SHEfaqs
ARE THERE EMPLOYMENT INSURANCE BENEFITS FOR SELF EMPLOYED PEOPLE?
Employment Insurance Benefits for Self Employed People – beginning in January, 2011, self employed Canadians will be able to access Employment Insurance (EI) special benefits. There are four types of EI special benefits: maternity benefits, parental benefits, sickness benefits, and compassionate care benefits. For more information visit: http://www.servicecanada.gc.ca/eng/sc/ei/self_employed_workers.shtml
What is an EMERGENCY FUND?
In a good financial plan one should ideally have 3-6 months’ living expenses, as in life you should be prepared; we call this an emergency fund. Financial emergencies could be the loss of a job, becoming sick with additional medical expenses, home or vehicle repairs. The importance of this is so one does not have to use credit which will only add to additional costs and expenses.
If you are just getting started, remember start small, it is amazing how quickly this will build and you will find the peace of mind this will create. The best way to get started is with the use of an automatic withdrawal plan, open up a new savings account if you currently don’t have one.
What are the different types of INSURANCE?
Mortgage Insurance vs. Life Insurance
Mortgage Insurance is provided by the financial lender to protect the risk of the debt, usually a mortgage or business loan. This coverage will pays off the debt owed, should the individual borrowing the money pass away before the mortgage or loan is satisfied. There are much better options available to consumers today such as individually owned life insurance. In most cases, I would recommend the individually owned type of insurance for my clients as it usually provides more flexibility, lower costs, can cover more than one need and can eliminate problems of re-qualifying for the coverage down the road.
For more information (download pdf) – Van Sun article / Article by SHEfinancial
Term 10 vs. Term 20
Term insurance is much like renting an apartment. If landlords priced their apartments like insurance companies price term insurance, they would say to you; “I am prepared to rent you this apartment for $800 per month, with no increase for the first 10 years. However the next 10 years will cost you $3,600 per month. For a 20 year lease, the rate won’t change from the initial $1,400 for 20 years, but then will increase to $4,800 per month”. You might then ask what if I choose the 20 year plan, and then want to walk away. No problem, however you have no equity what so ever.
Term Insurance vs. Permanent Insurance
Term insurance is designed for a specific period of time or term, hence its name. The appeal of term insurance is that it is available in increments as low as 1 year, any annual increment to 40 years, or to a specific age e.g. 65. Term 10 and Term 20 are the two most popular term periods. After each term the premium increases between 3 and 10 times the initial term premium, age dependent. Term is ideal for a short term need, such as mortgage insurance, income replacement while the children are under the age of majority.
Permanent insurance is designed to fill a permanent need, i.e. for your lifetime. The initial premium never increases, and it is possible to pay on an accelerated basis, i.e. one time up front, over 10, 15 or 20 years. Permanent insurance is used for estate requirements such as paying taxes on death, business succession plans, funding buy/sell agreements for a business partnership. Permanent insurance can also build up a substantial tax deferred cash value, which can be used in later years for retirement income top up, or as a tax free withdrawal for disability, critical illness, or long term care requirements. In essence permanent insurance is a multi-faceted solution to solve a multitude of requirements.
Whole Life Insurance vs. Universal Life Insurance
Both are considered permanent insurance, that along with term to age 100 have the feature that the premium initially established does not change for the duration of the contract. Also whole life and universal life can be paid for in an abbreviated time, e.g. one time up front, over 10 – 20 years is also available. Perhaps the easiest way to differentiate them is using a fixed premium for the life of the contract, you are paying more than the cost of insurance in the early years. This excess premium needs to be invested for the later years. With whole life, the insurance company decides how and what to invest the money into. Also once the dividend, bonus, or whatever they call it is paid to the account, it cannot be taken away. With universal life, you decide how to invest the excess premium amount. If you are unskilled in investing, you will want to make sure your advisor is. Clearly universal life requires more attention from you, typically at least annually. Lastly universal life typically has a surrender charge that can be quite onerous. Make sure you understand what it is, how much it is, and how long before this charge is removed.
What are LIVING BENEFITS?
Disability Insurance, Critical Illness Insurance, Business Overhead Insurance
Disability insurance
Should you become disabled, your ability to earn income may be compromised, and your ability to pay bills or save for retirement may decline. Our disability insurance plans are designed to help you meet your income requirements so that you can concentrate on recovering from your disability and returning to an active life.
The peace of mind that income protection can provide is available for professionals, business owners, business executives, and full-time, part-time or home-based workers. Whether you need to secure your main source of income or to supplement the coverage you receive from your employer or an association, we can help by providing a comprehensive and portable plan you can rely on throughout your working years.
To find out about our complete range of disability insurance plans, contact your advisor today. It may be the most important financial planning decision you’ll ever make.
Critical Illness Insurance
Getting sick isn’t something any of us like to think about. But it happens. Thanks to improvements in healthy living and medical science there’s a good chance you’ll recover and get on with your life; but getting better costs money. The costs to treat and cope with a critical illness are generally covered by national health plans, however the recovery costs can be significant and unexpected. If your income is disrupted during your recovery period, how will you pay the bills, you may need in-home therapy, or medications not covered by most provincial medical plans, e.g. sunitinib malate, or Sutent which can cost over $7,000 per month.
That’s where Critical Illness Insurance can help. It provides a cash benefit (lump sum) if you’re diagnosed with one of the covered conditions (these can vary depending on the plan you have, be sure to understand what is covered under your plan) described in your contract and you survive the waiting period.
Here’s a list of conditions covered by most Critical Illness Insurance Plans:
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To learn about how Critical Illness Insurance made a difference for a client go to: http://license.icopyright.net/user/viewFreeUse.act?fuid=NDkwOTY4Mw%3D%3D
Business Overhead Insurance
You are running a small business, for which you are leasing premises; you have utilities, equipment leases, 2 employees’ salaries, etc. with a combined monthly cost of $8,000 per month. You have a water leak on your home roof, and decide to save money by fixing it yourself. Unfortunately you fall off the roof, and are disabled for 8 months with broken bones, etc.
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Would your business survive the 8 months of you not being able to participate in the business?
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What if you are permanently disabled? Could you afford to keep the business going for up to 24 months while you try to find a buyer for it?
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Would you get more for a business that is running than if it was shut down?
Would insurance to pay for this overhead while you recover make the difference between the business surviving or failing before you can find a buyer? Call us to discuss this relatively inexpensive insurance for small business owners.
What is LONG TERM CARE INSURANCE?
Most Canadians believe that the government will care for us in our old age. However, with our rapidly aging population this may be a false sense of security. Statistics Canada projects that by 2021, Canada’s seven million Canadian seniors will represent 19 per cent of our total population. This could cause a significant impact on health-related services, including long term care – both in home and in long term care facilities. Taking responsibility now, while you are healthy could prove to be an important step in planning for your financial independence, you do have options, be sure to search these out. The financial impact on many families could be devastating.
Long Term care insurance provides for the financial resources you may need in the future, rather than using up all of your own. As an example, today’s cost of private care can easily exceed $5,000 per month. That’s more than $60,000 per year after tax. Now imagine the impact this will have on your estate, learn how to manage this risk with a long term care insurance plan.
What are some common types of INVESTMENTS?
Mutual Funds vs. Segregated Funds
Mutual funds are a collection of stocks, bonds, or other financial instruments that are managed by a fund manager within a fund company. A mutual fund is designed for a particular mandate, e.g. conservative (low volatility, modest gains or losses) to aggressive, (high volatility, high gains or losses). The advantage of investing an amount of money e.g. $1,000 into a mutual fund over individual stocks is diversification. A mutual fund will have dozens of stocks in its portfolio, chosen by a fund manager and his or her team of researchers.
Segregated Funds are essentially mutual funds with performance guarantees, and only available from life insurance companies. Segregated funds also invest in a collection of stocks, bonds or other financial instruments, with the added benefit of maturity and death benefit guarantees to minimize the risk of ownership. Also segregated funds because of their insurance component can name a beneficiary. On death, the market value or guaranteed value, whichever is greater, is paid to this beneficiary bypassing your estate.
Tax Free Savings Account (TFSA)
On January 1, 2009 a new savings vehicle called a Tax-Free Savings Account (TFSA) becomes available to Canadians. TFSA a new way to earn investment income tax-free is now available. The TFSA is a registered plan with no taxes on interest, dividends or capital gains. Whether you are savings for a short term (0-5 years) or for the longer term (6 years and beyond) a TFSA can be a valuable addition to your financial plan.
For more information visit: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/tfsa-celi/menu-eng.html?=slnk
Registered Education Savings Plans (RESPs)
A post-secondary education is one of the most important gifts you can provide to a child. Not only does it provide better career opportunities and self-confidence, it has far reaching economic benefits as well.
An education savings plan (ESP) is a savings vehicle generally used by parents to save for their children's post-secondary education.
For more information visit: http://www.cra-arc.gc.ca/tx/rgstrd/resp-reee/fq-eng.html
Registered Disability Savings Plan (RDSPs)
The purpose of such a plan is to provide for the long-term financial security of a beneficiary who has a prolonged and severe physical or mental impairment. The beneficiary named under an RDSP must be eligible to receive the disability amount. See article (download)
For more information visit: http://www.cra-arc.gc.ca/tx/rgstrd/rdsp/fq-eng.html
Registered Retirement Savings Plan (RRSPs)
An RRSP is a retirement plan that we register and that you or your spouse or common-law partner establish and contribute to. Deductible RRSP contributions can be used to reduce your tax. Any income you earn in the RRSP is usually exempt from tax for the time the funds remain in the plan. However, you generally have to pay tax when you cash in, make withdrawals, or receive payments from the plan.
For more information visit: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/rrsps-eng.html
Home Buyers' Plan (HBP)
The Home Buyers' Plan (HBP) is a program that allows you to withdraw up to $20,000 from your registered retirement savings plan (RRSPs) to buy or build a qualifying home for yourself or for a related person with a disability. For 2009 and subsequent years, withdrawals made after January 27, 2009, the maximum is $25,000.
For more information visit: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/rrsp-reer/hbp-rap/menu-eng.html
What is ESTATE PLANNING?
Estate planning should be a financial priority at almost any stage of life. An estate plan is written documentation of how you want your assets to be owned, managed and preserved during your lifetime and how you want them dispersed after your death. To ensure a simple, tax-efficient and organized transfer of your assets to loved ones.
Why do I need a WILL?
Your will lays out your wish for the distribution of your assets and should be updated on an ongoing basis - particularly as your circumstances change throughout your life
If you should die without a will (referred to as intestate), the province you reside in will step in to administer your estate using a formula. In this case, you’ve essentially forfeited your say on how things are divided and who will be in charge of the process.
A Will Kit (download pdf) downloaded from the internet is not our first choice for this important part of your estate plan. However on the basis of “something is better than nothing”, consider it. Estates can be very complex, especially when there are blended families involved. Consider seeking the council of a trained professional in will creation as the best option.
Power of Attorney – this is a document where you identify another person you trust to represent you with financial decisions should you become mentally incapacitated. Without this document, your loved one could find themselves unable to make the decisions required on your behalf. As well as your significant other, you should also have a discussion with your parents and / or your children. If your parents are seniors, eventually they may require your assistance with financial dealings, and a Power of Attorney makes this easy and straight forward.
SHEmind groups
Ask yourself...- How big could I dare to dream if I had the genuine support of a team of respected, like-minded women beside me?
- How much farther could I go if I had a group who was genuinely invested in my accomplishments?
We know that as women we can not do it alone. Becoming a part of a SHEMind group can help move your business forward faster.
Experience a structured, safe, intimate environment (maximum 12 per group) and the authentic power of genuine support. Imagine how inspired you could be if you had the expanded resources of your own team of mentors and peers to tap into. You have an opportunity to gain fresh new perspectives personally and professionally so you can see beyond your own limited range of vision.
Come join us and meet a group of influential caring women in your community who are willing to share their experiences, knowledge, resources and influence.
3 Keys to SHEmind groups:- Spark and ignite a new vision for your business; tap into dreaming again, open up the window of opportunity, define the possibilities and create a clear direction with purpose and passion.
- Take a deep look in the mirror and let go of the "basic stories" that keep us small, let go of the excuses, justifications and reasons why. Become bold and harness your courage and unique ways you contribute in your services.
- Keep "stepping up" to meet the challenges, opportunities and adventures in your business with confidence, conviction and a passion that is contagious.
For more information or to register for a SHEmind group, email us at info@shefinancialgroup.com
