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July 20, 2021 durhamcitizen.ca 15

“ Do You Know Someone Retiring in 2021 and Can Use The Advice of a 32 Year Experienced Retirement Specialist? MONEY
Go to: www.retire-rite.ca and Like/Share @: www.facebook.com/retireritelifestylesolutions

Are you aware of the differences between a

Bank Owned vs a Personally

Owned Mortgage Life Insurance?

Are you aware, when you insure In today’s ever advancing and fast Let us face it, your home is probably
your outstanding mortgage with paced environment, more and your largest single investment you
the bank’s mortgage insurance more Canadians have boldly will ever make and the strategy you
provider, you are naming the bank stated, they want to be involved in incorporate to ensure your home
as the owner and beneficiary of every single financial decision, stays in the family after your pre-
your mortgage insurance policy? regardless of the nature or the mature Death, Disability or
Think about this for a second, complexity of the decision. As an Critical Illness is critical, however,
when you purchased the bank independent and objective if you already have Mortgage Life
owned mortgage insurance, were financial advisor, I encourage my Insurance with your bank, DO
you aware you were naming your clients to request multiple NOT CANCEL it until you speak to
bank as your policy’s owner and scenarios, regardless of if it us. In other words, always have a
beneficiary? pertained to income protection, new policy in force before have enough committed future age 100, with the major difference
Your bank only has one major e s t a t e p r o t e c t i o n , we a l t h cancelling your old policy. income and or receivables to fund being the cost factor.
concern; in the event of your management, retirement planning It is also especially important to the income shortfall. No one knows your budget, more
p r e m a t u r e d e a t h , y o u r and or estate planning. know banks underwrite the In conclusion, Mortgage Insurance than you, however, if you had to
outstanding mortgage balance will Here are five questions you need insured at claim (death) rather is nothing more than Term Life insure your outstanding mortgage
be paid off, but wait for a second, answered before purchasing than at issue, and God forbid if the Insurance and this type of balance with a one (1) year term,
d i d y o u r e a l l y w a n t y o u r B a n k o w n e d M o r t g a g e bank determined you can be a insurance comes in all forms, term PLEASE DO SO and give yourself
beneficiaries to pay off the Insurance… future liability, due to a recent insurance can be sold for 1 year, 5 the year to re-arrange your finances
outstanding mortgage balance, or medical ussie, they could cancel years, 10 years, 20 years (most to facilitate a longer-term plan.
did your beneficiaries want to Q1: Who owns your bank’s your policy without hesitation. popular), to age 65, to age 75 and to
decide at that time (in the future) Mortgage Life Insurance policy, This situation is completely
on the best course(s) of action? you, or your bank? opposite with a personally owned For more information, please drop me a line at:
Actions, such as pre-funding your Q2: Who is the beneficiary of your policy, the only way it is cancelled is riyadm@themoneycafe.ca and or contact me via Linkedin or Facebook.
child/children’s education or bank’s Mortgage Life Insurance if you stop paying your premiums. You can also check out my websites: www.themoneycafe.ca |
paying off high-interest credit card policy, your beneficiaries, or the I have also advised my clients that www.retire-rite.ca | www.facebook.com/retireritelifestylesolutions
debt. The bottom line is you have bank? your greatest self-controlled asset
choices with a personally owned Q3: Why does my bank’s Mortgage is your ability to earn an income. It Article; courtesy;
mortgage insurance policy; with a Life Insurance policy face value is not your degrees or your business The Money Café Corp/Retire-Rite Lifestyle Solution™
bank owned policy, you do not! decrease when my payments stay experience and if your income
Are you aware, bank owned the same or increase? source(s) were interrupted or dried Kindest Regards
mortgage insurance benefit or Q4: What happens to my paid up for what ever reason, how would Riyad K Mohammed FA; PWA; RMS
payout declines as the mortgage is premiums if I switch banks and go you manage? Advanced Case Specialist/Financial Advisor
reduced, but with a personally from bank A to go to bank B (for a As a good rule of thumb, I advise The Money Café Corp
owned mortgage insurance, if you better rate)? my clients to have at least three (3) 1-813 Dundas Street W. Whitby; On; L1N 2N6
died in year 12, 15 or 20, your Q5: What can I use my bank’s months of expenses saved in a C: 647.554.2307
beneficiaries would receive 100% of Mortgage Life Insurance policy for ‘contingency account’ and if you E: riyadm@themoneycafe.ca W: www.themoneycafe.ca
the original amount of insurance? after my homes paid off? are a business owner, ensure you

The wealthiest Americans avoided

billions in taxes by voluntarily doing

something most only do out of

necessity: borrowing money.

ProPublica reported Tuesday it had salaries, avoiding the 37% federal wealth, according to ProPublica. time period. rate of 29.9%. But his wealth grew
obtained a massive trove of IRS tax on top incomes, as well as avoid The US does not directly tax ProPublica did not publish its by $13.9 billion during that time,
documents, revealing that selling stock to free up cash, individuals' total wealth, unlike source data or disclose how it meaning his "true tax rate,"
America's wealthiest individuals bypassing the 20% top capital gains some European countries. Nor obtained IRS data. a cco rd i n g to P ro P u b l i c a ' s
have avoided paying billions of tax rate. Since loans aren't does it tax stock holdings until they According to ProPublica, the top 25 methodology, was just 3.27%.
dollars in taxes for years, resulting considered taxable income, the are sold. And billionaires tend to wealthiest Americans paid a "true Musk replied to ProPublica's
in income tax bills that amount to a wealthy need only pay back the have a lot of their net worth tax rate" of 3.4% - a result of tax request for comment with: "?"
fraction of their net worth. principal and interest, rather than wrapped up in stocks. avoidance strategies that are out of Investor Carl Icahn also took
One of the key strategies employed the higher taxes that would However, ProPublica's analysis reach for most Americans. advantage of borrowing money,
by the ultrawealthy to keep their accompany multimillion-dollar revealed in new detail how Borrowing, it turns out, is one of paying $0 in federal income taxes
tax bills low: borrowing money. incomes and investments. America's tax code allows the those strategies. despite reporting an adjusted gross
Many Americans borrow money America's 25 wealthiest individuals ultrawealthy to take advantage of a In 2014, for example, Oracle income of $544 million, as he had
only when they have to for large saw their net worth grow by $401 litany of tax loopholes and wealth- cofounder Larry Ellison disclosed an outstanding loan with Bank of
purchases like college tuition or a billion from 2014 to 2018, according management strategies to increase he had used 250 million of his America worth $1.2 billion,
house, as interest can quickly add to Forbes. But they paid a total of t h e i r we a l t h w i t h o u t a l s o Oracle shares as collateral to secure ProPublica reported.
up, especially if they're not able to $13.6 billion in federal income taxes i n c r e a s i n g t h e i r t a x b i l l s a $9.7 billion personal line of “I didn't make money because,
pay back the loan right away. in that same period, amounting to substantially. credit. unfortunately for me, my interest
But according to ProPublica and 3.4% of that newly acquired To illustrate the gap between Elon Musk has similarly put up a was higher than my whole adjusted
independent experts, America's wealth, ProPublica found. wealth and taxes paid by the massive amount of his equity in income," Icahn told ProPublica,
billionaires have often financed By contrast, a middle-class ultrawealthy, ProPublica created Tesla and SpaceX as collateral for adding that while he does borrow a
their lavish lifestyles by using their American in their 40s who had what it called a "true tax rate." loans, rather than sell those shares lot of money, it's "not at all" meant
vast fortunes as collateral for loans, amassed a "typical amount of ProPublica defined this as the total and pay 20% in capital gains tax to to lower his tax bill, but rather that
which can come with single-digit wealth for people their age," saw federal income tax a person paid, in free up the money. From 2014 to he borrows "to win. I enjoy the
interest rates. their net worth grow by $65,000 this case from 2014 to 2018, 2018, Musk paid $455 million in competition. I enjoy winning."
Borrowing money allows the from 2014 to 2018, but paid $62,000 compared to how much new taxes on a reported income of $1.52
ultrawealthy to earn minuscule in income taxes, or 95% of that new wealth they acquired in that same billion, resulting in an effective tax