Life insurance is used to protect the financial security of the people you love most.
A life insurance policy pays a cash benefit, tax free, to your beneficiaries when you die. The amount of money for which you are insured and the type of insurance you buy depends on your needs.
People can get life insurance through work (some employers offer it through group benefits plans. This type usually ends when you come of the group plan) or they buy it on their own (usually from an insurance advisor).
There are 3 types of life insurance: term, permanent and universal.
Term Insurance Low cost, temporary protection for times of high financial risk. (e.g. when you have a mortgage)
Permanent Insurance Stable lifelong protection without the complexities of universal life. Over the long term, it offers generally a better financial choice than buying and renewing term insurance.
Universal Life Insurance A more flexible but intricate type of insurance that combines long term life insurance with an opportunity for tax-deferred savings.
Purpose of Insurance
The vision of quiet afternoons, leisurely vacations, and time to devote to your family and hobbies is more then enough of a reason to start saving for your retirement. And with careful planning, you should be able to live the way you want - both today and after retirement - without worrying about financial security.
Whether you're an individual investor or a business owner with employees, Deacon Kalata can guide you through the different retirement plans and help figure out what makes the most sense. And if your needs change after you've already enrolled in a plan, we can help you reevaluate your strategy. But first, start getting familiar with the options that are available to you.
Registered Retirement Savings Plan (RRSP) A Registered Retirement Savings Plan (RRSP) is a tax-deferred account designed specifically for retirement savings. Any resident of Canada over 18 and under the age of 71 who has earned income may establish and contribute to an RRSP. The objective is to provide individuals with an account into which they may contribute tax-deferred dollars that may be used for retirement.
Spousal Registered Retirement Savings Plan A spousal RRSP is an RRSP in which the plan holder's spouse makes contributions on behalf of the plan holder. The objective is to provide couples with a way to split income in retirement. Any resident under the age of 71 can be the plan holder. The contributing spouse can be older than 71, as long as the plan holder meets the latter suitability requirements.
Registered Retirement Income Fund (RRIF) A RRIF allows an investor to convert his or her retirement savings into retirement income. Any time before the end of the year you turn 71, RRSPs must be converted to RRIFs. There is a minimum annual withdrawal required each year based on the value of the RRIF and the plan holder's age (or spouse's age) at the beginning of the year the withdrawal takes place. The payments made to you from your RRIF are taxable, but the investment in a RRIF continues to grow tax-deferred until they are withdrawn.
Life Income Fund (LIF) If you leave a job where you had a pension plan, you usually have a choice between leaving the pension money in the pension plan or transferring it to a locked-in retirement account (LIRA) or locked-in RRSP, where it can be invested according to your directions until it's time to retire. Typically, the money is locked-in and cannot be withdrawn until you start retirement.
After a minimum age (set by your province) you can start to receive income from this pension money by converting it into a LIF or LRIF. (Depending on your province, you may have a choice between the two types of accounts. As well, there may be different rules affecting these accounts.)
The LIF or LRIF pays you an income. There's a maximum you can withdraw each year, which is intended to ensure that your money will last long enough to help support you in your retirement.
Tax-Free Savings Account (TFSA) The Tax-Free Savings Account (TFSA) is a flexible, registered general-purpose savings vehicle that allows Canadians to earn tax-free investment income to more easily meet lifetime savings needs.