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Welcome to Dynamic Wealth Management's brand new website.  Please take a look around and take a moment to read the blog.  I will be posting my thoughts on investing and the markets every Monday, so check back every week to get the latest news.


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Life Insurance, Disability Insurance, Critical Illness and Segregated Funds

Life Insurance

One of the keys to successful financial planning is the ability to prepare for worst case scenarios.  Although we never wish for a worst case scenario to happen, failure to protect yourself from these situations only makes a bad scenario even worse.  That is why Life Insurance is such an integral part of a proper financial plan.  Although we often view ourselves as being invincible, the world is filled with great uncertainty and we never know what tomorrow will bring.  That is why it’s important to have Life Insurance in place to protect your loved ones in case anything were ever to happen to you.  We should never take for granted how much of a role we play in other people’s lives.  We work hard every day to earn a good living to help support our family and if something were to happen to us and we were unable to support our family anymore, our family would be put in a very tough situation; A situation they may not be able to manage without some help!  The last thing any of us would ever want to do is leave our loved ones stricken with grief as well as a pile of bills to pay like mortgage payments and school tuition.  That is why a good Life Insurance policy is a key ingredient to every financial plan.

A Life Insurance policy protects your family in the event of a death to help pay for final expenses, the mortgage, school tuition etc.  The proceeds are paid directly to your beneficiary 100% TAX-FREE and never form any part of your estate.  Normally what is left of your estate is the result of your assets minus your liabilities at the time of death.  If you had $100,000 cash in your bank account, but $100,000 owing on a line of credit, your estate would have a value of $0.  However, with a Life Insurance policy, the proceeds from the policy would go directly to your beneficiary TAX-FREE and as a result, any creditors you had would not be able to touch the money going to your family. 

For example, if you were to pass away with $500,000 of debt and no money in the bank at all, a Life Insurance policy worth $500,000 would go directly to your beneficiary TAX-FREE and your creditors would be left with nothing but a $500,000 loss.  That is the power of a Life Insurance policy and that is one of the things that make it such a great tool for financial planning.  It helps you know exactly how your family is going to be taken care of if something were to happen to you, no matter what your financial circumstances are at the time of death.

There are many different types of Life Insurance on the market, some even offer you the option of paying for 20-years and being fully covered and if after paying for 20-years you decide that you no longer want the insurance, the insurance company will give you back EVERY DOLLAR you ever paid so the insurance cost you nothing!

If you’re interested in learning more about Life Insurance, please contact me and I would more than happy to sit down and discuss with you what type of insurance would suit you best and recommend to you the best products to suit your needs!

Disability Insurance and Critical Illness Insurance

When creating a financial plan, it’s important to plan for the worst case scenario like we do with Life Insurance, but it’s also important to plan for everything in between which includes disability as well as critical illness.

Disability Insurance protects you in the event that you would ever be disabled and unable to perform you regular working duties.  If you are unable to work, you may not get paid and as a result, your ongoing financial obligations may not be able to be met without some form of financial assistance.  If your mortgage requires the full effort of you and your spouse, and you were to get injured and were unable to work, your spouse would not be able to support the mortgage payments on their own and as a result, you would run the risk of defaulting on your mortgage payments and losing your home!  This would be on top of any additional medical bills that could result from treating the injury preventing you from doing your everyday work activities!  Obviously, this is a scenario we would all want to avoid which is why disability insurance is an important tool in protecting both you and your family.

Critical Illness Insurance is very similar to Disability Insurance but instead of paying you in the event of an injury, the insurance pays you if you were to ever become sick with something like cancer, kidney failure, heart attack etc.  Depending on the product, there are over 25 “Critical Illnesses” that are covered by this type of insurance.  Critical Illness Insurance not only ensures that you and your family are taken care of due to the loss of income of you not being able to work, but it also helps to provide income to pay for the increased medical bills that would result from illnesses such as these.

Some Critical Illness products also offer you a 100% premium refund in the event that your policy matures and you were never diagnosed with a Critical Illness.  Again, this means that you would be 100% protected in the event that something bad happened, but you would get 100% of your money back if nothing bad happened!  It’s like having free insurance and everybody loves free right?

If you’re interested in sitting down and learning more about Disability Insurance and/or Critical Illness Insurance, please feel free to contact me and I would be more than happy to sit down with you and see what products would be best for you!

Segregated Funds

Segregated funds are almost exactly like Mutual Funds but with an insurance component to them.  In fact, many Segregated Funds mirror a mutual fund and have the exact same stocks in the exact same proportions.

That being said, Segregated Funds offer benefits that Mutual Funds do not offer.  Here are a list of the most important benefits of Segregated Funds over Mutual Funds:

Financial Protection - Segregated Funds provide you a guarantee that your investments will be worth a minimum amount (usually 75% to 100% of the money you deposited) at the time of maturity (usually 10-years).

For example, if you invested $100,000 into a Segregated Fund and after 10-years, the market value of your investment was worth nothing (a loss of $100,000), the insurance company would give you $75,000 - $100,000 back depending on which Segregated Fund you invested with.

Death Benefit - Segregated Funds also provide you with a death benefit as they are considered insurance products.  Similar to Life Insurance, the death benefit bypasses your estate and is paid 100% TAX-FREE directly to your beneficiary.

Segregated Funds also offer a death benefit guarantee that is between 75% to 100% of the money you deposited.

For example, if you invested $100,000 into a Segregated Fund and then 6-months later, it was only worth $10,000 and you were to pass away, your insurance company would pay your beneficiary $75,000 - $100,000 (depending on the Segregated Fund purchased) despite your investment only being worth $10,000.

Creditor Protection - As mentioned previously, in the event of death, the proceeds from your Segregated Fund investment would go directly to your beneficiary and bypass your estate so there would be NO-TAXES to be paid.  Furthermore, any creditors you may owe money to would not be able to touch a single penny of this money.

Another Creditor Protection benefit that is offered by Segregated Funds is that it protects your investment from your creditors while you are alive as well!  Because Segregated Funds are insurance products, they are protected from seizure by your creditors.  If someone were to get a judgment against you, or you were to declare bankruptcy, no one would be able to touch your Segregated Fund investments!  This is one reason why Segregated Funds are so popular amongst business owners.  Business owners are more likely to be sued and are more vulnerable to creditors due to their position as owner and as such, they can really benefit from the creditor protection offered by Segregated Funds.  If their business were to go under, or another business associate were to ever win a lawsuit against them, the money invested in the Segregated Funds would be safe from seizure.

If you’re interested in learning more about Segregated Funds and how they might fit into your financial plans, please feel free to contact me and I would be more than happy to answer any questions you may have!