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14 Cards in this Set
- Front
- Back
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What are the three steps of conducting need analysis? |
1. Prepare an active inventory along with the values of the assets that will form part of the deceased estate 2. Determine the states obligations and death based on the immediate cash need of the survivors. This would include things like funeral cost, and paying off a mortgage. 3. Determine the amount of capital required to provide for ongoing income needs for the survivor. |
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What are some practical uses of life insurance? |
. To cover final expenses or living cost of dependent family members . To pay for a large tax liability that will arise from death. . Key person insurance . To fund by sale agreement |
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SEEM FIT |
S special bequest E emergency fund E education fund for children M mortgage F final expenses I income for surviving dependence T taxes |
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What is Chris-cross ownership approach |
With a cris-cross ownership approach, each partner owns life insurance on the other to fund an eventual buyout A Chris-cross ownership approach is also known as buy-sell agreement |
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What is a key person life Insurance? |
When a key employee of the company dies, it can have a major financial impact on the company itself. If this is the case, the company can take out life insurance on the key employee to help offset the loss of his or her services, the business itself is usually the owner of the beneficiary of the policy. |
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What is required for the surviving spouse to be able to transfer his deceased partners, RRSP or RRIF funds to his or own RRSP or RRIF with no tax consequences? |
The spouse needs to be named as the beneficiary |
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Segregated fund has a medium risk rating. What would be the standard deviation range? |
A standard deviation of 11 to less than 16. |
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What is the difference between exempt and a non-exempt life insurance policy? |
An exempt policy is not subject to tax on the income earned within the policy A non-exempt policy income and subject to tax and must be reported every three years if created prior to 1990 and annually from 1990 onwards |
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A policy fails its annual exemption test. Within how many days the policyholder fix the issue before the policy become non-exempt? |
60 days |
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OK need analysis is performed to estimate the amount of life insurance needed in order to take care of the immediate and future potential needs of surviving dependence. What are the steps involved in this process? |
Step one: prepare an acid inventory along with the values that would form part of the disease the state Step two: determine the estate obligation at the death based on the immediate cash need of the survivors. This would include things like funeral, cost, paying for a mortgage, etc.. Step three: determine the amount of capital required to provide for ongoing income needs of the survivor |
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What type of job insurance insurance plan has benefit that will receive tax-free by the employee? |
A plan that is owned and paid for by the employee |
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A life insurance policy can be transferred to a third-party or surrender for its cash value. If the policy has grown in value, what may need to be reported to CRA? |
A taxable gain |
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How is the death benefit on a life insurance policy treated for tax purposes? |
It is received by beneficiaries’s tax free |
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Policy Gain |
1. Policies last acquired December 1, 1982, or before. ACB = premium - dividend 2. Policy last acquired after December 1, 1982 ACB = premiums -dividends-net cost of your insurance |
