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Thanks for the comment. You can find some old newsletters here with much of their content as valid as they were several years ago when I first posted them. (I mean ‘valid’ not ‘as little valid as …’ )If you like the content then please keep coming back; there will be more new stuff added, even though at a slower pace than I’d really like it.

Laszlo

The higher end ltc facility/residences perhaps are not available to subsidized people? But to afford thisyou’d have to buy a massive ltc policy, wouldn’t you? And have crippling payments in today’s dollars. What are your thoughts? And then CII…I like the idea of being able to buy alternative therapies/expensive drugs not available on ohip. Which CII policies have you investigated?

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Thanks for your comments and questions, Linda. Regarding the government subsidy one can rely on: sure, there is some support, and you can learn about that via my posts or elsewhere. The question is speed, quality, and choice. In these regards, the situation and the trends are not good. It’s true that LTC insurance premiums are not very low, the reason for it being that the chances these policies will actually be used (will pay benefit) are high.

I think it’s true for any insurance that buying it is not a must; from the perspective of a penniless person, it’s a (desirable) luxury. (There are some business situations where to obtain insurance is an obligation - as a condition of getting a loan or setting up a partnership, e.g. - but getting into those situations is a matter of choice in the first place, so we’re back to square one.) Where it comes closest to a moral obligation, in my eyes (or even a legal one, as reflected and prescribed by a separation/divorce agreement, e.g.), is when someone is protecting a dependent child (usually by insuring against consequences of death, illness or accident striking the parent), … but there have been many orphans even who grew up fine. In other words, even for someone with a dependent, making insurance decisions is a matter of personal choice, and an advisor’s role is to help the deliberation leading to it to be an informed and reasonable one. Insurance is not a social service, in the sense that those who’d need most the lump sum or regular benefit payments it may provide are the least likely to afford paying for the protection. Whether spending on it is worthwhile and affordable to you has to be your own decision.

Many people make that kind of decision (either for or against) hastily, purely out of emotions, and disregarding facts and reasonable analysis. I try to help those who’d rather go for a more careful, balanced process, relying on detailed information and sensible analysis. To be able to that, among other things, I must have to be familiar with most policies available, because they are certainly not carbon copies of each other. This is the case with the critical illness policies as well, about which you’ve asked.

Please feel free to ask more or argue with my views if you like.

Regards,
Laszlo

Great videos - I’m showing Story of Stuff tomorrow, so it’s perfect timing!

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Thanks for the opportunity to clarify, Julio. Yes, I’ve heard about corporations having done this move. I believe the stories are true but I have no direct knowledge of the participants. As I understand, they did the transfer not at the time when the CSV appeared, or immediately before it, but a bit, let’s say 3 or 4 years, before.

It indicates that they certainly wanted to avoid the attention of Revenue Canada, but I still don’t think it’s necessarily purely a case of exploiting a loophole. I’m not a tax specialist, an accountant or lawyer specializing in taxation, and I’m not aware of any Revenue Canada position on this issue; if you want to get a more definite answer to this detail that you can rely on, I’m not the appropriate person to ask. However, I can imagine that it could be challenged if Revenue Canada assessed a taxable benefit when the transfer of ownership happens years before the CSV appears. It’s not only that there is nothing of actual monetary value changing hands then, but even that future value is very much potential only at that point. What if the insured dies or cancels the policy before the CSV is available?

The speculation is rather theoretic now, with the disappearance of this particular policy the post was about, … there are probably no more very similar policies on the market any more; the cash value appears immediately or after just a few years in the remaining ones. Even if the CSV is deemed as taxable income at transfer of ownership, as it does with these policies, the arrangement may make sense in many situations, although not as spectacularly good as this perhaps debatable and risky earlier strategy was.

Laszlo

Regards,
Ian Mcewen

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Hi Ian,

Could you please explain what you mean?
Yes, the policy was withdrawn, so in a sense there is not much usefulness in talking about it anymore, but I’d like to clarify if you did misunderstand something, … which appears to be the case here.

I can repeat what I wrote: this policy was payable until age 65. It provided permanent death benefit. There was no cash value until age 65, but there was an outstanding cash value from that point onward.

What kind of ‘eating away’ are you talking about???

Regards,

Laszlo, the curious