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One year Term insurance often offered
as a function of annual salary, (eg.1times , 2 times
or 3 times) or a flat amount (eg. $25,000 or $50,000).
This benefit usually decreases by 50% at age 65 and
terminates at age 70. Conversion to a personal plan
is available before age 65 if an employee leaves employment.
Optional life insurance is often available and is sold
in set units (eg. $10,000). Medical underwriting is
required.
Accidental Death and Dismemberment
Accidental Death and Dismemberment is often the same amount
as the life insurance but there are also options to
increase the amount paid out if the accidental death
occurs at work periods. Usually the same sum is paid
on the accidental loss of both limbs, or sight of both
eyes.
Dependent Life
This is life insurance issued on the
spouse and child of an insured employee.
Health Care
This is a medical plan that provides benefits over and above
government health benefits. This category is made up
of several components including but not limited to…
Prescription Drugs, Medical Professional Services (such
as Chiropractic, Physiotherapists, Psychologists, Naturopaths
etc…), Private Duty Nurse, Semi Private or Private
room in a Public General Hospital, Hearing Aids, Vision
(eg. eyeglasses and eye exams), Accidental Dental. Costs
are controlled and shared by a variety of deductibles,
coinsurances and maximums.
Dental
Dental plans usually cover the maintenance of good oral health
including cleaning, scaling, extractions, fillings,
x-rays, root canals and gum disease treatments. Recall
exams vary from every 6 months to once per year. More
enhanced plans offer crowns and bridges, orthodontics
for children and adults and some cosmetic procedures.
Costs are controlled and shared by a variety of deductibles,
co-insurances and maximums.
Short and Long Term Disability
Short and Long Term Disability benefits pay a percentage
of monthly income after a waiting period. The payment
usually continues until the employee returns to work,
becomes ineligible for benefits or turns 65 when CPP
takes over. Disability benefits can replace EI sickness
benefits or a salary continuation plan. If the employer
pays any portion of the premium the monthly benefit
is taxable to the employee.
Wellness Plans (or Employee Assistance Programs)
Growing in popularity, Wellness plans focus on the prevention
of illness and the maintenance and promotion of good
health…both physical and mental. These plans offer
employees assistance in the areas of substance abuse,
parenting, marital issues, bereavement, critical issues,
co-worker conflicts, violence. Wellness is promoted
through a variety of programs such as smoking cessation,
weight loss, healthy eating, cross-cultural communication,
work-life balance, career changes and other stresses.
New statistics show that Wellness plans reduce costs
associated with absenteeism and high benefit plan utilization.
Registered Pension Plan - RPP
A form of a trust that provides pension benefits for an employee
of a company upon retirement. RPPs are registered with
the Canada Revenue Agency. The employee and employer,
or just the employer make contributions to this retirement
plan until the employee leaves the company or retires.
Notes: Contributions to an RPP are
tax deductible for both the employee and the employer.
Contributions to the plan and gains on underlying assets
are tax deferred, so the funds are taxed when they are
withdrawn from the plan.
Registered Retirement Savings Plan - RRSP
A legal trust used to save for retirement. RRSPs are registered
by the Canada Revenue Agency. Contributions to an RRSP
are tax deductible, which makes contributions to RRSPs
tax deferred until they are withdrawn. An RRSP can contain
stocks, bonds, mutual funds, GICs, as well as other
investments. Because of their tax advantages, RRSPs
are an important retirement savings instrument for Canadians.
There are two main tax advantages of an RRSP:
1) Contributors deduct contributions against their income.
For example, if a contributor's tax rate is 40%, for
every $100 he or she invests under an RRSP will save
that person $40 in taxes, up to his or her contribution
limit.
2) Investments under an RRSP grow at tax sheltered.
Returns on investments are exempt from any capital-gains
tax, dividend tax or income tax. This means that investments
under RRSPs compound at a pretax rate whereas normal
investments' realized returns are taxed at least annually.
Notes:
RRSP contributors are delaying payment of taxes to a
time when their marginal tax rate will be lower (during
retirement) than it is during their working years. The
Government of Canada has provided this tax deferral
to Canadians to encourage retirement savings, which,
in turn, will help the population to rely less on the
Canadian Pension Plan to fund retirement.
Deferred Profit Sharing Plan - DPSP
An employer-sponsored Canadian profit sharing plan that is
registered with the Canadian Revenue Agency. On a periodic
basis, the employer shares the profits made from the
business with all employees or a designated group of
employees. Employees receiving a share of the profits
paid out by the employer do not have to pay federal
taxes on the money received from the DPSP until it is
withdrawn.
Notes:
An employer that chooses to participate in a DPSP with
some or all of its employees is referred to as the sponsor
of the plan. Employees who are granted a share of the
profits are the trustees of the plan. DPSPs are a type
of pension.
Non Registered Invesments
Non-registered savings plans play the same role as personal
savings accounts. You can accumulate savings to carry
out your plans (education, trips, a house, etc.) or
increase your retirement income. Who Should Consider
a Non-Registered Savings Plan?
* Investors who have reached their registered retirement
savings plan (RRSP) contribution limits and would like
to capitalize on their investments to carry out their
plans, while retaining a certain amount of control over
their investments.
* Persons wishing to obtain a source of income through
a systematic withdrawal program.
* Investors wishing to accumulate amounts in the short
term (financial cushion, vacation, etc.).
Retirement Compensation Agreement
A retirement compensation arrangement (RCA) is a plan or
an arrangement under which an employer, former employer,
or in some cases an employee makes contributions to
a custodian. The custodian holds the funds in trust
with the intent of eventually distributing them to the
employee (beneficiary). Distribution may occur on, after,
or in view of:
* an employee's retirement;
* an employee's loss of an office or employment; or
* any substantial change in the services the employee
provides (e.g., an athlete retained as a scout after
the end of a professional playing career). An employer
or former employer may acquire an interest in a life
insurance policy (including an annuity) to fund benefits
on, after, or in view of an employee's retirement, an
employee's loss of an office or employment, or any substantial
change in the services the employee provides. In this
case, we consider this interest to be the property of
an RCA and the employer to be the custodian of the RCA.
With a Flexible Benefit Plan, the plan
member is able to chose the benefits and the level of
coverage that is right for them. Rather than provide
a one size fits all package of benefits under a traditional
benefits plan, a plan sponsor supplies the plan members
with a core program with benefit options. Plan members
use credits allocated by the plan sponsor to purchase
their benefits coverage, with different levels of coverage
provided for each benefit type. Plan members can reduce
or opt out of coverage they don’t need and enhance
coverage they do need. Any left over credits often can
go into a Health Care Spending Account. Whether it is
a full-choice flex plan or a modular package, plan sponsors
are able to accommodate the variety of lifestyles and
priorities of their plan members. Flex Plans were initially
designed for large employers (1,000 plus participants)
although employers with fewer employees are considering
and implementing Flex Benefit Plans.
Health Care Spending Accounts |
With Health Spending accounts, employers
can offer the flexibility in health care choices that
their employees want, while holding plan costs at a
level that they can afford. Health Spending Accounts
reimburse employees for many health-related expenses
not covered by the provincial health coverage or by
a typical group plan. Best of all, Health Spending Accounts
give employees significant benefits without giving employers
significant costs. Employees appreciate the individuality
of coverage that Health Spending Accounts allow. Applied
in conjunction with an existing group benefits plan,
a health care spending account can be used to "top up"
core benefits and pay for expenses not completely reimbursed
by the plan. These include amounts exceeding the plan's
maximums, deductibles, coinsurances or any other portion
of a claim that isn't paid under the plan.
Tax Advantages
Health Spending Accounts provide a
way for clients to deliver tax-effective compensation
to their employees, using pre-tax dollars. At the beginning
of the year, the client decides on the amount to be
available in the Health Spending Account. Because these
dollars are directed to the account before income tax
is deducted, compensation provided through these accounts
goes much further than if employees were to pay for
health-related expenses themselves.
Expanded Eligibility
CCRA’s broad definition of a dependent permits employees
to cover expenses for extended family members – a
perfect solution for employees wanting to cover expenses
for family who would not otherwise be eligible under
their benefit plan (ex. Parent, Grandparent etc…).
Insurance
Life
Insurance that guarantees a specific
sum of money to a designated beneficiary upon the death
of the insured or to the insured if he or she lives
beyond a certain age. There are two main types of life
insurance which are temporary or term insurance and
permanent insurance. Understanding the purpose of the
insurance (ex. Income replacement, estate enhancement,
debt payment) will determine the most effective solution.
Accidental
Death and Dismemberment
Accidental Death and Dismemberment is
often the same amount as the life insurance but there
are also options to increase the amount paid out if
the accidental death occurs at work periods. Usually
the same sum is paid on the accidental loss of both
limbs, or sight of both eyes.
Critical
Illness
Critical illness insurance is a form
of health insurance that provides a lump-sum payment
should you become seriously ill. Although they differ
from company to company, typical illnesses and diseases
covered by critical illness insurance may include:
• cancer
• heart attack
• stroke
• blindness
• Alzheimer’s
• multiple sclerosis
• organ transplants
• kidney failure
• paralysis
Coverage can also vary according to the degree of severity
of, or conditions associated with, an illness or disease.
For example, if you are diagnosed with a type of cancer
that is treatable and that results in minimal "down
time", you may not be eligible to make a claim. Coverage
cannot be purchased for a pre-existing condition or
illness. It is important to read your policy carefully.
In addition, be sure to ask your insurance representative
to provide you with a complete explanation of your coverage.
Disability
A form of insurance coverage that provides
a portion of income lost as the result of a total or
partial disability caused by either an accident or an
illness. There are two major types of disability coverage:
• Short-Term Disability
Short term disability provides an income for the early
part of a disability. A policy may pay benefits for
two weeks up to two years. Short-term disability is
often included as part of an employee benefits package.
• Long-Term Disability
Long term disability helps replace income for an extended
period of time. Some people have long term disability
insurance provided by their employers; others purchase
it individually. There are two major types of individual
long-term disability insurance: non cancelable and guaranteed
renewable. (Other less expensive policies with limited,
if any, premium or renewability guarantees are also
sometimes available.) In the case of non-cancelable
or guaranteed renewable policies, the insurer cannot
cancel or refuse to renew the policy as long as the
required premiums are paid on time.
The key difference between the two major
types of policies is that under a non-cancelable contract,
you have extra security that premiums can never be raised
above those shown in the policy as long as the required
premiums are paid. With a guaranteed renewable policy,
the premiums can be raised, but only if the change affects
an entire class of policyholders. For this reason, initial
premiums for guaranteed renewable policies can be less
expensive than non-cancelable policies.
Mutual Fund
A mutual fund is a company that brings
together money from many people and invests it in stocks,
bonds or other assets. The combined holdings of stocks,
bonds or other assets the fund owns are known as its
portfolio. Each investor in the fund owns shares, which
represent a part of these holdings.
Guarantee
Investment Certificate
An investment of varying amounts in
contract with the issuing institution which, in exchange
for the deposit, will pay a predetermined amount of
interest at maturity. There are a number of different
factors for each certificate that will determine the
suitability of a guaranteed investment certificate for
the investor, such as length of term, rate of return
and liquidity or ability to be withdrawn prior to maturity
Individual
Pension Plans
Individual Pension Plans(IPPs)
are retirement savings vehicles designed to allow for
higher tax-deductible contributions and accelerated
tax-free growth of retirement assets, when compared
to conventional alternatives such as RRSPs. They are
defined benefit pension plans that are designed for
high-income earning executives and incorporated professionals,
and must adhere to Canadian pension plan rules and regulations
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Why you should consider GEM Financial Group.
