Odds and Ends from 2012

Some Recent Updates   

Here are a few items that might be of interest to you. If you would like additional information - send me an email or give me a call at 416-806-5478.

 

Did you turn 71 in 2011?
 
If you turned 71 in 2012, you must convert any funds that you have in a RRSP or LRSP to a RRIF or LIRA by December 31, 2012. For more information - check out the  CRAwebsite or give me a call.

 

Do you have a TFSA

 

The government has increased the amount you can deposit into a TFSA for 2013 to $5500. The rules for withdrawing and depositing money in a TFSA can be tricky. Check out the CRAwebsite,  read the articlefrom The Star or give me a call.

 

Life Insurance and Critical Illness Insurance

 

The costs for permanent life insurance and critical illness insurance have been increasing due to the low interest rate market. If you have been thinking about reviewing your coverage - there's no time like the present.

 

Predictions from 2012

 

Whether the prediction was for the end of the world according to the Mayans on 12-21-2012 or gasprices will end the year at $0.99 per litre,  the reality is often far from that. Remember if it sounds too good to be true, it probably is.

 

 

 

Insurance & the Movies

Many of you know that I am a TIFF (Toronto International Film Festival) fan and see 20 movies during the festival. Now that it’s over for another year, I’d thought that I’d give you a synopsis of some of the films that I saw and the insurance lesson they have.

This year one of the movies I saw was a 3D animated musical feature called The Suicide Shop. In the shop, owned by a family, they sell items of use to people who want to commit suicide. Everything from single bullets (you only need one) to poisons (pills, liquids, fast and slow acting) - you get the idea. This France / Belgium / Canada coproduction was directed by Patrice Leconte and was very humorous. It has a Canadian distributor so may play here.

It got me thinking about the 2 year contestability clause on new insurance policies. One type of death specifically mentioned in your policy is that the insurance company will not pay out the policy if you commit suicide in the first 2 years. However, the clause is much broader and gives the insurance company the ability to review the file for any inconsistencies or omissions in your file should you die in the first 2 years the policy is in force. Check out page 28 of the Life Insurance brochure on the CLHIA web site for more information about contestability.


I saw two movies (Argo and Love, Marilyn) where information came to light a number of years after an event. It reminded me that often a person would like to leave money to someone else without everyone knowing that they have left the money or without everyone knowing how much money they left them. While everything in your will is part of the public record, when an insurance policy has a Named Beneficiary, this information remains private.

Argo is the fictionalized story of the 1979 / 1980 escape of 6 members of the US embassy in Iran who managed to escape with the assistance of the Canadian embassy and the Canadian Ambassador, Ken Taylor. This story is based on declassified documents and was directed by Ben Affleck. This movie is being released Oct. 12, 2012.

Love, Marilyn directed by Liz Garbus, is a story of the private life of Marilyn Monroe. It has been 50 years since her death and this documentary is based on personal papers, diaries and letters that have recently surfaced. If it plays in theatres, it’s also well worth watching – especially if you’re a Marilyn fan.

I saw Clandestine Childhood, an Argentina / Spain / Brazil co-production directed by Benjamin Avila. It is the fictional story of a child in 1979 Argentina whose parents are dissidents, but based on the director’s personal experiences. Once things go wrong, it’s almost impossible to “fix” them. This movie shows great strength of character of all of the people in the movie.


The insurance lesson – once you get sick, it is very difficult to purchase insurance – so you’d better do it now before anything “bad” happens.

The final movie I’m going to discuss today is The Brass Teapot. This is a US film, directed by Ramaa Mosley. The premise of the movie is how far would you go to financially profit from bodily injury? This 2000 year old teapot produces US Greenbacks whenever the owner gets hurt. However, it also has addictive properties, much like the ring in the J. R. R. Tolkien series Lord of the Rings.


Okay, you ask – how does this relate to insurance? If you have applied for individually medically underwritten insurance, a record of that application exists at The Medical Information Bureau. The insurance companies use these records to ensure that they know how much insurance you have in force. This ensures that you can’t become too greedy – like almost happened in the movie.

If you’d like to discuss these and other movies with me, give me a call.

Your Legacy

They say there are only two things that are certain in, life - death and taxes. I'd like to add a third - Your Legacy. Dictionary.com defines legacy as - anything handed down from the past, as from an ancestor or predecessor. What do you want your legacy to be?

Your legacy is:
How you make a difference in this world and how will you be remembered.
To maximize your legacy -you need to push back the frontiers, you need to Chase Big Dreams.

I know the nature of my business is financial - but we're not strictly talking about money. Yes - if you are going to leave your family with financial debts and worries - that will affect how they will remember you. (We can talk about your insurance and savings options.) But, that is not the entire picture.

What is important to you - your family? Righting the wrongs in the world? Making one person's day a little better? Building a successful business? Getting your 15 minutes of fame? For each of us, the IMPORTANT thing is different - and that's what makes the world so interesting.

My suggestion to you - take a few minutes today to start working on what you want your legacy to be. Then schedule time into your schedule every day to make it happen.

Wednesday, July 18, 2012 was Mandela Day in honour of Nelson Mandela's birthday.

Mandela Day is a call to action for individuals - for people everywhere - to take responsibility for changing the world into a better place, one small step at a time, just as Mr Mandela did for more than 67 years. Start by devoting 67 minutes to community service on Mandela Day, on July 18 each year, and then make every day your Mandela Day by doing some good for others.

If you'd like additional information, drop me an email and I can send you out some material to help you get started.

A list of documents you need to gather

Can you imagine what would happen if you died and your beneficiaries didn’t know where to find your will? Or your money? To make sure this doesn’t happen to your family, always have the following key documents safely stored together in a place where they can easily be found:

1. Your will: Outlines who gets what when you die. It also appoints guardians for your underage children. Without a will, your assets will be divided according to provincial law, not your own wishes. Worse, your children might end up not living with the guardian of your choice.
2. A living will: Spells out how you want to be treated if you are unable to make decisions about your own health (i.e., whether you want to receive life-sustaining treatments like respiration or resuscitation or whether you want organs donated).
3. A power of attorney: Gives someone the power to make financial decisions for you in the event you’re no longer able to do so. Without this document, the courts will have to appoint a guardian to look after your affairs, and that can take a lot of time – and money. NOTE: You should ensure that there is a second signature on all of your bank accounts as well.
4. Proof of ownership: Gather together all documents that show you own your house, land, vehicles, stocks and any other assets. Without these, your family might not know what you own or be able to prove it.
5. Three years of tax returns: Tax returns give your executor a sense of the assets and finances that are part of your estate.
6. A list of bank accounts and safety deposit boxes: According to the Bank of Canada, there are approximately 1.3 million unclaimed balances in Canada worth some $465 million. You want your family to be able to find your money – show them where it is by listing all your accounts.
7. Stock certificates and savings bonds: Hang onto your investment account statements and store them safely with your certificates (if you have any on paper), so your family can easily determine exactly what you own.
8. Pension, retirement and annuity documents: Help your family access any remaining retirement benefits they are eligible for through your retirement plan. If you’re getting money from an annuity, the contract will help your beneficiaries understand what they are entitled to and from which company.
9. Insurance policies: You bought insurance so your loved ones would be financially covered when you die, so be sure to keep copies of all insurance-related documents on hand so your family will know what policies you have.
10. A list of your debts and loans: A list like this will ensure your family won’t end up having any unwanted surprises down the road, such as debts they did not know about.
11. Marriage licence and/or divorce papers: Legal proof of marriage and divorce can make it easier for the executor of your estate and for your family.
12. Your user names and passwords: With social media and online accounts becoming increasingly important, you want to be sure your loved ones will be able to access your accounts.
13. Contact information: Do you have a lawyer, financial planner, or other professionals who assist you.

Make sure that their names and contact information are also listed.
Review your list once a year to ensure that it’s kept up to date.

Changes to "Guaranteed Income for Life" products

The Ever Changing World Of Investments


Since the guaranteed lifetime withdrawal benefit products (GLWB) first made its debut, investors have been gravitating towards this "Guaranteed Income for Life" product as an alternative solution for their retirement plans; especially in these troubling economic times, However, as the adage goes, "all good things must come to an end", and we are now starting to see life insurance companies, modify, recede, and now even exit this investment product.

Market conditions over the past four years have left everyone worrying and scratching their heads as to where to put their retirement savings. Even Bonds and GICs, the once stronghold of the fixed income market for the ultra conservative investors, can no longer provide the same level of income with the low interest environment. There is no wonder as to why we are seeing an increasingly amount of GLWB sales in 2012.

However, financial markets have not been as responsive to the recovering global economy as analysts had hoped for, and as a result of this, life insurance companies have now started to modify, recede, and even exit from this investment product.

The main reasoning comes from a continuing low interest rate environment, market volatility and slow recovery. Sustainability and capital reserves requirements set out by FSCO (or as Insurance companies like to call "RISK") cannot be met. I am convinced that there will be other closures in the near future.

If you are a Conservative Investor or a Risk Adverse Investor now is the time to investigate this product group. Where else can you get guarantees that your principle is protected and that you cannot outlive your money? This product is ideal for people who do not have a pension plan from work. Check it out before the guarantees are gone.

Give me a call or send me an email and I can discuss your specific situation with you.

Tax Tips

April 30, 2012 is the deadline to file your taxes if you're an employee and it is also the deadline for self employed people to make sure that the CRA has received full payment of their outstanding balance. Therefore, here are some tips to help you complete your tax filing. Please contact your accountant, tax preparer or the CRA if you have specific questions.

The CBC has listed 9 tips to save you money at tax time. Included are:
1. Be sure to take advantage of all income-splitting and pension sharing opportunities.
2. Don’t assume that you don’t need to bother filing a tax return because you have no income.
3. Be sure to transfer any unused credits – including Child Tax Credit, Tuition Credits and Donations.
4. Know the limits of using tax software or online tax filing programs.
5. Be sure to claim all eligible medical expenses. Note: only expenses that exceed the lesser of $2,052 or three per cent of net income can be claimed. But there’s a long list of expenses that qualify, so it’s often not too difficult to reach that threshold, especially for the lower income spouse.
6. Take advantage of the new tax credits – including:
a. non-refundable Children’s Arts Tax Credit – maximum of $75 per child
b. The Volunteer Firefighter’s Tax Credit
c. Family Caregiver Tax Credit – beginning next year
d. TFSAs – if you withdraw funds, they cannot be replaced until the following calendar year
e. Examination fees now qualify for the tuition tax credit
f. 2011 budget also loosened the restrictions on transferring investments held in one sibling’s Registered Education Savings Plans (RESP) to another sibling’s RESP
g. RDSP withdrawals no longer trigger refunds of grants and bonds paid in the last yen years if a doctor certifies that a plan recipient isn’t likely to survive for five years
7. Keep good records.
8. Be proactive with your taxes.
9. Be sure to report all T-slips.

For more information on these items – check out the original article .

Highlights of the 2012 Federal Budget

The budget will:
• Gradually raise the age of eligibility for Old Age Security from 65 to 67 beginning in 2023.
• Give people the option to voluntarily defer taking your OAS pension, for up to five years, and receive a higher, actuarially adjusted, annual pension as a result.
• Adjust the RDSP to make it easier to open accounts for mentally challenged individuals; permit parents, who save in a Registered Education Savings Plan (RESP) for a child with a severe disability, to transfer investment income earned in an RESP on a tax-free (or “rollover”) basis to a RDSP, provided the plans share a common beneficiary;and to relax the rule to provide greater access to RDSP savings for small withdrawals
• Contain no new taxes or tax increases.
• Eliminate the penny.
• Reform regulation in the resource industry, including amending the Canadian Environmental Protection Act.
• Allow Canadians to claim more goods duty-free at the border. The limit after 24 hours goes from $50 to $200; for 48 hours it goes up to $800.
• Cap EI premium rate increases to 5 cents a year until the fund is balanced again.
• Eliminate 19,200 government jobs over three years, including 600 senior executives and 7,200 through attrition.
• Cut $2.1 billion from the Department of National Defence over the next three years.
• Cut funding to the CBC by 10 per cent over three years totaling $115 million.
• Cut funding to Elections Canada by $7.5 million a year starting in 2012-13.
• Give $5.2 billion over 11 years to the Canadian Coast Guard.
• Provide $450 million for sports facilities in the Greater Toronto Area for the 2015 Pan American and Parapan American Games.
• Tell consumers to complain directly to food companies about product labelling.
• Give $67 million to the National Research Council to refocus on "business-led, industry-relevant research."
• Streamline overall regulatory reviews of major economic projects.
• Provide $275 million to build and renovate schools on reserves.
• Pass legislation to create standards for First Nations education.
• Refund $130 million in application and processing fees to skilled foreign workers stuck in immigration limbo.
• Raise the retirement age of public servants from 60 to 65, for new employees beginning in 2013.
• Increase employee-contribution levels to pension plans for those working in Canadian Forces, RCMP, Public Service Commission and parliamentarians.
• Make the Governor General pay income tax beginning in 2013.
• Shut down the Public Appointments Commission, Assisted Human Reproduction Canada, and the National Round Table on the Environment and the Economy.
• Sell official residences abroad, generating $80 million in revenue.
• Standardize all government emails to one system.
• $205 million over one year for Hiring Credit for Small Business.
• Give $50 million over two years to Youth Employment Strategy.
• Give $150 million over two years on Community Infrastructure Improvement fund
• Give $105 million next year to Via Rail for operational and capital projects.
• Give $101 million over next five years for Esquimalt Graving Dock.
• Give $50 million over two years to protect wildlife at risk.
• Give $8 million to clean up low-level radioactive waste in Port Hope and Clarington, Ont.
• Provide $44 million over two years to the Canadian Grain Commission to reform their funding model.
• Provide $13.5 million over two years to improve pipeline safety.
• Give $35.7 million over two years to improve tanker safety and inspections, emergency preparedness related to oil spills and updated charts for shipping routes.
• Announce a new global commerce strategy in 2013 that sets trade priorities.
• Provide $9.6 million over three years to the RCMP to fight counterfeiting.
• Give $ 99.2 million over three years to help the provinces create permanent flood mitigation measures.
• The Government has found $5.2 billion in ongoing savings from departmental spending or less than two per cent of federal program spending.

If you would like additional information, feel free to email.

Unlocking Old Ontario LIFs and LRIFs

April 30, 2012 is the deadline for Ontario Old Life Income Fund (LIF) and Locked-in Retirement Income Fund (LRIF) clients to take advantage of the one time 50% unlocking opportunity available to them.

In June 2009, Regulation 909 under the Pension Benefits Act of Ontario was amended to include changes to the rules governing Ontario locked-in accounts including Old LIFs* and LRIFs. Until April 30, 2012, owners of an Old LIF or LRIF will have a one-time opportunity to withdraw or transfer 50% of the total market value of the assets of the fund to an RRSP or RRIF.

The request to withdraw or transfer must be made on a form approved by the Superintendent of Financial Services and be submitted to us by April 30, 2012.

No applications for any withdrawal or transfer may be made after April 30, 2012.

Effective May 1, 2012, owners of Old LIFs and LRIFs will no longer be able to
withdraw or transfer 50% of the assets in their account.

For more information check out the information on the FSCO web site

* Old LIFs are Life Income Funds issued on or before December 31, 2007 and locked-in under the Pension Benefits Act of Ontario.

30% off Ontario College & University Tuition

Are you a student or do you know a student who is eligible? Here are the conditions:

• Students must be less than four years out of high school and their parents' gross income must be $160,000 or less to qualify for the grant.
• Students with disabilities may receive the grant for up to six years of study.
• The grant for the current semester is $800 for students in a degree program and $365 for students in a college diploma and certificate programs.

This September the permanent 30% off tuition grant will apply to the full school year. Students in a university or college degree program will save $1,600, while students in college diploma and certificate programs will save $730.

Because the grant is calculated to be 30% off the average Ontario tuition, the amount of the grant will keep pace with any increased future costs -- meaning it will always be 30% off the price of tuition.

More than 300,000 students are eligible to receive the grant this year. Students who already receive OSAP will have their applications submitted automatically.

For more information and to apply

NOTE: Deadline to apply for the term starting January 2012 is MARCH 31, 2012

Should I top up my RRSP?

I have had a number of my clients calling me the last few weeks asking if they should top up their RRSP this year. I thought that I would review the process I go through with them to determine what is best in each individual situation.

Question 1 – Do you carry a balance on your credit cards each month? Credit card debt is between 18 and 20 percent. If you are carrying a balance on credit cards, you are probably better off paying down this debt rather than putting money into your RRSP.

Question 2 – What is your marginal tax rate? The higher your marginal tax rate for 2011, the larger the tax refund you will get from putting money into your RRSP. In general –“ more bang for your buck” the more money you earn.

Question 3 – Are you likely to need the money in the next two or three years? If you are likely going to take the money out in the next few years – you should top up your TFSA (Tax Free Savings Account) first. In 2012, you can deposit a total of $20,000 if you do not already have a TFSA account. If you do have an account and have never taken money out of it, you need to subtract the amount of money you have already deposited from the $20,000. If you have taken money out, the calculation is more complex – give me a call.

Question 4 – Are you likely to be a first time home buyer in the next few years? The Home Buyers Plan (HBP) lets you “borrow” up to $25,000 from your RRSP to acquire a home in Canada to be used as your principal residence. (This money must be repaid over a 15 year period.) If you are planning on buying a first home and don’t have $25,000 in your RRSP, it may make sense to top up now.

Question 5 – How old are you? The longer the money remains inside the RRSP, the greater the compounding that will occur.

You get a tax break when you put money into an RRSP. The money grows tax free inside the plan. However, you do pay taxes when you withdraw the money – so you need to think about what your tax bracket is likely to be later.

Do you have additional questions? Give me a call and we can work out the numbers for you.

Daily Living - Coping with a Broken Right Arm

I wrote a blog post back in June 2010 on this topic. This week I met a friend - Anne Sowden from Here's Looking at You - who has suffered a similar incapacitation. Her suggestions are below and my original Blog Post follows hers.

General Comments from both of us:
Don’t go to hospital/fracture clinic appointments alone. Take a relative or good friend who can ask the right questions and intervene on your behalf, if necessary. Even the most intelligent of us need that kind of help when we’ve suffered a major injury. This advice also applies for medical issues.

Comments from Anne:
I broke my right wrist while on a secret mission and had a plaster and fiberglass cast on my arm from my knuckles over my elbow for four weeks. Like Heather, I learned a number of coping mechanisms that I’d like to share:

Personal Hygiene:
If you don’t want to get an electric toothbrush, get an “End Tuft” brush. The small bristles on the end make it easier to brush, especially those hard to reach places. You also don’t end up with as much toothpaste all over the place.

Flossing is impossible with one hand, so get yourself an Access Flosser. It’s like a toothbrush with a U shaped head containing floss.. All you have to do is work the floss between your teeth. And, it’s easy to replace the floss with one hand. In addition or as an alternative, chew gum.

With a huge cast over my elbow, I discovered baths were easier than showers. I didn’t have to worry about keeping my balance and a long soak in bubble bath before bed was relaxing.

Fingernails grow a lot in four weeks so I became a “regular” at my local nail bar—a habit that still continues even though my cast is off.

What to wear:
I totally agree with Heather about shoes. High heels are impossible with a cast. My go to shoes were rubber soled flats with Velcro on the straps.

Long sleeves were a challenge but fortunately winter weather was delayed and I was able to go outside wearing one of my husband’s sweaters. Yes, it was big and bulky but I’m told the colour looked amazing on me! The trick to putting on a sweater or jacket is to get the sleeve over your cast first. However, consider cardigans rather than pullovers and definitely sit while dressing.

Eating:
I was lucky that I had someone to cook and wash dishes. However, we learned that I made less of a mess while eating if my food was served in a bowl or deep sided pasta dish, except for soup. That was definitely best eaten from a mug.

While I could stab food with a fork, my favourite and most effective utensil was a spoon.

Anne Sowden, AICI CIP
Here's Looking at You
P: 416-429-8028
www.hereslookingatyou.ca

Original Post from Heather:
Back in June 2010, I was having wild and passionate sex and swinging from a chandelier. No one told me you had to reinforce the chandelier first ... and the next thing I knew, I had a displaced fracture of my right humerus. If you prefer version 2, I was out walking and tripped, lost my balance and fell off the sidewalk and broke my upper right arm – so that it was in two pieces.

This started the process of not having any use of my right arm for almost three months. I was lucky and didn’t need surgery, for all but 3 weeks got to wear a plastic (Sarmiento) cast as opposed to an “old fashioned” plaster cast. However, my arm was held to my side with a strap and held in place with a sling that I was not allowed to remove (24 hours a day).

There were loads of coping mechanisms that I learned – and here some of them are. Please feel to pass them on to anyone you know who might find them useful.

PERSONAL HYGIENE:
• Did you ever try to brush your teeth with your left hand? It was humorous. An electric toothbrush came to the rescue!
• With only one functioning arm – I discovered the easiest way to put on powder was with a powder puff.
• To wash myself, I switched to liquid soap and a face cloth from the bar soap I had used before. (I didn’t drop the soap and I didn’t have to chase the bar soap.)

DRESSING:
• For the first three weeks, I needed to wear my top over the plaster cast – off to Value Village to buy some extra large men’s shirts with buttons up the front. Once the cast was changed, I could put my arm through the sleeves, but still needed a men’s shirt to fit over the cast – and the buttons as I couldn’t put anything over my head. Fortunately it was summer and short sleeves were fine – and I didn’t need a sweater or jacket.
• Pants – I couldn’t do up the zippers on my pants – so I needed pants with elastic waists. I went one step further and bought scrub pants as they have loads of pockets and therefore I didn’t need to carry a purse.
• Shoes – I converted to rubber soled loafers. My balance was off, so the flat shoes were essential and the loafers were easier to put on one armed.

Men – you can skip the next point:
• As for bras – if you can get away braless or with a sports bra – that would be my recommendation. You can also try bras that fasten in the front. I went with a size larger and assistance to put them on.

FOOD PREPARATION:
• I converted to preparing foods that only required heating with a microwave and that didn’t require much cutting. I also purchased shelf liner to put under my plate to prevent it from sliding around. I used a pizza cutter instead of a knife as I could do it one armed.
• My left arm was not strong enough to pour from containers larger than one litre – so I had someone pour liquid into single serving containers.
• When it came to washing dishes – I bought a smaller container of cleaner and used a protector in the bottom of the sink so that I could wash one handed.

SUMMARY
Now that it’s almost a year post injury and I’m able to do almost everything I could do before the accident, my main suggestion to everyone is to do all of the exercises recommended and find a good physiotherapist. I’ve spoken to a number of people who had much less serious injuries and lost a lot more mobility than I did. So - persevere with your exercises. If you have any additional suggestions – please let me know and I’ll pass them on.

Heather Freed
Insure Your Freedom
416-806-5478
www.freed.ca