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Jean* came to RBC Wealth Management as a knowledgeable, successful investor who liked to take an active role in the management of her investment portfolio. One of her immediate financial goals was to gift money to her adult children and their families so that she could see them enjoy it. In addition, she wanted to be thoughtful in her plan to give her children more money at death. Still employed in a rewarding profession that helped provide for her children, Jean hoped to stop working in the near future so she could enjoy her retirement years.
Jean and her financial advisor sat down to review her financial life from a holistic view to identify the issues she needed to address. Her advisor enlisted a team of specialists to conduct an in-depth review of Jean’s financial situation, her immediate needs and her future goals to develop appropriate recommendations.
Through the review process, the team found that Jean had an 11-year-old life insurance policy held in trust with a hefty annual premium — $42,910. The team’s insurance specialist conducted a more in-depth analysis and discovered that this was a non-guaranteed policy that either would lapse before Jean’s life expectancy or, if kept in force, would rise steeply with a premium increase of 46% to remain in force to age 100.
After meeting with Jean and the bank trustee for the life insurance policy, the insurance specialist working with Jean’s advisor recommended a guaranteed, level product with an appropriate death benefit for life. Jean qualified for a super-preferred offer and ultimately obtained a new policy with a lifetime guarantee from a highly rated insurance company that offered more financial stability. The new policy has a lower annual premium that will not change going forward, yielding a savings of 36% from the original policy.
Jean’s new policy by and large ensures her heirs will not need to worry about estate taxes. The review process also allowed her to truly assess the amount of money she wished to pass along to her children. Jean planned to retire soon, using the money she saved to help fund the lifestyle she wants to enjoy.
* Though the name is fictional to maintain client privacy, this is an actual depiction of a real client story.
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