Life Insurance

Insurance is a product we need to take care of various obligations, including making certain our families are adequately provided for and that there is enough money to pay estate taxes upon our death. If we are the owner of a closely held business, we need to be certain that there are insurance proceeds to keep the business going until successor management can take over or the business can be sold, thus preserving the value of the assets for our families and employees.

We have all had insurance professionals provide their opinions as to the value of our assets and the need for insurance to take care of estate taxes. These estimates are usually based on rule of thumb valuations. Before estate planning or adequacy of insurance planning can be undertaken, it is really necessary to have a good idea of the actual value of one's assets.

Determining Value

The value of marketable securities can be determined by reference to quotations from the exchange on which they are listed or reference to the security itself.

The value of Real estate can be determined either by comparable sales or by a real estate appraiser

The value of a business is determined by many factors such as market condition, location, management, market share, product life cycle, and other factors too numerous to mention.

In order to determine the value of a closely held business, one needs the services of a professionally trained, experienced business valuation analyst. That analyst should be trained and experienced in the factors that determine value and the rules under which the business needs to be valued for the purpose of a valuation, e.g., estate tax valuation, minority or controlling interest purchase or sale, sale to a publicly-traded company, or sale to a closely-held, private company

Are You Insuring What's Most Valuable?

Many people take the time to insure their homes, their cars and their personal belongings, but what about insuring the two things that have the most value – your life and your health? This is the most important insurance you have.

Think about it this way: insuring your life and health are really about insuring the income that supports your lifestyle.

Insurance isn’t as overwhelming as you think. Life and living benefits insurance are essential components of a sound financial plan.

Life and Living Benefits Insurance For You and Your Business

Your energy, talent and hard work drive your business. Everything about your business success is dependent on you, and if you die, become disabled, or become critically ill, everything stops.

As a business owner/partner you face many challenges, including managing day-to-day activities and ensuring your business's long-term viability. However, for many business people, short-term demands often take priority over long-term planning.

Life insurance can help minimize the amount of tax you pay, or cover taxes that may be payable when you die (for example, capital gains tax). Martinet Recchia, Inc.’s Tax and Estate Planning group have built processes for evaluating complicate business needs.

Critical illness insurance can provide you with a cash benefit – money you can use any way you want - if you're diagnosed with a condition that's covered in the contract. It can help finance solutions that will ensure your business can continue while you recover.

Remember, it's not your life or health you're insuring, but your business and its future earnings.

Determining Insurance Coverage

To determine how much coverage you need, start by gathering all your personal financial information and estimate what income your family will need after you die, if you become critically ill, or require long-term care.

Include ongoing expenses such as:

  • Daycare
  • Mortgage payments and household expenses
  • Costs to maintain your business
  • Tuition
  • Retirement income funds
  • Immediate expenses at the time of death (medical bills, burial costs, estate taxes)
  • Expenses not covered by your provincial or employee health plan if you become critically ill, or can no longer take care of yourself - expenses such as: travel to treatment, modifications to your home, nursing home care.

What Products Are Available

If you're not familiar with life or living benefits insurance, it can seem like a different language. You'll hear things like universal life, critical illness, term insurance, and temporary and permanent needs. Understanding a bit about insurance can help you make an informed decision about the coverage that's right for you, your family or your business.

Basically, life and living benefits insurance can be broken into two types: insurance to meet your temporary needs and insurance to meet your permanent needs.

For your temporary personal and business insurance needs, several term insurance products are available.

Living benefits include critical illness and long-term care insurance, unique products that provide a benefit to you while you're alive.

Tax Due Dates