Demystifying Protection Planning for the Business Owner

2. GROUND RULES Questions • Attendees are in listen-only mode • This webinar is being recorded for future on-demand playback • Your participation represents acknowledgement that we are recording • Tweet questions & comments to: #WelchDemystifying Windows Mac Tablet

3. Ryan Dostie, CPA, CA, CFP Partner rdostie@welchllp.com @WelchLLP Pierre Bernier, CFP, FMA Financial Consultant – Scotia Wealth Management pierre.bernier@scotiawealth.com www.scotiawealthmanagement.com PRESENTERS Tom Bryan, CFP, CLU Senior Advisor – Scotia Wealth Management tom.bryan@scotiawealth.com www.scotiawealthmanagement.com

4. WHAT WE’LL COVER TODAY • The Ultimate Myth • What is the Role of Insurance? • Types of Insurance • Taxation of Insurance • Changes in Insurance • Q & A

5. THE ULTIMATE MYTH

6. THE ULTIMATE MYTH “I have $1,000,000 of life insurance, that’s enough, right???”

7. According to Wikipedia: Insurance is a means of protection from financial loss. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. WHAT IS INSURANCE?

8. • Risk Protection - Death - Disability - Critical Illness • Tax Planning (Opportunity) - tax-shelter investments for use in retirement - tax-shelter investments for estate planning WHAT IS THE ROLE OF INSURANCE?

9. • Life - Term - Permanent Whole Life - Permanent Universal Life • Disability • Critical Illness TYPES OF INSURANCE

10. • Estate planning • Business succession planning • Philanthropy TAXATION OF INSURANCE

11. 2017 changes to: • tax-exempt life insurance • taxation of annuity income CHANGES IN INSURANCE

12.

13. Ryan Dostie, CPA, CA, CFP Partner rdostie@welchllp.com @WelchLLP Pierre Bernier, CFP, FMA Financial Consultant – Scotia Wealth Management pierre.bernier@scotiawealth.com www.scotiawealthmanagement.com Q&A Tom Bryan, CFP, CLU Senior Advisor – Scotia Wealth Management tom.bryan@scotiawealth.com www.scotiawealthmanagement.com

Editor's Notes

Moderator: Ryan Dostie, CPA, CA, CFP, Partner at Welch LLP has over 20 years of experience in public accounting. He leads the Retail & Service Industry Group. In addition, Ryan serves a number of other industries including: construction, automotive, independent contractors, NPO's, and high-tech. Ryan has been with Welch LLP since 1995, after graduating from the University of Ottawa with a Bachelor of Commerce. He obtained his Chartered Accountant designation in 1996 and his Certified Financial Planner designation in 2002. In February 2011, Ryan earned the title of Partner with the firm. Pierre Bernier, CFP, FMA, Financial Consultant at Scotia Wealth Management - has worked in the financial services industry since 1991. He holds the Certified Financial Planner, the Personal Financial Planner, and the Financial Management Advisor designations. Pierre has also completed the Canadian Securities Course, the Wealth Management Techniques Course and the Conduct and Practices Handbook Course, all through the Canadian Securities Institute. Tom Bryan, CFP, CLU Senior Advisor at Scotia Wealth management Tom joined Scotia Wealth Management in 2005. He has worked in the financial services industry for over 28 years and has extensive knowledge and expertise in both personal and corporate estate planning. Tom holds a degree in Economics from Carleton University and is also a Certified Financial Planner and a Chartered Life Underwriter. As well, Tom is an active member in the Ottawa Estate Planning Council and is the Chair of the Finance Committee and a Board member at St. Patrick’s Home of Ottawa.
RD: Read off what we will cover today. Moderator: I realize today’s Webinar is on demystifying protection planning for the business owner. So why did you choose that topic? Pierre: Ryan and I thought this is a key area that business owners sometimes miss or don’t completely understand. Ryan: Welcome board…You just came back on your family holiday, I bet you spent a ton of time thinking and working on this insurance webinar Pierre: To give cruise lifeboat drive… We decided to bring with us, one of our team of experts to help us demystify this topic. Welcome Tom. Tom: Thanks guys…. Makes comments about trip or whatever Move to next slide
RD says OK guys let’s get to why we are here - The Ultimate Myth- Vanna sorry Darryl please reveal
Moderator: say question on screen Tom- Guys I have pop quiz for you? Pierre and Ryan complain about it, etc high school days… blah blah Pierre says I can’t copy off him this time, so you go first Tom- “What Is your most valuable asset ?” Ryan – not sure if I can say that on the air? Pierre – to make some side remark to encourage Ryan Ryan – my personality and wit Tom and Pierre to hammer Ryan on response Pierre – to respond to question - family Moderator- so guys what is insurance… change slides
RD: Back to the most reliable source to read the body of this slide. Pierre to translate the definition and then move us into the roles of insurance. Tom it’s time to put your knowledge to the test, let’s talk about the roles of insurance. Turn slide
After Tom goes through the slides = Ryan says to Pierre, I remember from our last webinar about demystifying financial planning, that you discussed Insurance Needs as one of the components of financial plan. In what context do you cover off these with your clients. Tom will focus on the roles of “risk” and “opportunity” without getting to deep into product (that is the next slide) Depending on length of info – Tom to give some to PB and RD??? Pierre to move us from role to types:
Pierre – explains Life – Term Tom – explains Permanent whole and UL RD – Disability (RD Dentist example) Tom - CI Pierre going ask Tom, how he decides which type of insurance the client needs? Ryan will continue the conversation about how much? Tom – to mention about people coming for a second opinion About over insured or not? Pierre – how does taxation fit into this guys – Ryan being an accountant and Tom on insurance Move slides
Moderator- how does this work if the client owns the life insurance through their company – RD Tom: will hi-lite the role of a financial plan in determining the needs identified above and why insurance is the right tool I will give an example of each Estate planning: Your financial plan indicates you will have a significant tax liability at death (might be RRSP accounts/cottage/capital gains on a stock portfolio. Life insurance can be the lowest cost solution to pay the tax bill Business Succession Planning: Your business has 3 partners. If one dies, what do you want to happen. Typically the 2 survivors want to continue one and they need cash to buy out the deceased shareholder. Life insurance provides immediate liquidity when it is needed Philanthropy: Our tax system provides many incentives to give to charity. This includes the donation of life insurance policies. I will give 2 examples: one where the premium qualifies as a charitable donation and the second where the life insurance proceeds qualify for the deduction at the time of death.
Tom to provide an example of each: Tax-exempt life insurance, especially corporate owned life insurance: for policies issued in 2017 or later, client needs to live well past life expectancy before all of the insurance proceeds can flow out of the corporation on a tax-free basis. Policies issued before the end of this year will have much better tax treatment and the policy will be grandfathered and protected from the new rules Annuities purchased with non-registered funds qualify for “prescribed” or level taxation. The client knows the proportion of T5 interest income and the amount will stay the same for the lifetime of the contract. A new updated mortality table will be used starting in 2017. As we know, Canadians are living longer. The Department of Finance has decided that if we are living longer then a higher percentgage of the annuity payment should be considered taxable income versus a return of captial. The result will be an approximate 10% increase in the amount of interest income on an annuity payment In summary: If you have been considering a corporate owned life insurance policy or a life annuity you should meet with an advisor in the next several months. There are significant advantages to putting these contracts in place before the end of 2016
Conclusion: Demystified!
Questions Insurance is complicated? How do I determine if I have the right AMOUNT of coverage and the right TYPE of policy? Special riders for circumstance You guys covered a lot of information, where do I begin the process Is term life tax deductible if it’s in the company

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Editor's Notes