Insurance Companies Oppose International Financial Reporting Standards (IFRS)

Canadian life insurance companies are persuading the Canadian government and regulatory bodies to move the accounting principles and reporting requirements in their favour. In summary, the industry would like an amendment of International Financial Reporting Standards which Canadian government is prepared to put in use but plans to effect not before 2013.

They argue that the new order will prepare way for tremendous volatility to the c/e ratio in annual (quarterly) comparisons. The problem is, not only would this make the comparisons more problematic, but it would also stop comparisons to results calculated under the former rules.

LSM Insurance believes the latter is weedy plea though, as the the industry would most likely be needed to make new calculations for previous few periods\’ statements using the fresh rules precisely for the purposes of logical benchmark, as is the case with most alternations of the standards. However, a shift of regulations will absolutely come with more administrative power costs in the time of the change at the bottom end.

As to the volatility of capital figures, the FP says that the the industry are requiring a two-tier accounting system that lets capital to be assessed based on a various set of rules than the IFRS. This does make sense because the amounts of capital reserves are surveyed and regulated by the Canadian regulatory body – OSFI. Should there be over the limit volatility of capital, the insurance companies may be force to re-check them more often so that foil optimal capital management.

In extreme cases, insufficient capital may prompt OSFI to consider an insurer bankrupt. Now, it is far from possible to determine the exact effects of IFRS on c/e volatility, as the new regulations are still being prepared by the International Accounting Standards Board (IASB). Nevertheless, the insurance companies are believing that a two-tier rules, which is in place in the US and the UK will erase any such concerns.

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Solving Inheritance Tax Issues by Using Life Insurance

Originally devised as a tax on the super-rich, inheritance tax (IHT) is threatening more and more ordinary households in the UK. Indeed, over the last five years the estimated revenue from this tax has increased by 50% to annually yield £3billion into the HM Revenue & Customs coffers. It seems that in the future death will no longer be a valid reason to not pay tax for the majority of us. The chancellor will be pursuing 40% of your estate over the £300,000 threshold after your demise.

There is no shortage of financial advice on how to mitigate your IHT liability. That is because rising house prices combined with the government’s refusal to increase the nil-rate threshold in line with house price inflation means that this pernicious tax is now within the reach of many ordinary, base rate taxpayers: not just the super rich, as originally intended.

Ways to help reduce your liability include reducing the size of your estate by using trusts, although the HMRC has been quick to close the loopholes over the last few years. Under certain conditions you can give your assets away, although if done within seven years of your death, this may ultimately not reduce your tax liability, and there are other complications that may nullify this charitable way of distributing your worldly goods.

Another answer could be life assurance, which provides a tax-free cash sum on death, capable of paying the IHT bill. For those who are married or in a joint civil partnership, taking out a joint-life second death policy would be the solution, as their estate is not subject to IHT on the first death. However, it is essential that this life insurance is written into trust, otherwise it will be taxed as part of the taxable estate – so rather than reducing the tax liability it will increase it.

Part of the planning challenge for this solution is being certain that you will expire before your policy does. There is no point having a sum assured to meet your tax liability if you outlive the policy. As a result, many would consider a whole-of-life life insurance product as the best alternative to the second death policy. This type of UK life insurance product pays out upon death and not after a fixed period. However, premiums tend to be higher with whole-of-life policies and can increase significantly over the period of the insurance.

Inheritance planning is very important and, before taking out any policy, it is important that you compare life insurance products, as the premiums will differ depending upon the cover and the company. In any case, get professional independent financial advice before committing to any life insurance purchase.

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Single Premium Life Insurance Policy

Single premium life insurance is a type of life insurance coverage where the policyholder pays the premium at the beginning of the policy term and no additional premium is required to pay during the policy term.

The main feature of the single premium life insurance policy is that the policy acquires its cash value faster than the policy for which payments are made regularly. The death benefit is similar like any other life insurance policy and it is depends upon the amount of money that policyholder pay and his age. If the policy holder is young, the life expectancy will be longer and this will give enough time for the premium to grow higher before his death. The death benefit is tax deferred and it is immediately provided to the beneficiary.

There are different versions of single premium life insurance available in the market, which offers wider range of investment and withdrawal options. Whole life and variable life are the most popular plans in a single premium life insurance policies. In a whole life plan, the benefit is depends upon company\’s investment experience and current market situation. Variable life plan allows policy holder to choose the investment strategy.

Under this plan, the policy holder retain access to their money for the illness, retirement or any other needs. The loan is also available and generally loan amount is equal to 90% of the policy\’s surrender value.

At the time of purchasing, consider the more than one insurance company to get the better benefits for the single premium. The insurance company\’s financial situation is especially important to get the better returns on your investment. There are policies that allows additional premiums, it can be a good if the individuals want to deposit additional money later to increase benefit.

To qualify for such a plans little easier then other types of life insurance- medically speaking. This plan is very useful for those people who have a seasonal income and they want hinger return on their investment with life cover.

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Ways to Use Life Insurance in Your Estate Planning

Life insurance can help you provide the extra cash that protects your estate from being gouged by estate taxes. This article shows you a couple of ways it can do this.

*Get cash for settling estate costs and preserving your holdings intact:

At your death, estate taxes are imposed on the value of what you own. If you\’re married, these may be delayed until your spouse\’s death. Other costs such as funeral expenses, debt settlement, and administration fees can add to the need to have cash.

Life insurance can supply this cash. Other than cash on hand, no asset can provide such a predictable and immediate influx of dollars to pay the costs of dying as can insurance.

Without available cash your estate may have to liquidate your investments or business interests to pay estate taxes. Such untimely liquidation can cause irreparable losses and opportunities. To maintain your estate\’s investment holdings or business intact so they pass on to your children, you or your spouse may purchase insurance to alleviate having to liquidate those precious holdings.

If you\’re married, survivorship life insurance generally is used to provide liquidity for final expenses when the second one of you dies.

*Make that charitable gift and still transfer your wealth to your children:

You can combine charitable giving with life insurance to make the donations you always wanted to. And you can do this without reducing the wealth you want to pass on to your beneficiaries. Here\’s how it works…

You can – if you have the wealth – give a substantial lifetime gift of appreciated property to a qualified charity. This gifting generates a significant income tax deduction. With the income tax savings you get from this deduction, you can purchase life insurance whose proceeds at your death will replace the very wealth that you gave to charity. It\’s like eating your cake and giving it away too.

*Foregoing ownership of life insurance will further reduce your estate taxes:

In both these examples, if you maintain ownership of the life insurance, then its death proceeds would be added to the value of your estate. This, in turn, would add to the estate tax on your estate. Realize that though life insurance proceeds are free of income tax, your ownership of the life insurance makes those proceeds part of the value to your estate – and therefore subject to estate tax at your death.

You can avoid that estate tax on those life insurance proceeds if you don\’t own the life insurance. So you can eliminate ownership of that life insurance either by giving it away at least 3 years before your death or by having some other person or legal entity to purchase and own in the first place.

Without your ownership of the life insurance on you its proceeds can still be used for paying all those final expenses without adding those proceeds to your estate subject to estate tax. Trusts are common legal entities for purchasing and owning life insurance in such circumstance.

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International Term Life Insurance vs. Cash Value Insurance

Domestic and/or International Term Life vs. Cash Value Insurance Policies

There are two forms of life insurance policies available. The first is Domestic/International Term Life insurance, which is the most basic form of insurance. It offers insurance death benefit coverage and that\’s it. With a term policy, your premiums are applied 100% to the cost of the term insurance. As you age and retirement grows near, the need for any life insurance decreases. Your children will now be able to support themselves and your savings for retirement will begin to approximate a lump-sum insurance payment. At this time, it may be safe to cancel or sell your current Domestic/International Term Life insurance policy.

The second type of insurance is cash value insurance. There are many financial products that fall under this category. They can include universal life insurance, variable life insurance and whole life insurance. Cash value insurance combine regular term insurance with a tax-sheltered savings plan that is long-term. One of the most important things to know about cash value policies is that they must be held for life, but this does not mean that premiums need to be paid for life; it is possible you only need to pay premiums for 5 -7 years. In most cases, there will be some upfront costs that are associated with setting up the savings plan, paying a commission to the agent and investing the money. Despite these initial charges, this type of tax-sheltered savings can have huge advantages, however, be aware that it may take at least 10 years for those advantages to be a benefit. If you are thinking of purchasing a cash value policy, make sure you learn about every aspect of the policy.

How Cash Value Works: Not All Cash Value Insurance is Created Equal

Understanding how a general cash value policy works is essential. Your life insurance is paid by a portion of your regular premium payment. The balance is then applied to the savings account attached to the policy. In order to build savings, your advisor should request a minimum death benefit and fund the policy over at least 5-7 years. The premiums for a cash value policy are higher than that of a term life policy with the same death benefit, but you are not buying this policy for the death benefit, but rather for tax-free savings and tax free withdrawals. For this retirement strategy, you definitely want to get the minimum death benefit to maximize the cash value growth. While the premium may seem higher, savings is the ultimate goal. The savings from a cash value policy can provide you with income that will cover all life insurance payments upon retirement. If you die, the balance of the savings and the death benefit is then passed onto your named beneficiary, which ideally will be an irrevocable trust. Depending on the type of policy, the amount passed on will be a portion of the death benefit of the insurance or in addition to that death benefit.

Withdraw Cash Value Life Insurance Money with No Income Tax

If set up correctly, removing money from the plan will not result in income taxes which is one of the key benefits of the policy.  There are strict rules regarding taking money from the savings in the plan, but a good advisor or Estate Street Partners will walk you through those details.

In the author\’s opinion, the best type of cash value life insurance is Indexed Equity Universal Life (EIUL) because it has an annual minimum return guarantee, but still allows the cash value to grow at market rates every year if the stock market has positive returns.  These policies lock in the gains in up years and avoid losing money in the years the market goes negative.  Usually these policies are tied to a stock index like the S&P 500.

The mechanics are simple:  The insurance company does not invest in the stock market, rather they invest in bonds and some of the interest that is generated from the bonds goes to you to guarantee a minimum rate of return and some of the interest is used to buy call options on the index.  When the stock market index goes up it pays off the policy at the same rate of return of the market.

Why You Should Keep Your Cash Value Policy & Not Cancel it

There are many people who will buy a cash value policy and then cancel it. Cash value plans can provide great benefits, but you must keep that policy and not cancel it. If you think you may cancel a life insurance policy later, it may be better to purchase a term life policy instead. But there is really no need to cancel it, just stop paying the premiums and the cash value will continue to grow tax free. Unlike a Term life policy, one does not need to pay premiums for more than 5 years unless they want too.

If you are contemplating buying life insurance, make sure the agent breaks it all down. You want to know the exact benefits of each type of policy and what these benefits entail. Many agents will recommend you to buy cash value because of the savings plan attached to it. While this may be a good option for most, it may not benefit everyone in the same way; it depends on each individual\’s situation. Each person has their own needs when it comes to life insurance, so make sure you get all the information needed before making a decision.

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Life Insurance Policy Coverage – Affordable Whole Life Insurance For Any Budget

Looking for Life Insurance Policy Coverage?  Acquiring a good life insurance plan can secure the welfare of your loved ones.  In a time of trouble, a proper life insurance plan can be very useful for your children and spouse.  Your dependents\’ financial welfare will be protected by the life insurance plan you have when you are not there.  Researching the insurance plans available is a very important step.  These plans should provide and cover your family\’s needs.

You can get a free life insurance quote here.

It\’s essential to purchase an insurance policy that gives the most coverage for a sum that you can manage to pay.  Easy internet research can land you a good insurance plan.  Examining the insurance schemes in this approach can make your work a whole lot easier.  The advantage is that you get numerous policies from a variety of different providers.

Many websites are in place to help you obtain free insurance quotes.  These free services can help you to find the correct policy quickly and easily.  It makes it straightforward to find the firms that will give you the most secuirty for the amount asked.  After collecting your quotes, you then can settle on what firms provide for your needs for a charge that is financially sound.

Get life insurance quotes from numerous companies now.

It is recommended that you obtain second opinions on the insurance provider that you are researching.  If you want to get Life Insurance Policy Coverage, you need to look at a lot of comparisons.  Quize those who have gotten life insurance before from a certain organization to learn how their experience went.  Their understanding can demonstrate if the insurance scheme is the one for you.

When getting a quote online, you simply have to provide basic information such as your age and gender into a form.  After you finish the questionnaire, you will acquire competitive plans from different organizations.  In the end you can choose what companies are the correct ones to protect the well-being of your family.

Get started now and don\’t wait around anymore.  Go here to find out more about and to get free life insurance policy reviews.

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