Effective January 1, 2017 new tax legislation will come into effect that may affect your life insurance policy

The government has introduced new tax legislation that’s designed to reduce some of the benefits in policies purchased or changed after December 31, 2016. It is beyond the scope of this article to explain in detail each change that will affect every policy type so I will outline the major points of concern and which type of policy holder should contact us for help. Remember that we are brokers for all the major Canadian Life Insurance Companies so we can help you with any changes to ensure your benefits are grandfathered under the old rules.

Ten Major Points

  • You have a term rider on an existing permanent policy
  • You need to put a term rider on an existing permanent policy
  • You need to change the net amount at risk in the future (NAAR)
  • You need to convert a term policy to a Universal Life Policy
  • You need to split coverage from a multiple life policy to a single policy
  • You need to split a joint policy into two separate policies
  • You need to exchange a shorter term policy for a Term 100 policy
  • You own a Universal Life Policy now but have not maximized the deposit room available
  • You own a Universal Life Policy now but do not have other family members included
  • Your corporation owns a Universal Life Policy but it is out of date with your Shareholder’s Agreement or last valuation

Who Should Be Concerned

  • Anyone mentioned above in points one through ten
  • If you need new coverage for family or business protection
  • If you have an existing Universal Life Policy and have children or grandchildren that you wish to lock in all the benefits of the old rules for
  • If you have a corporately owned Universal Life or Term Policy. You can ensure that all the pre-legislation benefits are preserved
  • If you have deposit room in your existing Universal Life policy
  • If you are considering the purchase of a Prescribed Annuity

This is an incomplete list of the reasons to review your insurance and tax sheltered programs. The benefits on policies purchased or changed after December 31, 2016 will be greatly reduced to comply with the new government legislation. It will be well worth your while to review your situation with us before the end of September. The deadline for any transactions is December 31, 2016 but in most cases it takes several months to make changes, especially if any underwriting is required.

Call 780-945-1010 or email gord@charterwealth.com for a complimentary analysis today.