The tight rope of life
Managing risk is about more than just insurance. It's a way of thinking. How do you assess risk? How critical is that risk to you, your family, or your business? Can you, quite literally, live with that risk?
NOW can help with many types of risk management analysis:
Family lifestyle protection
- Protecting the standard of living of a family or household in the event of a premature death, long-term disability, or critical illness.
- This is especially important for families with dependents, and any situation where the loss of income would negatively impact lifestyle
- A needs analysis will reveal the amount of coverage required and should be updated any time a material change in income/assets/debts occurs.
- Upon the death of parents or grandparents, the tax bill related to any remaining registered assets, capital gains on non-registered assets and 2nd properties can be massive.
- The old adage "the government is your biggest beneficiary" exists for a reason.
- The estate value erosion can be severe. Life insurance is often the most cost effective tax defence.
- Clients who intend to "die with every dollar spent" may still want to leave something behind
- Permanent life insurance can create an estate instantly that is cost-effective and tax-free, allowing parents to spend their savings
- Solutions can involve one or both spouses and ages into early 80s!
Business succession planning
- Family owned businesses (including farms) face complex succession planning issues, many which can result in enormous tax consequences
- There are a variety of proven strategies using insurance products that can mitigate succession risks and absorb some, if not all, of the tax bill
Shareholder Agreements / Buy-Sell coverage
- Most incorporated business have a Shareholders Agreement, and some even have a buy-sell clause to provide rules for such eventualities
- The financial capacity to fund the buy-out of a partner - in case of death, long-term disability or critical illness - is usually lacking.
- Insurance can provide a financially sound solution rather than using otherwise critical cash from the business or borrowing more money.
Key person coverage
- Anyone in your business who, if they died prematurely or become ill for a long period of time, would seriously damage the business' revenues and profitability needs coverage.
- If that key person has no coverage in place, the business is vulnerable.
- By the time something bad happens, it may be too late. Lenders don't typically like it when the key person in a business is no longer involved!
- The often neglected piece of the risk management puzzle - employees today expect coverage.
- Without group benefits, a business is leaving key staff and employees vulnerable to their own financial turmoil (ie: disability, illness, large medical expenses, drugs) which can directly impact their performance at work and therefore profitability of the business
- Employee benefits are a much more tax efficient way to reward employees (as opposed to a simple salary increase)