Monday, August 21, 2017

Canada Modernizes Life Insurance Tax Rules

Operating under the Managing General Agency HUB Financial, Seema Gakhar serves as an insurance agent to both individual and business clients. Based in Canada, Seema Gakhar stays informed of industry developments such as the new tax-rules affecting the tax benefits associated with life insurance.

In effect as of January 1, 2017, the changes were made to modernize life insurance tax rules, which were last updated in 1982, to reflect longer life spans, current inflation and interest rates, and the plethora of new insurance products on the market. One significant change involves corporate-owned policies and the amount added to a capital dividend account following a shareholder’s death. Under the new rules, this amount will likely be lower. The rules governing life insurance policies offered as loan collateral have also been revised, reducing the insurance premium deduction for these policies.

Generally, life insurance policies issued prior to January 1, 2017, will be “grandfathered in” and follow the previous rules. However, there are activities that can trigger the removal of this status, including adding coverage and converting a term insurance policy into a permanent policy.

Thursday, August 3, 2017

Long-Term Disability Insurance

Seema Gakhar serves as an insurance agent through Hub Financial, a managing general agent (MGA) in Toronto, Ontario. Dedicated to caring for her clients like family, Seema Gakhar works to help individuals secure long-term disability insurance to protect their livelihoods and loved ones in the case of unexpected illness or injury.

Although the average work absence due to a disability is approximately 34.6 months, or just under three years, short-term disability policies may pay out for only three to six months. Because many people cannot afford to live the remaining two years or more without income, long-term disability insurance exists to fill in the gap.

In most cases, long-term disability insurance becomes active after a person's short-term policy expires. It then pays approximately 50 percent to 70 percent of the individual's salary, or another amount specified in the policy, assuming that the person is fully disabled and unable to work.

Benefits may be different if the policy holder is only partially disabled and thus can work in a lower-paying job. Individuals who earn less than 20 percent of their former income can usually still receive full disability benefits, though insurers pro-rate payouts for those who earn 20 percent to 80 percent of their pre-disability earnings.

Duration of benefits also depend on the specifics of the policy. Certain plans may pay continuously until the individual reaches the standard retirement age of 65, though others may have a limitation of five to 10 years. Premium payees also vary, as some policies charge employers in full or in part, while others place the onus of cost on the individual.