Investments and Retirement Flashcards
Maturity Gurantee
the amount that the insurer would have to “top up” if the value of the IVIC is less than the guranteed amount
Linear method of Reducing guarantee
=amount withdrawn / original amount invested
Gurantee would then be reduced by that %
Proportionate method of Reducing gurantee
=amount of withdrawal / current value of investment
Simplified Prospectus
must be mailed within 2 business days of the purchase of mutual funds
Information Folder
the main disclosure document for segregated funds, must be given to the client before the sale
MER
Segregated funds have higher MER due to the guarantees, an actively managed fund would have higher MER than an index fund
The right to withdrawal
You have 2 business days to read through the prospectus and change your mind for mutual funds, there is no right of withdrawal or free look period for segregated funds
NAVPS
=Total Assets - Total Liabilities / # of units outstanding
Offering Price
NAVPS / (100 - front end load )
Assuris
Protection for Insurance Products
CIPF
Protection fund for investment firms
CDIC
Protection fund for deposit taking institutions
Exempt Policy
Any interest earned within the investment component of the policy is not subject to annual taxation
Non Exempt Policy
Any interest earned within the investment component of the policy is subject to annual taxation
Pre-1982 Policy
would have a higher ACB and in turn a lower policy gain if surrenderd ( subject to less tax upon redemption )
Capital Gains Tax
Only have of capital gains are subject to tax
Tax Benefits if employer is paying premium for group benefit plan
The monthly Premium is NOT a taxable benefit for the employee
The disability income WOULD be taxable upon disability
Tax Benefits if the employee is paying premiums for a group benefit plan
The monthly premium is a taxable benefit for the employee
The disability income would not be taxable upon disability
Withdrawals from RRSPS
Fully Taxed
Prescribed Annuity
Interest portion of the payments are taxed but the taxation is spread evenly over the life of the annuity
Non-Prescribed Annuity
Each annual payment includes some interest and some principal. While the payment itself is a fixed amount, more of the payment represents interest in the early years. Attracts more taxation in the early years than in the later years
Transferring of RRSP or RRIF upon death
Spouse and Child over 18 - > tax deffered
Child under 18 - > used to buy an annuity, payments would be taxed in the childs hands each year until the age of 18 when all the money would have been paid out
Straight Life Annuity
Will pay out for life
Life Annuity - Installment Refund
Will pay out for life, but then potentially continue to pay an annual amount to the beneficiary
Life Annuity - Lump Sum Refund
Will pay out for the life, but then potentially pay a lump sum to the beneficiary. If the annuitant dies before they recieved their initial premium back, the difference is paid as a lump sum to the beneficary
Life Annuity - 10 year guaranteed term
Will pay out for life or for 10 years, whichever is longer
10 year term certain annuity
Will pay out exactly for 10 years
How can Pension Plans be Transfered
transfered to a locked-in-RRSP (also known as a LIRA or Locked-in-Retirement account)
DPSP (Deferred Profit Sharing Plan) Contributions
Made by the employer only
The amount contributed is reflected in the employees P.A. and reduces what the employee can contribute to an RRSP
Defined Contribution Plan
Add up the contributions from both the employee and the employer
Defined Benefit Plan
(9x benefit entitlement) - 600
OAS (old age security)
Only based on residency, can be recieved at age 65
What does the CPP provide
Pension benefits, disability benefits and even death benefits ( currently 2500 )
Vesting Period
Minimum amount of time that a plan holder must be part of the plan in order to be entitled to the funds contributed into the DPSP on the employees behalf
Churning
Unlawful replacement of a policy with one from the same insurer
Twisting
Unlawful replacement of a policy with one from another insurer
FINTRAC
collects and analyzes information collected from financial institutions to help law enforcement investigate and prosecute money laundering offences
BDS
required if the agent is recommending that the client cancel a policy or do something that will substantially take away from an existing policy for the purpose of buying another
Fronting
an agent must not submit an application for insurance if another agent has actually completed the application but has not signed it
