financing

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    Term vs Permanent Life Insurance: Which One Makes Sense for You Right Now?

    ByBreaking Bank Wealth

    Life insurance is one of those financial products people know they need but often avoid discussing. The choice between term and permanent coverage can feel more complicated than it needs to be, especially when you’re trying to make the right decision for your stage of life. This article walks through three real-life scenarios to help you see how these policies work in the real world. No sales pitch. Just clarity, with the goal of helping you protect what matters most. What’s the Difference? Term life insurance is designed to cover you for a specific period, such as 10, 20, or 30 years. It’s typically used to protect against time-limited risks like a mortgage or the cost of raising children. Premiums are lower and fixed for the length of the term. Permanent life insurance lasts for your entire life and comes with a built-in cash value component that grows over time. You pay more up front, but the policy can serve multiple purposes: coverage, savings, and estate planning. Both types of coverage have their place. Here’s how they play out in real financial lives. Scenario 1: The New Homeowners Sam and Dani are both 31 and recently bought their first home in Kitchener. With a 25-year mortgage and a baby on the way, they’re feeling the weight of financial responsibility for the first time. They want to make sure that if either of them passes away unexpectedly, the surviving partner could manage the mortgage and continue building the life they’ve started. They choose 25-year term life insurance policies that align with the length of their mortgage. The cost is manageable, which is especially important given the added expenses of homeownership and upcoming childcare. More importantly, the coverage gives them peace of mind. If something happens, the mortgage would be paid off and the household could stay afloat. For Sam and Dani, permanent insurance isn’t on the radar yet. Their focus is on affordability and covering major risks during a very specific time in their life. Term insurance checks all the boxes without adding extra financial strain. Scenario 2: The Business Owner Planning Ahead Jordan is 45 and runs a successful HVAC company with a team of 14 employees. He’s worked hard to build the business and wants to make sure it survives if something happens to him. At the same time, he’s starting to think about how to create tax-efficient wealth that he can pass on to his children. Jordan decides to take a layered approach. He keeps a 20-year term life policy in place to protect the income his family relies on. This also provides liquidity to cover outstanding business debts and operating expenses in case of his death. But he’s also thinking long term. Working with his accountant, Jordan adds a corporate-owned permanent life insurance policy. The cash value inside the policy grows tax-deferred and gives him options. He could borrow against it in retirement or use it as a tool to pass wealth to the next generation more efficiently. This combination gives Jordan both flexibility and control. The term policy handles today’s risk. The permanent policy quietly builds value in the background, ready to support a future need. Scenario 3: The Retiree Focused on Legacy Nora is 68 and enjoying her retirement in Victoria. Her home is fully paid off, and she lives comfortably on her CPP, OAS, and a small investment portfolio. She doesn’t have any dependents, but she wants to make sure her final expenses are covered and that she can leave a small legacy to her niece, who helped care for her during a health scare last year. With those goals in mind, Nora applies for a small permanent life insurance policy. The premiums are locked in for life, and the policy guarantees a payout whenever she passes. There’s no expiry date and no need to revisit her coverage every few years. She likes the certainty and appreciates the simplicity. For Nora, a term policy wouldn’t offer the same peace of mind. It could expire before she needs it or cost much more to renew later. Permanent coverage allows her to set the policy in place and know the funds will be available when her estate needs them. How to Choose Wisely Your decision should reflect your current priorities. If you’re in the early stages of building a family or paying off debt, term insurance gives you solid protection at a price that works with your budget. If you’re thinking about legacy, tax efficiency, or lifelong coverage, permanent insurance may be the better fit. Many Canadians start with term coverage and move to permanent later. Most term policies include a conversion option, allowing you to switch to permanent coverage without new medical underwriting. This is a valuable feature if your health changes as you age. Final Word There’s no single right answer when it comes to life insurance. The right choice is the one that supports your goals, fits your finances, and protects the people and plans you care about. Whether you’re starting a family, building a business, or preparing your estate, life insurance should align with where you are and where you’re going.

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    How to Layer Insurance with Wealth Planning for Tax Efficiency

    ByTeam Breaking Bank

    Once you’ve built a successful business or career and your registered accounts are fully funded, the financial priorities begin to shift. At this stage, planning becomes less about accumulation and more about preservation, tax efficiency, and leaving a meaningful legacy. Insurance, when integrated properly into a financial plan, can do more than provide protection. It becomes a tool for tax-efficient investing, corporate planning, and estate preservation. The key is knowing how to layer insurance solutions within your broader wealth strategy. 1. The Insured Retirement Plan (IRP) For incorporated professionals with surplus retained earnings, an insured retirement plan offers a way to grow wealth inside the corporation while creating access to tax-efficient income in retirement. This strategy uses a permanent life insurance policy that builds cash value over time. Premiums are funded with after-tax corporate dollars, and the policy grows tax-deferred. In retirement, the policyholder can borrow against the cash value using a line of credit to supplement income without triggering personal tax. The loan is repaid from the insurance proceeds upon death, and the remaining benefit creates a credit in the capital dividend account. That allows funds to be distributed to shareholders tax-free. It’s a structure that supports both retirement income and long-term estate value. 2. Corporate-Owned Life Insurance (COLI) When business owners want to protect the value of their company and reduce future tax liabilities, corporate-owned life insurance can be a powerful solution. In this setup, the corporation takes out a permanent life insurance policy on a shareholder or key individual, paying premiums with after-tax dollars. When the insured person passes away, the policy pays out a tax-free death benefit to the corporation and generates a capital dividend account credit. This structure adds liquidity exactly when it is needed and allows the business to pass funds to shareholders tax-free. It’s commonly used to fund buy-sell agreements, cover capital gains tax, and support succession planning, while keeping the business intact and financially stable. 3. Estate Preservation and Equalization For high-net-worth families with multiple heirs and significant illiquid assets, insurance can help bring clarity and fairness to the estate planning process. Rather than trying to divide a business, property, or other hard-to-split assets among children, parents can use life insurance to create liquidity. One heir may receive the family business, while another receives a tax-free payout from the policy. Insurance proceeds can also be used to cover capital gains tax, preventing the forced sale of real estate or investments. This strategy allows families to preserve important assets and pass them on intact, while minimizing conflict and ensuring a smoother transfer of wealth across generations. A Strategic Asset in Wealth Planning Life insurance can serve many roles in a financial plan. It creates tax-efficient cash flow during retirement, adds liquidity to a corporation, and provides stability to an estate plan. The most effective approach involves working closely with a financial advisor, tax professional, and insurance expert who can design a strategy tailored to your goals. For incorporated professionals and affluent Canadians, insurance planning is not just about risk management. It is about structuring your financial life in a way that supports long-term success and legacy. With the right strategy, you can preserve more of what you have built and pass it on with greater efficiency.

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    Cash Flow Is King. Building a Monthly Wealth Engine with Passive Income

    ByBreaking Bank Wealth

    For most Canadians, the path to wealth has long been tied to saving and investing for the future. But waiting decades to enjoy the fruits of your labour doesn’t appeal to everyone, especially if you’re focused on building a life with more freedom today. That’s where cash flow strategies come into play. A growing number of Canadians are shifting their focus from long-term capital appreciation to monthly income that covers expenses and creates lifestyle flexibility. Passive income focuses on creating steady, reliable cash streams that flow into your account each month with minimal effort. The goal is to build a foundation of financial stability, like having your own private pension. Here’s how to design a monthly wealth engine using three proven income streams: dividends, REITs, and rental property cash flow. 1. Dividend Income: The Classic Foundation Dividend-paying stocks have been a staple of income investing for decades. These are companies, often in sectors like utilities, banks, telecom, and pipelines, that distribute part of their profits to shareholders. Investing in blue-chip Canadian dividend stocks offers two key benefits: income and stability. Many of these companies have long histories of increasing dividends over time. That means your monthly or quarterly income can grow, even if you’re not adding more capital. To build consistent dividend income: Focus on Dividend Aristocrats. Companies that have increased their dividends annually for at least five years. Diversify across sectors to reduce risk. Use a non-registered account if you’re in a lower tax bracket to take advantage of the dividend tax credit. Set a target. For example, a portfolio yielding 5% annually requires $240,000 invested to generate $1,000 per month. 2. REITs: Real Estate Income Without the Hassle Real Estate Investment Trusts (REITs) let you invest in commercial and residential real estate without owning property directly. These publicly traded trusts hold portfolios of office buildings, apartments, malls, or industrial spaces and pay out most of their rental income to investors. The key advantage of REITs is accessibility. You can invest with a few hundred dollars, spread across multiple properties and geographies. Many REITs pay distributions monthly, making them ideal for building a passive income stream. To boost reliability: Look for REITs with a strong track record of distribution stability. Focus on sectors with long-term demand, like residential or industrial real estate. Hold REITs in a TFSA or RRSP to shelter distributions from tax. 3. Rental Property Cash Flow: The Income Workhorse Owning rental property is a hands-on way to generate passive income. While it requires more upfront effort and management, it can produce steady cash flow, appreciation, and tax benefits. Cash flow is the income left over after all expenses are paid (mortgage, taxes, insurance, maintenance, and property management). Positive cash flow means your tenants are covering your costs and then some. For a rental property to become part of your monthly wealth engine, structure it with intention: Prioritize cash flow over speculation. The numbers must work from day one. Use fixed-rate financing to lock in predictable costs. Consider secondary suites or multi-unit properties to maximize rental income. Done right, a single property can generate several hundred dollars a month, with long-term equity growth on top. 4. MICs: Real Estate Income Without Owning Property If you like the idea of earning real estate income but don’t want the responsibilities of being a landlord (or even owning property), Mortgage Investment Corporations (MICs) offer a compelling alternative. A MIC pools investor capital to lend money secured by real estate. In other words, you’re investing in the lending side of real estate, not the ownership side. These mortgages are typically short-term, higher-yield loans made to borrowers who may not qualify through traditional banks. MICs generate income through the interest charged on those mortgages. In Canada, they are required to distribute most of that interest income back to investors, often on a monthly or quarterly basis. To use MICs effectively: Research the quality of the lending portfolio and the manager’s track record. Consider diversification across multiple MICs to spread risk. Use registered accounts like a TFSA or RRSP to defer or avoid tax on distributions. MICs offer higher yields than traditional fixed-income investments, but come with risk, especially in housing downturns or if underwriting standards are weak. Stick to well-established firms with transparent reporting. Putting It All Together: A Balanced Approach No single income stream does it all. The real magic comes from blending them. Imagine this scenario: $300/month from dividend stocks $400/month from REITs $1,000/month from rental cash flow $500/month from MICs That’s $2,200 each month, without touching your original capital. Over time, that income can grow, especially if reinvested and optimized for tax efficiency. Final Thought Passive income doesn’t mean no effort. But, it does mean front-loading the effort to create lasting freedom. Whether you’re looking to reduce work hours, travel more, or simply stop worrying about every bill, building a monthly wealth engine through cash flow gives you more control, earlier in life. Start small, stay consistent, and focus on income that arrives whether you’re working or not. Because when your money starts working harder than you do, you’re building wealth on your terms. The information provided is for general informational purposes only and has been obtained from sources believed to be reliable. It is not intended to provide financial, legal, tax, or investment advice. Any strategies or decisions should be assessed in light of your individual goals, circumstances

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    Understanding Insured, Insurable, and Uninsured Mortgages

    ByStan S.

    When shopping for mortgages, you’re likely to come across terms like insured, insurable, and uninsured mortgages.  These classifications impact the type of property you can purchase, how much you need for a down payment, and the interest rates available to you.  Let’s break down what these terms mean, their requirements, and examples to clarify how…

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    Are you financially ready to own a home

    ByStan S.

    How to calculate how much you’re spending now, what you can afford and your future expenses. Are you financially ready to own a home? Look into these 5 calculations and questions before you meet with your broker or lender. QUALIFYING FOR A MORTGAGE There are 2 affordability rules that determine how much you can spend on housing without…

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    I can’t pay my mortgage, what are my options?

    ByStan S.

    Alternative payment arrangements when facing financial difficulties. Unforeseen financial circumstances happen. Sometimes, they affect your ability to make regular mortgage payments. The good thing is that you have options. It’s important for you to take quick action quickly. If you can’t pay your mortgage, you need to get in touch with your mortgage professional at…

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    The Inheritance Boom: What Canada’s Wealth Transfer Means for Real Estate Investors

    ByStan S.

    Over the next two decades, Canada will witness the largest wealth transfer in history as Baby Boomers pass an estimated $1 trillion to their heirs.  This unprecedented shift will do more than just redistribute wealth—it’s poised to reshape the real estate market in profound ways.  For investors, it’s both an opportunity and a challenge worth…

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    Living Trusts vs. Wills: What’s the Best Estate Planning Strategy for Canadians?

    ByStan S.

    Most Canadians think a will is enough to protect their assets. Spoiler: It’s not. A will dictates who gets what when you die, but it doesn’t help minimize taxes, avoid probate, or keep your estate private. That’s where a living trust comes in. If you’re sitting on a real estate portfolio, investments, or a business, you might be losing tens…

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    The Early Inheritance Playbook: How to Gift Money Without Risking Your Own Future

    ByStan S.

    You worked hard to build your savings. Now you’re wondering: should you give your kids or grandkids a financial boost while you’re still around to see the benefits?Early inheritance can be a beautiful, impactful gesture — but only if done wisely.This playbook walks you through how to gift money smartly, safely, and with peace of…

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    Buying a Foreclosure Home in Canada

    ByStan S.

    If you are interested to have access to all Vancouver Foreclosures MLS® Listings, please click on the “VIP Insider Access” button. In the “Notes” box include the code “Foreclosures” or visit Vancouver Foreclosures and register What You Should Know Foreclosed homes are typically homes put on sale by lenders after the previous buyer defaults on their mortgage. Foreclosures are rare…