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New Rules for Life Insurance Policies after January 1, 2017

We recommend that you contact your MD Advisor or your MD Insurance Consultant to find out if these rule changes might affect your existing insurance or your plans to buy insurance in the future.

Potential Effects of the New Regulations

  • A reduction in the maximum amount of premiums that can be deposited in a policy.
  • A change to the maximum amount of cash that can be accumulated in a policy.

What’s Changing and What’s Not Changing

Generally, policies issued before January 1, 2017 will be grandfathered and remain subject to the old taxation regulations. This means that nothing will change with regard to an existing insurance policy.

However, if certain changes are made to an existing policy after January 1, 2017, the policy may lose its grandfathered status.

Examples of Changes That Might Result in a Loss of Grandfathered Status

  • Additions to your insurance coverage that require you to provide medical or health information.
  • Conversion from one type of insurance policy to another (for example, from a term policy to a permanent policy).

Examples of Changes That Will Not Affect Grandfathered Status

  • Moving from smoker to non-smoker status.
  • Transferring ownership of your policy.

Life Insurance Remains a Powerful Financial Planning Tool

Life Insurance Remains a Powerful Financial Planning Tool

  • tax-free death benefits, and
  • tax-advantaged accumulation to help you build, protect and transfer your wealth.

Even under the new rules, life insurance will continue to be a great planning tool and, for incorporated clients, will still be a tax-efficient way to pass down money from a corporation to surviving shareholders and/or beneficiaries on the death of the insured person.

Why the New Legislation Is Being Introduced

The current legislation has remained unchanged since 1982. Since then, life expectancy and insurance have changed significantly. The changes to the legislation reflect the fact that people are living longer, and ensure greater consistency in how different insurance products are taxed.

What to Do if You’re Considering Changes to Your Existing Life Insurance or Buying a New Policy

Before doing anything, talk to your MD Advisor or MD Insurance Consultant, who are experts in life insurance. They can answer any questions you may have and help ensure you have the correct insurance coverage in place, build value for your beneficiaries and maximize the tax effectiveness of your policy as part of your overall financial plan. Together, you can decide what is right for you and your family.

Insurance products are distributed by MD Insurance Agency Limited, a CMA company. All life-licensed MD employees have life licences with MD Insurance Agency Limited, a CMA company.