With the federal government heading towards the legalization of personal marijuana use some life insurance companies have announced that occasional marijuana smokers would now be considered as non-smokers on new applications for life insurance and in some cases critical illness insurance.
How significant is this change? Substantial!
As an example, for a male age 35, the standard smoker premium for $500,000 of 20 year renewable term is $1,070*. Now a recreational marijuana user can purchase that same coverage for 410 per year. *
Sun Life, BMO and Empire Life were the first three companies to make this change with Sun and Empire extending the offer to Critical Illness coverage as well. Most insurance companies are expected to make similar announcements. For some companies, medicinal marijuana users are excluded from the new offering but may be considered on a case by case basis. Read more
Canadians may need to rethink their risk management
In a recent study conducted by the Life Insurance and Market Research Association (LIMRA), it was reported that 61% of Canadians hold some form of life insurance. Surprisingly, it also revealed that only 38% of Canadians own an individual life insurance contract.
In another study of middle class Canadians, Manulife reported that 79% had no individual disability insurance and 87% had no individual critical illness coverage.
What both of these studies conclude is that most Canadians rely heavily on their group benefits for their family’s insurance protection. Read more
Don’t Put Off Your Decision to Buy Life Insurance
2016 is an opportune year to buy life insurance. New laws affecting the taxation of life insurance come into effect on January 1, 2017. After this date new policies will not perform as well as they do currently.
The good news is that the proceeds of life insurance policies paid at death still remain tax free. What has been affected is the amount of cash value that may accrue in a policy and the tax-free distribution of death proceeds from a life insurance policy owned in a corporation.
How will this impact your existing and future policies?
Adjustment to the Maximum Tax Actuarial Reserve
Whole Life and Universal Life policies are valuable vehicles in which to accumulate cash value. The limit of how much can be invested is governed by the Maximum Tax Actuarial Reserve (MTAR). If the cash value ever exceeds the MTAR limit, the policy is deemed to be “offside” and will be subject to accrual taxation. Read more