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disability

On September 23rd, in a speech delivered by Governor General Julie Payette, Prime Minister Justin Trudeau outlined the Federal government's priorities.

On September 23rd, in a speech delivered by Governor General Julie Payette, Prime Minister Justin Trudeau outlined the Federal government’s priorities focused on four foundations:

  • Fighting the pandemic and saving lives;

  • Supporting people and businesses through the emergency “as long as it lasts, whatever it takes”; 

  • “Building back better” by creating jobs and strengthening the middle class;

  • Standing up for Canadian values, including progress on reconciliation, gender equality, and systemic racism.

Below, we highlight the support programs that help those Canadians who are struggling financially due to the pandemic.

Canada Emergency Wage Subsidy extended to next summer

The Canada Wage Subsidy (CEWS) will be extended to summer 2021. Under new program criteria, businesses with ANY revenue decline will be eligible. However, the amount of the subsidy will be based on the revenue drop rather than the original 75%.

Canada Recovery Benefit increased to $500/week

The day after the Throne Speech, in a bid for opposition support, the federal government announced it will increase the new Canada Recovery Benefit (CRB) to $500/week for up to 26 weeks.

In order to qualify for this program, Canadians must be looking for work and had stopped working or had their income reduced by 50 per cent or more due to COVID-19, but are still making some money on their own.

Canada Recovery Sickness Benefit

The Canada Recovery Sickness Benefit (CRSB) will provide $500/week for up to 2 weeks for workers who are unable to work because they are sick or must isolate due to COVID-19.

Canada Recovery Caregiving Benefit

The Canada Recovery Caregiver Benefit will provide $500/week for up to 26 weeks per household to eligible workers who cannot work because they must provide care to children or family members due to the closure of schools, day cares or care facilities.

Creating a new Canadian Disability Benefit

The government pledged to bring in a new Canadian Disability Benefit (CDB) that will be modelled after the guaranteed income supplement (GIS) for seniors.

The CRB, CRSB, CRCB and CDB are pending the passage of legislation in the House of Commons and Senate.

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Everybody understands the value of life insurance and most of us who take our finances seriously have a solid life insurance policy in place. But what happens if you are unlucky enough to sustain a serious illness, chronic disease or disability which prevents you from working? Such a scenario could be disastrous for your family finances and this is where disability insurance comes in.

Everybody understands the value of life insurance and most of us who take our finances seriously have a solid life insurance policy in place. But what happens if you are unlucky enough to sustain a serious illness, chronic disease or disability which prevents you from working? Such a scenario could be disastrous for your family finances and this is where disability insurance comes in.

What is disability insurance?

Disability insurance provides you with a portion of your income in the event that you suffer from an illness or accident which means that you can’t work, either temporarily or on a permanent basis.

Studies show that you are actually more likely to sustain a disability during the course of your working life than to die whilst of working age. A disability can have a dramatic and long-term impact on your earning potential – in fact, the Council for Disability Awareness has found that the average absence from work for a long term disability is nearly three years.*

Types of disability insurance

There are two main types of policy – short-term and long-term disability insurance.

Short-term disability insurance generally offers the policyholder a maximum of 6 months of benefits.

Long-term disability insurance usually kicks in at the end of a short-term disability insurance. Policies differ in terms of the length of time that they offer benefits for and the criteria that must be fulfilled to be eligible.

An important factor in this regard is the definition of “regular or own occupation” or “any occupation”. A “regular or own occupation” policy covers you if you are unable to work in any capacity – meaning that, even if you could perform a role different to the one that you worked in prior to your disability, you will still receive benefits under the plan. Alternatively, an “any occupation” policy means that you will only receive disability benefits if you are unable to work at all.

It’s important to figure out which type of policy suits you better, depending on the cost of the premiums, the type of work that you do and your personal preference. We can help you with this.

Factors to consider when taking out disability insurance

  • How much do you or your family depend on your income?

Dependency is the key question here – if you have a spouse, children and/or other individuals who rely on your income contribution to the household finances, disability insurance is likely to be valuable to you.

However, it is likely that, as you age and your children become less financially dependent on you or you have saved enough retirement funds to help you through a potential early retirement due to ill health, disability insurance becomes less fundamental.

  • How much does your company plan protect you?

Some companies offer a disability policy and this is a common reason for people failing to purchase a personal plan. However, it’s important to understand the level of coverage that your company policy offers you, as it is common for such plans to only replace a small proportion of your income (often capped) across a short-term basis which is unlikely to be sufficient for your needs.

  • Work out your budget and shop around for the best deal

You could benefit from working with an independent financial advisor to help you in the purchase of your disability insurance. They will be able to search the market in order to find you a customized plan which fits your budget, rather than falling back on off-the-shelf policies which may not meet your individual requirements as well.

  • Don’t cut back on your level of coverage where possible

That said, it’s easy to underestimate the level of disability coverage that you actually need should the worst happen. Not only would you have to replace your existing expenditure, but you are likely to accumulate new expenses if you were to become disabled, such as the purchase of medical equipment, healthcare or home help, additional childcare, home renovations etc. Make sure that the benefits that your policy pays out are sufficient to cover all of your financial needs adequately.


Key questions to ask when purchasing disability insurance


There can be a lot of small-print involved in a disability insurance policy. Make sure that you understand the answers to the following, non-exhaustive questions before proceeding:

  • Terms and conditions of the policy- Including how disability is defined, which conditions are eligible and which are excluded and if pre-existing conditions are covered and, if so, to what extent.

  • Policy premiums- Including the total cost of the policy and whether contributions are still required if you are diagnosed with a disability and claiming on the plan.

  • Benefits of the plan- Including the level of benefits you will receive, whether they are adjusted for future inflation and whether they are taxable, any waiting periods for receiving premiums and how a disability is diagnosed.

  • Group plans- Including how the plan is funded (by an insurance company or self-funded by your employer), how your benefits will be affected if the company goes bankrupt and how your coverage will be treated if you leave your job.

Disability insurance is an important cornerstone to achieving your financial goals. Talk to us, we can help.

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The 2019 budget is titled “Investing in the Middle Class. Here are the highlights from the 2019 Federal Budget.

2019 Federal Budget

The 2019 budget is titled “Investing in the Middle Class. Here are the highlights from the 2019 Federal Budget.

We’ve put together the key measures for:

  • Individuals and Families

  • Business Owners and Executives

  • Retirement and Retirees

  • Farmers and Fishers

Individuals & Families

Home Buyers’ Plan

Currently, the Home Buyers’ Plan allows first time home buyers to withdraw $25,000 from their Registered Retirement Savings Plan (RRSP), the budget proposes an increase this to $35,000.

First Time Home Buyer Incentive

The Incentive is to provide eligible first-time home buyers with shared equity funding of 5% or 10% of their home purchase price through Canada Mortgage and Housing Corporation (CMHC).

To be eligible:

  • Household income is less than $120,000.

  • There is a cap of no more than 4 times the applicant’s annual income where the mortgage value plus the CMHC loan doesn’t exceed $480,000.

The buyer must pay back CMHC when the property is sold, however details about the dollar amount payable is unclear. There will be further details released later this year.

Canada Training Benefit

A refundable training tax credit to provide up to half eligible tuition and fees associated with training. Eligible individuals will accumulate $250 per year in a notional account to a maximum of $5,000 over a lifetime.

Canadian Drug Agency

National Pharmacare program to help provinces and territories on bulk drug purchases and negotiate better prices for prescription medicine. According to the budget, the goal is to make “prescription drugs affordable for all Canadians.”

Registered Disability Savings Plan (RDSP)

The budget proposes to remove the limitation on the period that a RDSP may remain open after a beneficiary becomes ineligible for the disability tax credit. (DTC) and the requirement for medical certification for the DTC in the future in order for the plan to remain open.

This is a positive change for individuals in the disability community and the proposed measures will apply after 2020.

Business Owners and Executives

Intergenerational Business Transfer

The government will continue consultations with farmers, fishes and other business owners throughout 2019 to develop new proposals to facilitate the intergenerational transfers of businesses.

Employee Stock Options

The introduction of a $200,000 annual cap on employee stock option grants (based on Fair market value) that may receive preferential tax treatment for employees of “large, long-established, mature firms.” More details will be released before this summer.

Retirement and Retirees

Additional types of Annuities under Registered Plans

For certain registered plans, two new types of annuities will be introduced to address longevity risk and providing flexibility: Advanced Life Deferred Annuity and Variable Payment Life Annuity.

This will allow retirees to keep more savings tax-free until later in retirement.

Advanced Life Deferred Annuity (ALDA): An annuity whose commencement can be deferred until age 85. It limits the amount that would be subject to the RRIF minimum, and it also pushes off the time period to just short of age 85.

Variable Payment Life Annuity (VPLA): Permit Pooled Retirement Pension Plans (PRPP) and defined contribution Registered Retirement Plans (RPP) to provide a VPLA to members directly from the plan. A VPLA will provide payments that vary based on the investment performance of the underlying annuities fund and on the mortality experience of VPLA annuitants.

Farmers and Fishers

Small Business Deduction

Farming/Fishing will be entitled to claim a small business deduction on income from sales to any arm’s length purchaser. Producers will be able to market their grain and livestock to the purchaser that makes the most business sense without worrying about potential income tax issues. This measure will apply retroactive to any taxation years that began after March 21, 2016.

To learn how the budget affects you, please don’t hesitate to contact us.

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