Your Investment Protection

Our office has been very fortunate. The Lunch and Learn presentations have been successful in driving interest to our office from prospective clients. In the prospective client meetings, I am noticing a growing trend – people are concerned with the sustainability and solvency of our dealer, Assante Capital Management Ltd. This is not due to a poor brand in the industry but more so indicative of the sophistication and growth of fraudulent activity in our industry as a whole.

I thought it to be prudent to address these concerns with those who may not be aware of the protection their accounts have while invested with us.

Firstly, there is the protection of being wholly owned by CI Financial, one of Canada's largest investment fund companies. CI Financial is Canadian-owned and publicly traded on the TSX. It has a market capitalization of over $10B.

Secondly, Assante Capital Management Ltd. is a member of the Canadian Investor Protection Fund. The majority of legitimate dealers will be a member of this fund. Simply put, our clients' accounts can be insured up to $1M against dealer insolvency. Please note that the protection does not cover losses due to market fluctuations.

Thirdly, Assante employs the services of 3rd party providers for the purposes of securities tracking and record keeping. In fact, physical securities are held by the National Bank Correspondent Network, a wholly owned subsidiary of National Bank.

Canadian banks have a great reputation for being financially sound, evidenced by their performance through the 2008 global market crisis. Bank-owned dealers are no different from an independent dealer like Assante when it comes to protecting clients' assets.

Dealer insolvency is considered an unlikely event, especially since they may be highly regulated by an SRO (IIROC in our case) and if it is backed by a publicly-traded, multibillion dollar corporation that provides transparency and accountability through continuous financial disclosure obligations. That said, losing our clients' confidence is something we do not take lightly and we want to address any of these concerns immediately.

For further clarification of this topic, please don't hesitate to contact us at the office.

Carlo Cansino, FMA, FCSI, CFP
Senior Financial Planning Advisor
Assante Capital Management Ltd.

Insurance

Term insurance: To renew or not to renew,
that is the question.

Let's start by understanding the different types of insurance. When looking at life insurance, your options are either permanent insurance or temporary insurance. Under the permanent life insurance banner we find Universal Life, Whole Life and T100. We will be reviewing those options in a future column. Today's focus however is temporary insurance which comes in various terms for 5 to 40 years. What this means is that if you buy a Term-10 policy, your rates are guaranteed not to increase for 10 years but will definitely increase in year 11 if you choose to keep that policy.

So, which policy should you have?

These policies should be used based on the underlying need – a permanent need requires permanent insurance and a temporary need requires temporary insurance. Permanent needs revolve mainly around estate planning and include paying for final taxes and probate, charitable giving, allocating for a trust for a disabled child or simply creating an estate. Temporary needs are mortgages and other debts, young children, school funding and income replacement. Ideally, your term insurance should match the duration of your debts but sometimes you need to extend the term of your temporary insurance.

Term insurance renewals.

One of the perceived advantages of term policies is that they renew after their term with no medical requirements. For example, a T-10 is guaranteed to be renewed in year 11, regardless of your health at that time. Even if you are no longer insurable, you can still renew this policy in year 11.

Sounds like a pretty good feature? Well, insurance companies are aware that if you are healthy, you can shop the market for a better rate. Which means that the only clients that will keep their policy in year 11 are or those that are not healthy. Therefore, insurance companies intentionally keep the renewal rates much higher than market rates to offset this increased retention of "bad" risks. If you are not paying attention and you let your Term policy renew automatically, you will be caught paying these increased "bad" rates.

So, what should you do?

If you are still healthy, you should shop the market. That means you should call or email me your policy and I will check the current rates for an equivalent policy. If the rates are cheaper then we have to apply for a new policy which would mean a new medical would have to be done. But trust me, the cost savings for doing this additional medical would be well worth it.

For Example:

Here is an example of a recent client that bought a Term-20 policy. The clients were both 42 years old, husband and wife. They needed $500,000 of insurance for the next 20 years. If they chose to keep the coverage into the 21st year, the difference between renewing their policy or buying a new policy would be $15,555 per year!

$ 1,200 per year Current Rate
$18,930 per year Renewal rate in 20 years
$ 3,375 per year New policy in 20 years
$15,555 per year Savings per year

What if I get declined?
Don't worry. We wouldn't cancel your existing policy until you are approved under a new one. If you were declined on the new policy, you would still have your old policy that they couldn't take away from you.

So, if you do have a term policy that is going to renew in the next few years OR have just renewed in the last couple of years, email me a copy of your term policy rates and I will double check the market rates to ensure you are paying the cheapest rate possible. At the end of the day, term insurance is pretty much a commodity, so why pay more than you have to.

Call me to discuss your options today.

Jorge Ramos CFP, CLU, CHS
Senior Estate Planning Consultant
Assante Estate and Insurance Services Inc.

The Latest

Ontario's Condo Outlook:

Ontario's condo prices may be seeing a decline by as much as 10% over the next few years based on a Fitch Ratings Inc report released late this month. Despite a decline in condo starts with developers having slowed down the initiation of new projects over the last few years there are some concerns of a market saturation on the horizon.

This year's first quarter had 1,436 new units brought to market, a 58% drop from a year ago. Stefan Hilts, Director at Fitch Ratings Inc reported that "Even though we're starting to see a downtrend in starts, it's not enough given how many units are out there waiting to come online…The boom that started in mid to late 2012 is just continuing — those units aren't yet on the market."

The concern is not dire but predictions exist that there may be a 'soft landing' in prices. With thousands of people moving into the GTA each year there remains to be a need for the development of many of these units. If the decline of condo starts stays steady, hopefully we can minimize such concerns.

Should you wish to learn more about mortgage solutions, please let us know and we would be happy to put you in touch with mortgage brokers within our professional network.

Assante Capital Management Ltd. is a member of the Canadian Investor Protection Fund and is registered with the Investment Industry Regulatory Organization of Canada. This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please make sure to see me for individual financial advice based on your personal circumstances. Insurance products and services are provided through Assante Estate and Insurance Services Inc.

The opinions expressed are those of the author and not necessarily those of Assante Capital Management Ltd.

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