Reap benefits of buying life insurance in 2016
We all know the anticipation of waiting for the start of a vacation or the newest season of your favourite TV series. Thankfully there are some things you don’t need to wait for – like the great tax benefits that life insurance offers. Actually, you shouldn’t wait because some of these benefits won’t be available much longer.
New income tax rules for life insurance will be implemented on January 1, 2017, which will affect permanent life insurance policies and annuities. These new rules will have a big effect on corporately owned policies and capital dividend accounts.
Insurance policies issued before the changes take effect will have grandfathering provisions.
How changes affect you
Changes to the taxation of life insurance will include:
- The tax deferral advantage of permanent insurance will still be available, but the tax-deferred amount will be lower
- There will be changes in the tax deductible amount of life insurance assigned as collateral by business owners
- The amount that can be paid tax free through a corporation to shareholders will decrease
- The taxable portion of personally owned life annuities will change, in most cases making it more advantageous to purchase them now
Your Consultant can help
Take time to review your insurance coverage with your Consultant to see if changes need to be made to existing policies or if you should purchase insurance before the end of year. Your Consultant also has access to a team of insurance, tax and estate planning specialists to ensure you have the right coverage for your needs.
This is one time where you’ll be glad you didn’t wait for next year’s model.
Reviewed: April 21, 2016
Insurance products and services distributed through I.G. Insurance Services Inc. (in Québec, a Financial Services Firm). Insurance license sponsored by The Great-West Life Assurance Company (outside of Québec).