SALEX Insurance Consultants
SALEX Insurance Consultants

Investments


As Canadian financial institutions evolve, the lines between banks, trust companies and insurance companies have blurred. The following financial products are available through life insurance companies:

  • RRSPs and RRIFs (Segregated Funds) – Segregated funds are similar to mutual funds in that they offer professional money management and fund diversification The term “segregated” refers to the separation of your investment from the general assets of the insurance company. As with mutual funds, segregated funds can be registered or non-registered.

  • RESPs – A tax-sheltered account that allows any individual to save for a child’s post-secondary education. Children up to the age of 17 are eligible for the Canadian Education Savings Grant. The amount of the grant is determined by the family’s annual income; between $500 and $600 annually and up to a lifetime maximum of $7,200.

  • Tax-Free Savings Accounts – a savings vehicle that allows for tax-free investment income. CRA allows an annual contribution of $5,000 for Canadian residents age 18 and over. Unused contribution room is carried forward and accumulates.

  • Guaranteed Investments – generally offer a minimum investment and pay a predetermined interest rate for a specified term. The interest rate and principal are guaranteed.

  • Annuities or Guaranteed Minimum Withdrawal Benefits – There are significant differences in these two products that should be discussed with your advisor. However, both products are generally pre-funded with monthly or annual contributions and result in a stream of income at a later date.

Investors should be aware of the unique benefits offered by life insurance companies in terms of their investments.

Guarantees

Investing in segregated funds through a life insurance company provides the investor with two guarantees. The first is a guarantee when a maturity period is reached and the second is in the event of death. Many insurers allow selection of guarantees; as different fees are incurred from these guarantees, it is important to discuss your options with an advisor.

Creditor Protection

Although incredibly important, many individuals overlook the significance of safeguarding their investment assets from creditors. In general, assets held within life insurance and annuity contracts are creditor protected provided that a beneficiary has been assigned to the policy – this includes segregated funds, RRSPs and term deposits.

Probate Protection

Investments held with a life insurance company transfer directly to the designated beneficiary that has been named. This allows the beneficiary to avoid the estate and probate process and can lead to significant savings in fees and time delays.

For any current investment holdings that are linked to the above vehicles, speak to a trusted advisor if you are interested in adding this extra protection to your investments. We will present you with all the industry wide options available to you, as well as managing and expediting the transfer process.