I am the first to admit that lawyers generally a pretty conservative bunch; if something has worked well enough in the past (no matter how ancient), then why rock the boat by trying something new? Sometimes, however, even the most cautious and traditional of lawyers realize that it’s time for a change. Accordingly, after many, many years of consideration, contemplation and conversation, our province has implemented sweeping changes to the rules regarding wills and estates through a single new piece of legislation entitled the Wills, Estates and Succession Act that consolidates many other statutes into one stop shopping. Essentially, it’s like making 90 years of changes all at once.
Posts from the ‘Estate Planning’ Category
I describe permanent life insurance as a multipurpose jackknife that combines many useful tools into a single sleek package. Universal Life (“UL”) policies are the ultra-deluxe version that includes enough attachments to do anything from performing minor surgery or opening wine bottles. On the other hand, unless you are supremely confident in your surgical skills or don’t mind a little cork in your chardonnay, perhaps this mythical pocketknife isn’t always the best tool for the job.
Arguably, the same is true for UL insurance; although it is capable of many different uses, which is a wonderful thing, it isn’t always the ideal solution for every problem. All the same, since we don’t always know what to expect when wandering through the forest that is life, having something in our back pocket that can be useful in a variety of different scenarios is a very attractive option. On a similar note, UL may sometimes be a secondary tool you can use in conjunction with your preferred implement to improve your overall results. Of course, in other case, despite these cautions, maybe sometimes a UL policy is exactly what you need.
For those of you waiting with bated breath, here is the third and final installment in my series on Participating Whole Life Insurance aka "Par Policies." The first and second chapters of this exciting story describe what these things are and how they work, including some information on what the insurer considers when determining what to pay you in policy dividends each year, and exploring your different choices for what to do with these things, along with the tax consequences. Today, we get practical. I'll talk about some of the different types of Par Policies currently available, how you can use them to help fund your retirement and, perhaps most importantly, what to consider when you're looking to buy a policy. With no further ado, here goes . . .
This article continues the conversation begun in my last article on Par Policies. For those of you who haven't read it or have quickly repressed the details from your memory, here's a brief recap. Par Policies are a type of permanent life insurance that allows policyholders to reap some of the insurance company's rewards in exchange for taking on some of its risks. You take on these risks by paying a higher initial premium. The insurer doesn't expect its costs each year to be as high as it assumed when calculating your premium, so policyholders typically get some of their extra premium dollars back each year through something called a "policy dividend." How much do you get back? This is stated as a percentage and is called the "dividend scale." I'll now talk a bit more about this delightful thing and will see where the conversation goes from there.