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The Benefit Specialists Corp. is more than willing to answer any questions you or anyone you know may have had. If you know someone who has questions regarding the insurance industry or anyone who wants to join our mailing list please contact me, or forward this email to them and get them to click the join our mailing list button below.
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A Health Spending Account (HSA) is an innovative way
to complement your group benefit plan. HSAs provide the
ultimate blend of flexibility and cost containment, while enabling
your employees to pay for medical and dental expenses not
otherwise covered by your plan-with non-taxable dollars. Offering
an HSA to your employees not only helps maintain a healthy,
productive workforce, but gives you an edge for attracting
and retaining high-calibre employees.
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For .62 cents a day, your employees can prepare their wills, obtain unlimited phone consultations, 3 letters or phone calls per quarter, 5 (10) page documents reviewed, emergency access if arrested or detained and preferred member discount for complex issues.
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Join Our List
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Changes to taxable Long & Short Term Disability Plans
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Effective January 1, 2015, Canadian group insurers will begin to update how taxable long-term and short-term disability plans are administered, to align with new requirements outlined by the Canada Revenue Agency (CRA).
- The CRA now requires that benefits paid from these plans be taxed at the source using payroll tax tables and basic personal exemption amounts. Previously, plan sponsors or plan members could select other options for withholding tax such as a specific amount or percentage, or defer them until annual taxes are filed.
- Beginning January 1, 2015, plan members receiving taxable disability benefits that do not have income tax deducted at the source may begin seeing a lower net disability benefit payment as a result of the tax withholding.
- If a member selected a flat tax amount or percentage the withholding tax will be changed to align with the applicable payroll tax tables. This may result in a change to the member's benefit payments.
- For Quebec members, provincial income tax has always been deducted from the disability benefit payments prior to being issued; however, federal income tax will now be deducted based on the CRA requirements
As information is announced by your group's insurance carrier(s), it will be forwarded to your attention. In the interim, if you have any questions about this change, please contact your insurance company representative.
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The Cascading Life Insurance Strategy
Ken Doll - Wealth Architects Inc.
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A Lifetime Gift for your Grandchildren
If you are a grandparent wishing to provide an asset for your grandchildren without compromising your own financial security you may want to consider an estate planning application known as "Cascading Life Insurance" that will generate:
* Tax deferred or tax free accumulation of wealth;
* Generational transfer of wealth with no income tax consequences;
* Avoidance of probate fees;
* Protection against claims of creditors;
* Providing a significant legacy.
Under the Cascading strategy a grandparent would purchase an insurance policy on his or her grandchild and fund the policy to create significant cash value. The fact that the cost of life insurance is lowest at the younger ages allows the grandparent to establish a significant plan that allows the cash value or investment fund in the policy to grow tax deferred. The grandparent would own the policy and name their adult child as contingent owner and primary beneficiary. When the grandparent dies their adult child now becomes the owner of the policy.
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Let's consider an example of the Cascading Life Insurance Strategy. Grandpa Brian is 65 and has funds put aside for the benefit of his grandson, Ian. He purchases a participating Whole Life policy on Ian for an annual premium of $5,000 for the next 20 years. Brian's daughter, Kelly is named as contingent owner in the event of Grandpa Brian's death and beneficiary in the event of Ian's death. If Grandpa Brian were to die at age 85, the policy now passes to Kelly with no tax consequence. The cash value of the policy (at current dividend scale) at that time is approximately $ 154,000 and the death benefit of the policy is approximately $800,000.
As a result of Grandpa Brian's legacy planning, Grandchild Ian, now age 31, has a significant insurance estate that will continue to grow with no further premiums!
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In summary, what are the benefits of the Cascading Life Insurance Strategy?
- The funds have skipped a generation with no income tax consequence to the grandparent or the estate. (This is due to a provision of Section 148 of the income tax act which states that the transfer of a cash value life insurance policy from a grandparent or parent to a child or grandchild is not subject to income tax).
- There are also no probate fees to be paid.
- Both the cash value and death benefit receive preferential treatment in protection against the claims of creditors.
- The parents can access the cash value through withdrawal or loan which could be used to pay for their child's expenses such as education costs. (Withdrawal of cash value may have tax consequences).
- It's provides a cost effect way for grandparents to provide a significant legacy.
If you feel that this concept could be of value to you or someone you know, please call me. I would be happy to provide you with further information specific to your situation.
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The information contained in this bulletin is for general information purposes only. The articles published in this bulletin have been collected by The Benefit Specialists Corp. (TBSC) and we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability or availability with respect to the information, products, services, or related graphics contained. Any reliance you place on such information is therefore strictly at your own risk. In no event will we be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits out of, or in connection with, the use of the information contained in this bulletin. Through this bulletin you are able to link to other websites which are not under the control of TBSC. We have no control over the nature, content and availability of those sites. The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them. |
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Sean Murray
The Benefit Specialists Corp.
sean.murray@beneco.ca
(403) 547-5236
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