Peter Boys, Boys Financial Services

Tax & Other Changes to Life Insurance Coming January 1st

tax and life insurance

This is an important notice to all holders of term life insurance policies who may be wishing to upgrade their coverage, convert some or all of their coverage to a new permanent plan, or who are just looking to apply for new permanent life coverage.

There are some important changes coming that could impact your future life insurance choices. Effective January 1st 2017, CRA is changing the tax rules for new permanent insurance policies, and insurance companies are increasing premiums for permanent life insurance.

  • If you’re considering converting some or all of your existing term coverage to a permanent life insurance policy, we recommend that you act now to lock in lower premiums before the increased premium costs come into effect. This can be done without medical underwriting up to the value of your present coverage.
  • For those of you insured on a corporately owned term policy and looking to convert some or all to permanent coverage, future tax changes may impact the amount of the death benefit that can be paid out tax-free to your beneficiaries. If you wish to convert some or all of a corporate owned term plan to a permanent one or apply for new coverage, it would be prudent to do so very soon, so that it can be grandfathered under the current rules and at a lower cost.
  • If you wish to purchase any new or additional permanent coverage requiring medical underwriting, applications would need to be submitted by the end of September to ensure the coverage will be issued before the 2016 year end cut off for grandfathering under the existing tax rules.
  • If you’re considering purchasing an annuity for tax efficient life-time income, it’s best to do it in 2016, as after January 1st the taxable amount will increase resulting in less income.

We have a link to a video on our web site – boysfin.ca – that covers these changes.  This can be found at: http://boysfin.ca/2017-tax-changes-life-insurance/

If you have any questions or concerns about any of this, talk to your insurance advisor. If you don’t have an advisor, talk to an experienced insurance advisor who can review your policies and help with any changes you may need to make before the deadlines.

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