Healthcare Spending Account Tax Savings
April 21, 2023
Prudent financial planning has never been more important than it is now. In our recent Integrated Planning video series, WealthCo’s Vice President of Insurance Advisory, Jeff Dyck, a proud member of the Integrated Advisory Network, takes us through the integrated approach to financial planning. We’ve included a synopsis below
When purchasing a home, your lender will invariably offer mortgage insurance. But, did you know that you have another option for ensuring your mortgage and debt are protected in the event of death or disability?
The Alternative to Mortgage Insurance
Rather than purchasing mortgage insurance, homeowners have the option to secure traditional term insurance - the difference between these two options is critical but is often overlooked by the vast majority of Canadians that have a mortgage on their home.
Why Term Insurance Delivers Better Value Than Mortgage Insurance
The bank will be quick to offer a seemingly simple and convenient option - mortgage insurance which can be obtained quickly without the need for medical underwriting or additional paperwork. However, there is a crucial distinction that is often overlooked: the bank's mortgage insurance primarily serves to protect the bank's interests, not the homeowner's interests. The coverage amount gradually decreases over time, following the mortgage balance, while the insurance premium payment remains fixed. This means that although you may start with coverage for the full mortgage amount (say, for $350,000), it eventually diminishes to zero.
On the other hand, traditional term insurance provides coverage for the specified amount (e.g., $350,000) throughout the entire term of the mortgage. The premium payments in the brokerage market are generally lower compared to the bank's mortgage insurance. Moreover, with term insurance, homeowners own the coverage, and the payout goes directly to the beneficiary (e.g., family) in the event of death. The excess amount above the mortgage debt can be utilized by the family however they so choose.
The Wiser Choice: Term Insurance
Know your options when it comes to protecting your mortgage and your family. The bank’s mortgage insurance is ultimately owned by the bank, has fixed premiums, and provides less and less coverage as your mortgage is paid down. By comparison, traditional term insurance is owned by the homeowner, the coverage remains constant regardless of the balance remaining on your mortgage, and the premiums are typically lower. By understanding these differences, individuals can make more informed decisions about their mortgage insurance needs.
The Integrated Advisory Network consists of progressive CPA firms, along with best-in-class professional advisors, service, and product specialists, who work together to deliver an elevated and holistic client experience. One that optimizes both their personal and professional lives with an integrated financial strategy designed to help their clients reach their goals. Reach out to your Integrated Advisory accountant if you have any questions or want to have a deeper conversation about your financial plan.
Unleashing the Power of Accountants: Your Trusted Partners in Small Business Growth
Small businesses serve as the backbone of Canada’s economy, driving innovation, fostering local growth, and creating job opportunities. They are also challenging to launch and keep going.
Exploring the Last Great Tax Shelter
Learn from our experts, Jeff Dyck and Jordan Tanner, on the last great tax shelter.