INVESTING IN A LIFE
INSURNACE COMPANY
The benefits of an insurance GIC*
*An insurance GIC is an accumulation annuity issued by a life insurance company
My disclaimer
• I am knowledgeable in Estate Planning techniques and concepts
• I Do understand the big picture and can help explain it
• I am NOT a tax expert
• I am NOT a legal expert
What we can learn today
1. Estate planning and probate
2. Understanding your intentions
3. Issues that can arise with your Estate
4. Understanding how an insurance company can help
Estate planning and probate
What is estate planning and how can it help?
• Estate planning is the anticipating and arranging for the
distribution of an estate
• It can eliminate uncertainties
• It can help maximize the value of the estate
What is probate?
• administration of the deceased estate
• distributing property
How does a bank GIC work?
Bank GIC
Estate
Beneficiary
Problems going through your estate
1. Lengthy
2. Expensive
3. Public
Wouldn’t it be nice to skip the estate?
Assets
Estate
Beneficiary
What generally happens
When the first spouse passes away...
House
Bank account
RRSP/RRIF
Non-registered assets
Passed easily to spouse
What generally happens
When the second spouse passes away…
House
Bank account
Sold - assets to the estate
Frozen - assets to the estate
RRSP/RRIF
Non-registered assets
Sold & taxed - assets to the estate
Sold & taxed - assets to the estate
What’s the solution?
Bank GIC
Insurance GIC
Estate
Estate
Beneficiary
Beneficiary
What is an insurance GIC?
• Guaranteed interest investment
• Can only be offered by an Insurance company
• Similar to bank GICs but with perks
– Beneficiary designation available on both registered and non-registered
investments
– Coverage from Assuris*
– Potential creditor protection
– Payout annuity option available
– Redeemable
– Pension tax credit
* For more information, please visit www.assuris.ca
Case study
Aunt Susan wants to leave a gift behind for her
favourite niece and nephew
GIC at her local bank for Steve
Insurance GIC at her life insurance company for Carol
Steve’s story
The timeline:
Day 1
Notified of aunts
passing & of GIC
left to him
Day 90
Estate has been
assessed
The cost:
Time taken to
Time passed after
distribute inheritance
receiving inheritance
Day 210
Day 217
Day 365
Details of
the
handling of
the estate
shared
Will is contested
Dispute is
resolved and
the estate is
distributed
Bank GIC
- Bank discharge
- Probate fee
- Executor fee
$50,000
$ 4,550
$ 450
$ 5,000
Steve’s inheritance
$40,000
Carol’s story
The timeline:
Day 1
Notified of
aunts passing
& of
insurance GIC
left to her
The cost:
Day 5
Time taken to
Time passed after
distribute inheritance
receiving inheritance
Day 14
Carol contacts the
insurance
company &
receives required
form to complete
Carol receives
proceeds of the
insurance GIC
GIC / AA
- Bank discharge
- Probate fee
- Executor fee
$50,000
n/a
n/a
n/a
Carol’s inheritance
$50,000
The moral of our story
Steve
Carol
• Took 12 months to receive
inheritance
• Received inheritance in two weeks
• Only received $40,000 of the
intended $50,000
• Received full amount - intended
$50,000
It all starts with this…
Insurance GIC
Estate
Beneficiary
Summary
Non-registered money with a life insurance
company:
• Reduces estate costs
• Speeds up the process
• Goes to the beneficiary
• Provides more privacy
Questions
?