- Why do I need Life Insurance?
Answer: Everyone should have life insurance if you have debt. I the case of death, your debt is transferred to your next of kin. If you are young with a young family, it could be devastating financially should you not have it. If you are older nearing retirement you may choose to have insurance in your estate plan to cover the tax portion of your estate or just to leave an inheritance for your family.
- How much insurance do I need?
Answer: The younger you are the more insurance you will need because you are just starting out with a mortgage and a young family. It is generally based on your debt, the amount of income protection you need for your family and your long term goals or to cover tax in estate planning.
- When should I get insurance?
Answer: As soon as you start accumulating debt you should purchase your first policy. Especially if you have a family that depends on your income should something happen to you. Also, the younger you are the cheaper the insurance is because you are, in most cases, at your best health.
- What is the difference between Term and Permanent insurance?
Answer: If you are looking for a low cost option to cover debt and income protection than Term is the most economical. It is a good choice for people on fixed incomes or with families. It is a specific amount of insurance for a specific length of time. Permanent insurance is more expensive but has the benefit of having a cash value that you can borrow against. It is a good option for someone wanting insurance for the rest of their life and has a larger monthly budget.
- Why do I need to invest in RRSP’s?
Answer: RRSP’s allow you to contribute pre-tax dollars and you get to defer taxes on interest income, dividends or capital gains you receive within it. They also lower your income tax at tax time and allow you a greater return when you need it the most.
- Should I purchase monthly or at tax time?
Answer: If you purchase your RRSP’s as a PAC (pre authorized checking) on a monthly basis you may have the opportunity to purchase shares when the market may be lower than it may be at tax time. Not to mention that if you purchase them lower and they rise before tax time you will have the gains you wouldn’t have if you waited to purchase lump sum. It is also more cost effective as most don’t have the lump sum to deposit.
- What are the benefits of a Tax Free Savings Account?
Answer: TFSA’s are great if you have maximized your RRSP’s and have extra after tax dollars to contribute. It is a great option for saving for retirement, your child’s education, a vehicle, or even a vacation. You are allowed to invest a max of $5000 per year and the money grows tax free. These accounts are available to individuals 18 and older.
- What is disability insurance for?
Answer: D.I. provides a monthly income in the event you are unable to work due to illness or injury. It is a recommended product for those that are self employed or if you work for a company that doesn’t offer the benefit. If you had a machine in your basement making $100 dollar bills and it broke down, would you pay to have it fixed? Remember you are the machine making those bills and D. I. is your fix.
- How often should I have my financial plan changed?
Answer: As your life changes so should your financial plan. If you purchase real estate, lose your job, inherit money or become married or single, your goals will change. Your budget will increase or decrease and you should contact your financial advisor to help you stay on track with all the bumps in the road.
- When should I do a will?
Answer: The best time to consider making a will is when you purchase your first home. Or in the case that you don’t own a home and have children, that would also be the best time. Anyone can have a will at 18yrs or older. One should have a living will in case you become incapacitated with no possible recovery from a mental or physical disability, would you prefer to live or die? Also, a power of attorney is recommended that allows you to choose a person to act on your behalf of your financial affairs if you are not able. If you have children under the age of 18 and both parents die, you must have assigned a legal guardian in your will or the courts will assign one on your behalf and they may not be the one you would have preferred.