SAFEBRIDGE Announces Our “Famous Bridges” Winner

Our first full year running our SAFEBRIDGE Financial “Famous Bridges” Program is over, and a winner has been chosen!

There has never been a better time for us to thank each of you who has introduced us to someone you know who could benefit from a complimentary second review with our firm. You have “graduated” from being a client of SAFEBRIDGE to becoming an Advocate of our firm, and we are truly grateful for that. In fact, over 300 of you chose to become an Advocate of what we do and that is a responsibility that we take very seriously!

To view the video of our live draw, please click here!

Congratulations once again to our winner and until next time, have a Terrific Tuesday.

Chris & Elisseos

Creative Home Buying for 20 Somethings

The Ottawa Citizen just released an article saying that more and more “20 Somethings” are getting creative when it comes to buying their first or subsequent property.

Real Estate has been on the rise in Canada for quite some time, and many Canadians have been looking for ways to get into the housing market despite their luming student loans and other debts. One strategy that many people have used is to buy a home with a finished basement or separate unit and then rent that to someone they know, or even someone they don’t. This has proven to very succesful for many “20 Somethings” as the article states “About one-quarter of Canadians aged 18 to 34 are homeowners, according to a recent survey by the Canadian Association of Accredited Mortgage Professionals (CAAMP).”

Your Take-Away: If you are currently single and would prefer to own rather then rent, the door to your goal is by no means closed. With longer amortization periods on mortgages, your mortgage payment can be reduced substantially allowing you to buy something for close to the same price you’d pay to rent. This is just one idea to help you get into your home sooner rather then later, but there are a number of other ways you can get creative if you are serious about buying instead of renting.

One caution however is to not make a hasty decision and go bigger then you should just because it feels more affordable based on smaller payments or our low interest rate market. This can come back to bite you if you are not careful to “stay within your means” on this decision.

Until next time, have a Terrific Thursday!

Chris & Elisseos

It Pays to Know your Closing Costs

The writer of “Canadian Capitalist” wrote a great blog on the costs of owning a home.

In short, he outlined some of the key expenses that are sometimes easily overlooked causing a bit of a panic mode come closing. He also discussed some of the major expenses that we often forget about or all together minimize and cautioned us to seriously think through both the pros and cons of home ownership.

Your Take-Away: In most cases, owning a home to live in can be a great decision. What we see all too often is Canadians over extending themselves and buying larger homes then necessary. With the interest rate market over the last number of years, many have bought more home then they should have and have been forced to scrimp and save to survive their growing expenses.

Always look at all of the possible expenses you may incur, and it pays to definitely air on the side of inflating the numbers simply to safe guard yourselves from becoming trapped at home because you end up cash poor.

Until next time, have a Magnificent Monday!

Chris

Life Insurance Explained: How Much is Enough? (Part 5 of 5)

In the final post of our “Life Insurance Explained” series, we want to answer the question “How much is enough?”

There are many different ways to determine how much life insurance is needed, but it is essntial to know that there is no “one size fits all” formula. Each situation is different and it is important that the formula you use to define this all important number is specific to your own situation.

Your Take-Away: Of the different formulas that are available, let’s look specifically at two of them.

The first formula that some of the more experienced generation of Advisor’s use is to simply define the income you would want replaced and then determine how much capital is required to provide that income stream at an assumed interest rate. For example, if you lost your Spouse or Partner and you needed a $100,000 income to properly maintain your lifestyle, you would need approximately $2,000,000 of capital invested at 5% to earn the before tax income you are looking for.

The second, and somewhat more specific formula is to actually take into consideration items such as your assets, liabilities, income needed AND for how many years that income is needed. The best way to use this formula is to work with a life insurance calculator. Most banks, insurance or investment companies all provide this tool for consumers and it is definitely worth referencing when trying to determine what you require. One great calculator for this purpose can be found on the Manulife Financial website.

In the end, it is always best to seek the advice of a qualified Professional, but it definitely doesn’t hurt to learn for yourself how these assumptions are used and how much life insurance actually is enough.

Until next time, have a Terrific Thursday.

Chris & Elisseos

CBC Exposes Bank Mortgage Insurance

VIDEO: The CBC Reports on Mortgage Insurance

The above video was put together by CBC is a tremendous example of the downfalls of purchasing ortgage Insurance through your bank.

As a Mortgage provider, we have done our research and are well versed on the difference between opting for the mortgage insurance provided through your lender and owning personal life insurance for the purpose of your mortgage. In fact, that is why we recommend that each of our mortgage clients purchase personally owned life insurance for this purpose. We know that almost all individuals will save money on the premium, but that is only one part of the many benefits that exist.

Your Take-Away: As a home owner, it is 100% in your best interest to explore your options. If you choose to own personal life insurance for your mortgage over the lenders mortgage insurance, you will benefit in the following ways:

  1. Ownership: You will own the policy and thus choose your beneficiary as opposed to having the bank as your beneficiary
  2. Portability: Your mortgage insurance will go with you whether you buy a new home or change lenders as opposed to having to reapply if you change lenders
  3. Level Benefit: You will receive the benefit you apply for at claim time as opposed to simply having your mortgage paid off at whatever value it is
  4. Underwriting: We underwrite at the time of application which means you are approved once you receive your policy as opposed to doing the bulk of the underwriting at claim time

Enjoy the video, and don’t forget that it is well worth your time to do a bit of research before simply “signing off”.

Until next time, have a Terrific Tueday.

Chris & Elisseos

Life Insurance Explained: Universal Life Insurance (Part 4 of 5)

We have looked at both Term Life Insurance and Whole Life Insurance previously and today we want to better understand how the two of them helped to create Universal Life Insurance.

In some ways, you can look at Universal Life Insurance as a “hybrid” product combining the best of both worlds when it comes to Term and Whole Life. With this type of insurance, the objective is to pay an Estimated Level Premium (ELP) that will stay level for life or the period of time you select. Inside of this policy are two primary components; namely the Cash Surrender Value (CSV) and the Insurance cost. Depending on how you structure this, you can use it to protect you and your family with a level Cost of Insurance option that is guaranteed for life, or you can use it to create wealth for yourself by over funding this policy and by using an Annual Renewable Term cost of insurance.

The reason this is considered a hybrid product is because the insurance industry has combine both a term insurance component with the ability to over fund your policy and thus create a cash value. The difference in this case is that the premium you pay is not guaranteed and is based on the success of your investment choice and of course the market.

Your Take-Away: This type of life insurance can used for someone who wants a level cost of insurance from now until death but who may want to take advantage of the tax shelter it provides or “pay it off” in a certain time period. The level cost of insurance is guaranteed within the policy, however it is important to note that your premiums are not. This can also be used for someone who may or may not have a need for life insurance but who has extra cash flow that are looking to protect their assets from the tax man or creditors.

Again, this form of life insurance can be a great vehicle for many Canadians, but it safe to say that this structure will not make sense for everyone. Each situation is different and understanding your options and financial status is key to helping you make the right decision on what “concept” or product is right for you.

Until next time, have a Terrific Tuesday.

 Chris & Elisseos

Life Insurance Explained: Whole Life Insurance (Part 3 of 5)

In the third part of our series, we want to Whole Life Insurance and explain how it works and who it is most suitable for.

Whole Life insurance is one of the oldest forms of life insurance in Canada. In most cases, it provides a guaranteed level premium for life combined with a guaranteed cash value. Depending on the company of choice, Whole Life insurance can also “participate” in the company’s profits in which case the term “Whole Life Par” is used. This participation, in the case of a positive year for the insurance company, is typically paid out in the form of a Dividend and can be used to add to your cash value or simpy purchase “Paid Up Life Insurance”. To use an analogy, it is similar to owning a fixed income or GIC based life insurance policy that provides a number of different guarantees.

Your Take-Away: This form of life insurance is used in a number of different circumstances. For example, if you are looking for a safe, alternative investment vehicle, or simply want to leave money to your heirs without being dependant on the market, this can be a great opportunity. It is also used in some cases for individuals who are looking for basic life insurance that will last a life time and will not fluctuate in terms of premiums or cash value.

Another situation where this may be very suitable is for an individual who has a life insurance need for estate planning purposes but has taken a lot of risk with his other investments such as Real Estate, his own business, or even his overall portfolio. This product can provide the life insurance required based on his needs, but can completely eliminate any risk in terms of market volatility. In other words, it can be considered the fixed income component of this person’s overall investment portfolio.

In the end, knowing your options is essential and do not hesitate to ask your Advisor to explain everything before making a decision.

Until next time, have a Magnificent Monday.

Chris & Elisseos