Insurance Understood: Insurance pizza
By Steve Meldrum on July 16, 2022.
My kids love ordering in pizza. I love it too because everyone ends up happy and there are minimal dishes. They all have different preferences for toppings but all the pizzas have a common base of dough, sauce and cheese. However, those ingredients flavour can really vary between restaurants. One child likes pizza with just those base ingredients whereas others like to dress up pizzas with additional toppings. This commonality of base ingredients for pizza got me thinking of insurance and the base of every insurance policy. Additionally, how options for insurance can be customized to each persons preferences. The base of every insurance policy is the death benefit, ACB – adjusted cost basis and NCPI – net cost of pure insurance. This holds true for personally owned or corporately owned insurance policies. The ACB and NCPI usually aren’t on your common statement. You may need to ask your insurance professional for those items. If you have a corporately owned policy this information should be given to you and your accountant every year. Depending on your insurance strategy, this information may be required for various tax deductions. For example, on a corporately owned policy, the death benefit coverage minus the ACB creates a notional capital dividend account. The capital dividend account allows you to move money tax free from the corporation to the shareholders. This is huge! Especially, when you start looking at different companies, products and how they vary in their base ingredients. From there, you can also dress up an insurance policy with things like cash value, contractual features, riders and so on. Again, not everyone likes or needs additional toppings. However, when you do add more features the costs generally climb too. Of course, just like pizza, you can order it online, have it delivered or go into a restaurant. They all vary on experience, convenience, quality and so on. Each option can fit a different situation. What kind of pizza do you like? What type of insurance policy do you like? Do you know the ingredients? How are they going to impact your life and planning. Steve Meldrum B.Mgt. CFP CLU is the founder of Swell Private Wealth Ltd. For over a decade he has specialized in helping individuals and businesses expand protect and perpetuate their wealth. For further information or tailored advice, contact him at 403-487-0490, steve@swellwealth.com or connect on social media 9-8
