Windrem Financial Group Inc.

You may think of life insurance as straightforward coverage – something to help cover final expenses at death. While that's true, there may be more costs to consider than just final expenses. If you want to pass assets on to heirs or charities at death, there may be taxes owing. This may be a tax bill your heirs or charities weren't expecting.

"You Have a Will, But Do You Have a Way?" helps make you aware of potential taxes that may have to be paid, impacting the legacy you plan to leave to heirs or charities. It shows how the proceeds of a participating life insurance policy could be used to cover possible taxes owing upon death. To watch the video click here.




 When considering Estate Planning goals, you will need to consider the three beneficiaries that you have:

  1. Your family or close friends
  2. Your favorite charity(ies)
  3. Canada Revenue Agency

There are various Estate Planning tools that you can use to meet your Estate Planning objectives.

Life Insurance:

One of the most popular tools, which is also one that is often misunderstood, is life insurance.  We have provided some basic details regarding the different types of insurance you may consider when considering the tax planning strategy for your Estate Plan.

Term Insurance:

Term life insurance is temporary, low-cost coverage where your payments stay the same for a set period of time also known as the TERM.  When the TERM is up it automatically renews; however, the rates increase based upon your attained age and lock in for the new TERM.  Or you may have the option to convert ther term insurance to permanent life insurance without having to answer further health questions.

Permanent Insurance (Whole Life & Universal Life):

Permanent life insurance as compared to term insurance provides you with added security because it lasts a lifetime as long as you continue to make premium payments.  Permanent life insurance costs more than term insurance in the short term, but can accumulate money on a tax-shletered basis inside your insurance policy over time (called Cash Surrender Value), which you may be able to access while you are still alive.

Whole Life:

Whole Life is Permanent insurance which provides coverage for an individual's whole life, rather than a specified term.  A savings component, called Cash Surrender Value or Loan Value, builds over time and can be used as a tax-preferred wealth accumulation vehicle.  Whole life is the most basic form of cash value life insurance. The insurance company essentially makes all of the decisions regarding the policy and the investments held within the policy.  Regular premiums both pay insurance costs and cause equity to accrue in a savings or accumulation fund.  The policy will pay out upon death either a fixed death benefit or increasing death benefit based upon the dividend option selected and is paid to the beneficiary indicated in the policy.

Universal Life:

Universal Life Insurance is insurance which combines low-cost protection of term insurance with a savings component that is invested in a tax-deferrred accumulation account.  The idea is to purchase Term and Invest the Difference within the  policy.  The cash surrender value of this policy may be available for redemption directly from the policy or as a policy loan to the policy holder.

Universal Life was created to provide flexibility by allowing the policy holder to shift money between the insurance and savings components of the policy.  Additionally, the inner workings of the investment process are openly displayed to the policy holder, whereas details of Whole Life investments are calculated through a complex formula based  upon the profitability of the particular policies and the profits are distributed back to the policy holders through dividends.

With the Universal Life insurance, premiums may be variable and are broken down into the insurance and savings component.  Therefore, the policy holder can adjust the premium and choice of investment based on economic and market conditions.  As well, if investmente returns are lower, then the accumulation fund can be used to pay future insurance premiums instead of injecting more money into the policy.

The excess tax-preferred accumulation can be used to increase the death benefit. Unlike with Whole Life, which investments grow based upon the companies choice of investments, the cash value investments within the Universal Life policy grow at a variable rate that is adjusted monthly depending upon the underlying investments.  However, there is often a minimum rate of return associated with some of the investment choices.  Having multiple investment  options within the Universal Life policy allow the policy holder to take advantage of rising interest rates and market investment returns. The danger that exists within the Universal Life policy is that falling interest rates or poor investment returns may result in the need to increase premiums or even cause the policy to lapse if the accumulation fund is no longer adequate to pay the insurance costs.  Therefore, designing a prudent investment selection is imperative.

For a more details regarding life insurance options Click Here: Insurance Plain Talk 

Windrem Financial Group Inc.

Many people nearing retirement are giving some serious thought to how they are going to manage in retirement. There are several retirement risks that need to be addressed so that your retirement will not create anxiety. This is a topic that we are very familiar with. Let us help you build the plan so that you know you will have enough to last your lifetime. For an overview of the some of the details and also some scenarios to consider, please click here.




When looking at your retirement plan you will need to understand the different kinds of accounts that you may require to achieve your specific retirement goals.  Below you will find a brief definition of the various different types of accounts that may be used, although these are no means an exhaustive list:

Non-Registered (OPEN):

An open account is a non-registered investment account. You pay income tax on the income earned throughout the year (ex: dividends, interest, capital gains, etc.).  When you sell your investments you could possibly pay a more tax-preferred capital gains/ losses on the sale of the investments.

Tax Free Savings Account (TFSA):

A TFSA is a registered investment account.  It allows you to contribute after-tax money and invest it where the growth and income is tax free.  There is no up front deduction for the contribution.  As well, there is no tax payable on the income while the investments are held inside the TFSA as well as no tax payable when the money is redeemed from the TFSA.  Each year there are limits on how much you can contribute to a TFSA and CRA penalties for over-contributions.

TFSA's have the greatest benefit when an individual has a lower income during the working years and will have a higher income in retirement or where you are able to move money to a lower income spouse.

Registered Retirement Savings Plan (RRSP):

An RRSP is a registered investment account.  It allows you to contribute with pre-tax money and invest it where the growth and income is tax deferred until it is later withdrawn.  When you contribute to an RRSP you receive a tax deduction based upon the amount contributed and your Marginal Tax Rate.  Contributions made in the 1st 60 days of the calendar year may be applied to the previous year's tax return or used in the current year's tax return.  When you withdraw money from your RRSP, the full amount of the withdrawal is added to your income for tax purposes (treated like employment income).

RRSP's have the greatest benefit when the individual has a higher income during the working years and will have a lower income in retirement or where you are able to contribute to a Spousal RRSP. 

Registered Retirement Income Fund (RRIF):

A RRIF is a registered investment account.  Essentially a RRIF is a matured RRSP as prior to the end of the year you turn 71, you must roll your RRSP into a RRIF.  A RRIF is very similar to an RRSP as the money that remains within the RRIF continues to accumulate on a tax deffered basis; however, the RRIF is a vehicle that provides an income stream where minimum withdrawals are required.  The amount of the withdrawal can be anywhere from the minimum withdrawal amount to a full redemption.  When you withdraw money from your RRIF, it is added to your income for tax purposes similar to an RRSP.

Individual Pension Plan (IPP):

An IPP is a registered investment account for business owners similar to an RRSP.  It is a Defined Benefit Pension Plan.  It allows the corporation to make contributions to the owners or employees investment account.  The contributions are tax deductible to the corporation.  The growth and income grows on a tax deferred basis in the hands of the owner or employee and tax is only payable when the money is later withdrawn from the account similar to an RRSP.  One significant benefit for older owners or employees is that contribution limits are higher for an IPP than an RRSP and the IPP allows for past service contributions as well.  Click Here: Individual Pension Plan Details

Family Pension Plan (FPP):

A FFP has the same benefits an IPP; however, it allows for more than one family member to be part of the same pension plan as apposed to just one individual.  This creates a significant opportunity which enables the transfer of tax deferred assets from one generation to another without triggering tax on the death of the primary beneficiary.  This is a significant advantage as the RRSP or RRIF only allows the remaining assets to roll over on a tax deferred basis to a spouse who is the beneficiary.