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The opinions expressed herein are my own personal opinions and do not represent my employer's view in any way.

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# Thursday, April 26, 2007
Thursday, April 26, 2007 7:06:04 PM (GMT Daylight Time, UTC+01:00) ( General Life | Term Life | Whole Life )

Reviewing Your Retirement Plan

One of the biggest financial challenges is planning for your retirement. What you save for retirement will ultimately decide the quality of life once you stop working, and also determine when you stop working. Once you have a retirement plan, it is very important that you review your plan every few years to determine whether or not it is still reflective of your plans and needs. When reviewing your retirement plan, ask yourself these questions to determine whether you need to amend your original plan.

Are you still planning on retiring at the age you first decided on? Many circumstances, such as illness in the family, getting married, etc. can alter the original plan. Financial setbacks, such as unemployment, a loss in the stock market, supporting a loved one or whether or not your investments are growing at rate on which you accounted for can cause a significant change in your savings, thereby changing your original goal of when to stop working. Determine whether you need to re-evaluate this, and if applicable, decide on when retirement will be feasible.

Are your spending habits still consistent with your original retirement plan? Marriage, divorce, having children can significantly change your bank balance. Big purchases, such as a home or vacation home, new vehicles, etc. can also take a bite out of your savings. Also consider whether or not you have incurred new expenses, such as your children's education, etc. that you didn’t have when you first planned for retirement. It is important to evaluate your current financial obligations, and determine whether or not it is consistent with your retirement plan. You may want to consider cutting expenses where you can in order to save for your retirement.

Is your investment portfolio growing as originally expected? You need to evaluate whether your original investments are still relevant to your needs. Reassess whether or not your original portfolio is growing with your retirement goals. Factor in your age and retirement goal and decide whether or not you need to make changes in order to accomplish that goal. Depending on your target retirement age, and how close you are to that target, you may need to make changes in order to accomplish your goals.

How much can you expect from your government retirement plan? Get a statement of earnings so you know exactly how much money you can expect when you retire. By doing this beforehand, you can also determine whether your account information is correct, and deal with any mistakes before you need this income. Having an accurate dollar amount of what you are entitled to will greatly aid you in determining your retirement budget, and exactly how much savings you will need.

How about your company pension plan? You need to be fully aware of what type of plan it is, whether or not your employers offer matching funds, and whether or not you are contributing as much as you can. You need to research whether or not you can choose the investments and track how well they are doing, as well as what you are entitled to if you choose to leave your employment early. It is important to know how much your plan is worth, and how much it will grow between now and your retirement date.
What happens to your health and life insurance benefits? Determine whether or not your benefits are available after your retirement. Most benefits end upon termination of employment, just when life and health coverage is most needed. For those who are concerned about getting coverage with existing health problems, we offer a Guaranteed Issue Life Insurance plan that is affordable and requires no medical exam. We also offer FollowMe Life Insurance, specifically designed for those who lose their employee benefits. There is no medical examination required, providing you apply for coverage within 60 days of your employment termination. You can choose the amount of coverage you want, and it is guaranteed renewable up to the age of 80, regardless of health conditions. This coverage also provides a Living Benefit, at no additional cost. We also provide Guaranteed Issue Health Insurance; for more information please visit our website

The closer you get to retirement, the more often you should review all these criteria to ensure that your plan is still meeting all your requirements. Consult a financial planner if you are unsure whether or not you are maximizing all your options. If you are concerned about getting insurance coverage after you retire, please contact us for assistance.


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# Friday, April 13, 2007
Friday, April 13, 2007 2:57:43 PM (GMT Daylight Time, UTC+01:00) ( General Life )

Choosing The Right Charity

Many Canadians choose to donate to charities in an effort to make life better for those less fortunate. Charities play an important part of Canadian society, raising money for programs that would not otherwise be able to financially survive. Before donating, it is important to make sure it is a legitimate recognized charity, and that your donation is being spent properly.

Unfortunately, there are some unscrupulous people posing as charities in order to illegally profit from donations. With so many different charities to choose from, potential donors need to exercise some caution before committing to donating their money. A simple way to verify if a charity is legitimate is to see if they are registered under the Income Tax Act. The Canada Revenue Agency registers qualifying organizations as charities, and handles auditing and compliance issues. All registered charities are required by law to file an annual tax return, which is available to the public. They must meet government requirements regarding their expenditures and activities. If a charity is registered, they are entitled to issue official receipts for donations, which can be used by the donor to reduce their payable income tax. If you would like to verify whether a charity is registered, you can call 1-888-892-5667 or visit the Charities Direcorate webpage.

It is advisable to do some homework on the charity that you are interested in. A reputable charity will offer information if asked, such as budget information, annual reports, etc. It is important as well to ask exactly how your money will be spent, i.e. how much goes to operating costs vs. directly going to the intended cause. Never give out your personal information to someone over the phone or internet. Beware of solicitors who pressure you into giving a donation immediately, without allowing you the opportunity to investigate the charity first. This may be an indication that they are not a charity at all, but rather a "scam" that relies on high pressure tactics to dupe unsuspecting citizens. These scams may also use "sound alike" names of reputable charities, trying to trick a potential donor believe that they are legitimate, when in fact they are not.

Once you have decided on a reputable charity, you may want to consider donating a life insurance policy. This can be done by either gifting ownership of an existing policy to the charity, or by having the charity take out a policy on the donor’s life. With either of these options, the charity becomes the owner of the policy. Choose carefully which option will suit your taxation purposes, as they carry very different results.

If you donate an existing policy, or have the charity take out a policy on your life,  a tax receipt can be issued for the fair market value. This is calculated by the cash surrender value of the policy minus any outstanding loans plus any accumulated interest. Premiums paid on the policy by the donor, either directly (by you to the insurer) or indirectly (funds paid to the charity that are specifically earmarked for payment of premiums) are considered charitable donations. The charity can issue an annual receipt in regards to these premiums. The beneficiary designation does not need to be irrevocable in order to obtain this charitable tax credit. The donor may also be entitled to a tax deduction for the value of the donated policy. Upon death however, the estate will not be entitled to any further tax benefits.

The other option is to purchase a policy and name your estate as beneficiary. You can then directly specify that the benefits go to your charity or charities. This option does not entitle the donor to a tax receipt for the premiums, but instead entitles the individual for a charitable donation tax credit on the proceeds on their terminal return. However, it is important to remember that there is no "carry-over" for gifts made in the year of death. If the full amount of the tax credit cannot be used, there is a provision in the tax laws to carry back any unused donation one year. The donation limit for the year of death and the preceding year is limited to 100% of the net income.

Donating a life insurance policy can be beneficial to both the donor and the charity. Discuss with your family your intentions of donating a life insurance policy to charity. It is also advisable to seek help from a qualified insurance broker in order to ensure that you understand your options, and can select the method which best suits your taxation requirements.

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