life insurance.
There is more to know and understand when it comes to protecting your family, for example, a non-profit compensation organization that protects policyholders in the event a life insurance company fails. RRSPs, Critical Illness Insurance, Disability Insurance, and the book Preserving Wealth gives some great illustration in a story format that is easy to comprehend.
For more information on Protecting Your Family, you can refer to Chapter 5: Protecting Your Family, from the book Preserving Wealth: The Next Generation, The definitive guide to Protecting, Investing and Transferring Wealth by Jack Lumsden, MBA, CFP®
For your FREE Copy, CLICK HERE
This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources; however, no warranty can be made regarding its accuracy or completeness. Before acting on any of the above, please make sure to see me for individual financial advice based on your personal circumstances. The information provided is for illustrative purposes only. Commissions, trailing commissions, management fees and expenses may all be associated with mutual fund investments. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated. Please read the Fund Facts and consult your Assante Advisor before investing.
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