Frequently Asked Questions
AFC is an independent firm providing a bridge between its clients and financial institutions.
Whether it’s the risk of running out of time, running out of health, or running out of income–attention needs to be given to planning ahead! The financial security of families and businesses depend on it!
We often hear of the frustrations with the impersonal, template approach employed by larger institutions. Many are pleased there is an alternative!
This is the greatest financial concern of retirees as they get older. While government programs may be sustained—the continuation of personal income requires planning. The solutions include segregated funds, annuities, and other concepts such as the cash wedge.
Although we often think of life insurance as a necessity for young families, many are not aware of the effective role it can play in retirement. Its uses include:
- readjustment fund for surviving spouse
- tax effective transferring of wealth to heirs
- payment of taxes on death (last spouse) on capital property/registered assets
- support to charitable interests
- the “insurance” element in an Insured Annuity
There is no answer for everyone—but it can be advantageous to roll these funds into a personal program to consolidate retirement assets. This streamlines planning and the conversion to retirement income. There are also issues concerning locked-in funds. Affirmative has the experience and tools necessary to re-position these funds so as not to trigger a taxable disposition.
There is normally no tax payable on proceeds from a life insurance policy at death. The cash value accumulation within the plan can also be paid tax-free at death–which is powerful as the growth on those accumulations are often tax-deferred during the life of the insured. There are limits set by legislation as to how great the cash value can be. We like to say, “The larger the insurance bubble–the larger the investment bubble.”
Leveraging opportunities are available with proper planning as well. We have coined it the “Tax Triple-Play”–tax deferred accumulations followed by tax-favoured income and finally tax-free proceeds at death (part of which settles the leveraging arrangement). Naturally, the “Triple-Play” is not for everyone but can be a powerful addition to a retirement income plan.
Everyone seems to have a horror story of how an “estate trap” complicated life and strained relationships–sometimes causing financial hardship! Properly structured insurance and investment products with Life Insurance companies can be great tools in loosening the trap. An estate may be large–but delays and disputes can rob its effectiveness. A pie is not only judged by its size, but also by its taste!