INVESTING IN A LIFE INSURNACE COMPANY

The benefits of an insurance GIC*

*An insurance GIC is an accumulation annuity issued by a life insurance company

My disclaimer

• I am knowledgeable in Estate Planning techniques and concepts

• I Do understand the big picture and can help explain it

• I am NOT a tax expert

• I am NOT a legal expert

What we can learn today

1. Estate planning and probate

2. Understanding your intentions

3. Issues that can arise with your Estate

4. Understanding how an insurance company can help

Estate planning and probate

What is estate planning and how can it help?

• Estate planning is the anticipating and arranging for the distribution of an estate

• It can eliminate uncertainties

• It can help maximize the value of the estate

What is probate?

• administration of the deceased estate

• distributing property

How does a bank GIC work?

Bank GIC

Estate

Beneficiary

Problems going through your estate

1. Lengthy

2. Expensive

3. Public

Wouldn’t it be nice to skip the estate?

Assets

Estate

Beneficiary

What generally happens

House

Bank account

RRSP/RRIF

Non-registered assets

Passed easily to spouse

When the first spouse passes away...

What generally happens

When the second spouse passes away…

House Bank account

RRSP/RRIF

Non-registered assets

Sold - assets to the estate

Frozen - assets to the estate

Sold & taxed - assets to the estate

Sold & taxed - assets to the estate

What’s the solution?

Insurance GIC

Estate

Beneficiary

Bank GIC

Estate

Beneficiary

What is an insurance GIC?

* For more information, please visit www.assuris.ca

• Guaranteed interest investment

• Can only be offered by an Insurance company

• Similar to bank GICs but with perks

– Beneficiary designation available on both registered and non-registered investments

– Coverage from Assuris*

– Potential creditor protection

– Payout annuity option available

– Redeemable

– Pension tax credit

Case study

Aunt Susan wants to leave a gift behind for her favourite niece and nephew

GIC at her local bank for Steve

Insurance GIC at her life insurance company for Carol

Steve’s story

Notified of aunts passing & of GIC left to him

Day 1

Day 90

Estate has been assessed

Day 210

Details of the handling of the estate shared

Day 217

Will is contested

Day 365

Dispute is resolved and the estate is distributed

The timeline:

The cost: Bank GIC $50,000- Bank discharge $ 4,550- Probate fee $ 450- Executor fee $ 5,000

Steve’s inheritance $40,000

Time taken to

distribute inheritance

Time passed after

receiving inheritance

Carol’s story

Notified of aunts passing & of insurance GIC left to her

Day 1

Day 5

Carol contacts the insurance company & receives required form to complete

Day 14

Carol receives proceeds of the insurance GIC

The cost:

The timeline: Time taken to

distribute inheritance

Time passed after

receiving inheritance

GIC / AA$50,000 - Bank dischargen/a - Probate fee n/a - Executor fee n/a

Carol’s inheritance $50,000

The moral of our story

Steve

• Took 12 months to receive inheritance

• Only received $40,000 of the intended $50,000

Carol

• Received inheritance in two weeks

• Received full amount - intended $50,000

Insurance GIC

It all starts with this…

Estate

Beneficiary

Summary

Non-registered money with a life insurance company:

• Reduces estate costs

• Speeds up the process

• Goes to the beneficiary

• Provides more privacy

Questions

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