1. Achieving More Together Top 10 Insurance Planning Opportunities

2. Achieving More Together # 10 Risk Management

3. Achieving More Together Insurance planning opportunity # 10 Financial planning Planning Pyramid Investment management  Education  Retirement  Estate Risk management  Contingency fund  Insurance (life, health, DI, CI, home, auto)  Wills, POAs WEALTH PROTECTION

4. Achieving More Together Insurance planning opportunity # 10 Financial planning –Insurance to fund basic estate liquidity needs For example … –Final expenses –Estate administration –Debt repayment –Professional fees –Income continuation –Matrimonial obligations –Charitable bequests –Education trusts

5. Achieving More Together Insurance planning opportunity # 10 Financial planning –Insurance to fund basic estate liquidity needs What to look for … –Married couple or single parent under age 50 –One high-income spouse –Have not yet achieved financial independence –Dependent children –Personal debts –Charitable bequests in will

6. Achieving More Together # 9 Funding Business Needs

7. Achieving More Together Insurance planning opportunity # 9 Business planning –Business owners often have a significant amount of their net worth tied up in their business –The death of a business owner or key executive can impair the value of the business and create financial hardship for the deceased’s family and the surviving shareholders

8. Achieving More Together Insurance planning opportunity # 9 Business planning –Protect the business against the loss of an owner or key executive with insurance For example … –Funding shareholder agreements –Keyperson insurance protection

9. Achieving More Together Insurance planning opportunity # 9 Business planning –Protect the business against the loss of an owner or key executive with insurance What to look for … –Business can be at any stage in the business life cycle –More than one shareholder –Business loans –Owners or other key executives whose death would have a significant financial impact on the business

10. Achieving More Together Insurance planning opportunity # 9 Tony Joe Tax Corp Inc. 50% Agreement: Tony’s Estate must sell to Joe who must buy

11. Achieving More Together # 8 Funding Family Business Succession

12. Achieving More Together Insurance planning opportunity # 8 Business planning –Over 75% of current family businesses will have to deal with a change in leadership over next 15 years –Only one-third of family businesses survive the transition to the 2nd generation primarily because of a lack of planning, no qualified successors, and a lack of liquidity

13. Achieving More Together Insurance planning opportunity # 8 Business planning –Facilitate family business succession plans with insurance For example … –Fund capital gains taxes on the parent’s shares –Fund a redemption of the parent’s shares –Equalize the estate amongst the heirs

14. Achieving More Together Insurance planning opportunity # 8 Business planning –Facilitate family business succession plans with insurance What to look for … –Successful family-owned businesses –Business owner within 5 – 10 years of retirement –Business owner has a desire to plan for an orderly succession

15. Achieving More Together # 7 Shared interests

16. Achieving More Together Insurance planning opportunity # 7 Tax planning –Life insurance is a unique financial instrument –It is possible to split the ownership of a universal life insurance policy into the pure death benefit and the fund account –The growth in fund account values is tax-advantaged Fund Value Death Benefit Owner A Owner B

17. Achieving More Together Insurance planning opportunity # 7 Tax planning –Create a tax-advantaged fund account for business owners and executives by using a split-ownership arrangement For example … –Opco owns death benefit (buy-sell, keyperson protection) and business owner (or executive) owns fund account –Opco owns death benefit and Holdco owns fund account –Opco owns death benefit and RCA trust owns fund account –Parent owns fund account and adult child owns death benefit

18. Achieving More Together Insurance planning opportunity # 7 Tax planning –Create a tax-advantaged fund account for business owners and executives by using a split-ownership arrangement What to look for … –Need for insurance by one party and excess cash for investment by another party

19. Achieving More Together # 6 Funding Retirement

20. Achieving More Together Insurance planning opportunity # 6 Retirement planning –The demographics in Canada indicate that boomers will be retiring from active employment in ever increasing numbers over the next two decades –Retirement planning and retirement income are becoming an increasing priority in the minds of your clients

21. Achieving More Together Insurance planning opportunity # 6 Retirement planning –Provide supplemental retirement income to a business owner or executive For example … –Leveraged life insurance –Insured retirement compensation arrangement (RCA)

22. Achieving More Together Insurance planning opportunity # 6 Retirement planning –Provide supplemental retirement income to a business owner or executive What to look for … –Client over age 40 –Mortgage paid down –Maxed out on RRSPs/RPPs –Insurance need today but have excess cash available for funding

23. Achieving More Together Insurance planning opportunity # 6 1- During Accumulation Years Purchase a life insurance policy Maximize premium deposits 2- When additional income is required Moveable hypothec is used Setup loan or line of credit 3- At Death Life insurance policy provides death benefit Balance of death benefit paid to heirs Loan is repaid to Bank

24. Achieving More Together # 5 Creating A Guaranteed Income

25. Achieving More Together Insurance planning opportunity # 5 Retirement planning –Fixed income investment returns have declined over the past two decades –Older clients looking for ways to increase returns while maintaining their estate for their heirs

26. Achieving More Together Insurance planning opportunity # 5 Retirement planning –Guarantee a lifetime retirement income while preserving the estate for the heirs For example … –Insured annuity –Corporate insured annuity –Leveraged corporate insured annuity

27. Achieving More Together Insurance planning opportunity # 5 Retirement planning –Guarantee a lifetime retirement income while preserving the estate for the heirs What to look for … –Clients age 65 – 75 –Personal investment assets being used as a significant source of retirement income –Corporate investment holding company

28. Achieving More Together Prescribed Annuity Non-registered Guaranteed income Tax advantages Replaces the original capital at death Insurance planning opportunity # 5 Life Insurance

29. Achieving More Together # 4 Creating A Charitable Gift

30. Achieving More Together Insurance planning opportunity # 4 Charitable gift planning –There are approximately 350,000 Canadian households with at least $1 million in household financial assets –Nine-in-ten (87%) of these millionaire households expect to make a financial contribution to a charity or local community organization in the next year

31. Achieving More Together Insurance planning opportunity # 4 Charitable gift planning –Fund a charitable gift with insurance For example … –Gift of life insurance to charity –Fund a charitable bequest with life insurance –Name a charity the beneficiary of a policy –Estate replacement insurance funded using the donation tax benefits –Insured share redemption of private company shares gifted to charity following death

32. Achieving More Together Insurance planning opportunity # 4 Charitable gift planning –Fund a charitable gift with insurance What to look for … –Client is over age 50 –Client has a desire to support a charitable organization –Client wants to magnify or multiply their bequest or minimize the impact of the donation on family wealth

33. Achieving More Together # 3 Transfer Wealth To The Next Generation

34. Achieving More Together Insurance planning opportunity # 3 Estate planning –Demographics in Canada suggest a significant transfer of wealth will occur over the next 25 years –Clients are looking for effective ways to initiate transfers of wealth

35. Achieving More Together Insurance planning opportunity # 3 Estate planning –Initiate a transfer of wealth to the next generation using life insurance For example … –Parent purchases insurance on life of child (or grandchild), transfers ownership (tax-free) following death of parents

36. Achieving More Together Insurance planning opportunity # 3 Estate planning –Initiate a transfer of wealth to the next generation using life insurance What to look for … –Clients over 50 who are financially independent with adult children

37. Achieving More Together # 2 Funding Estate Taxes

38. Achieving More Together Insurance planning opportunity # 2 Estate planning –A deceased taxpayer is deemed to dispose of all property immediately before death for proceeds equal to fair market value –Accrued gains taxed on final tax return –Transfer to surviving spouse or spouse trust can defer (but not eliminate) tax liability –The tax liability can have a material impact on the value of the estate available for distribution to the heirs

39. Achieving More Together Insurance planning opportunity # 2 Estate planning –Fund the estate tax liability with insurance to preserve/conserve the estate for the heirs For example … –Investments –Private company shares –Commercial real estate –Vacation property –RRSPs

40. Achieving More Together Insurance planning opportunity # 2 Estate planning –Fund the estate tax liability with insurance to preserve/conserve the estate for the heirs What to look for … –Client(s) over age 50 –Investment assets with significant accrued gains –Private company shares –Registered funds

41. Achieving More Together # 1 Maximize Family Wealth

42. Achieving More Together Insurance planning opportunity # 1 Estate planning –Wealthy families may have no obvious need for life insurance protection but are interested in ways to maximize family wealth without significant risk

43. Achieving More Together Insurance planning opportunity # 1 Estate planning –Maximize the estate for distribution to the heirs For example … –Insured inheritance –Corporate estate transfer –Insurance as an alternative investment

44. Achieving More Together Insurance planning opportunity # 1 Estate planning –Maximize the estate for distribution to the heirs What to look for … –Client is over age 50 –Significant investment holdings (personal or corporate) –Investments include fixed income component generating interest income taxed at top rates

45. Achieving More Together Consider your client’s net worth cycle: Some of your clients’ net worth will not be used in their lifetime. Does it make sense to pay tax on the growth of their investments every year?

46. Achieving More Together Insurance opportunities Risk management Funding Business needs Funding Family Business Succession Shared interests Funding Retirement Guaranteed Income Charitable Gift Transfer Wealth to the next Generation Funding Estate taxes Maximize Family Wealth

47. Achieving More Together Retirement compensation arrangement ( RCA )

48. Achieving More Together Who Qualifies  Owner or key employee of small to medium size business  Ages 35 to 50  Annual compensation of $125,000 and over  Minimum of ten years to retirement  Business is generating earnings above small business limit  Maximized registered retirement and pension options  Wants to secure supplemental pension funding

49. Achieving More Together What is an RCA? Retirement compensation arrangement (RCA) Defined in the ITA 248(1) Supplemental retirement income arrangement for employees and/or owner/operators

50. Achieving More Together How does it work? An RCA program would involve the contributions being made from a company to a trust 50% of the contribution goes to the government (CRA) and into a refundable tax account (RTA) 50% ( or the remainder) of the contribution goes into an investment vehicle which is chosen by the trustee(s) For example, a company chooses to contribute $100,000 to an RCA for Jim Smith. Of the entire contribution, $50,000 goes to the RTA account and $50,000 will be invested by the trust.

51. Achieving More Together RCA Contributions Most commonly, contributions are made by an employer. Employees are able to make contributions to an RCA that has been setup but the contribution (for tax purposes) cannot exceed the employers contribution.

52. Achieving More Together

53. Marketing and Sales Support

54. Achieving More Together Conclusion Insurance is an innovative financial instrument Insurance is used to facilitate or enhance a client’s wealth management plans Insurance can be a viable solution even when the need for liquidity is not evident Insurance should be an important part of the products and services you offer to your clients