Q. We have recently bought a larger home using the appreciated value in our first property to make a substantial down payment. However, we still have a large mortgage and we’re concerned about what would happen should either of us die prematurely. What do you recommend? Marianne and Bill N.
As perhaps your largest investment, protecting your home should you become ill or die prematurely is prudent. Creditor insurance is an insurance policy that pays out your borrowing balances (credit card, bank loan, line of credit, or mortgage) should you become critically ill, seriously injured, or die. The most common type is for loss of life protection that will pay the principal and interest remaining on your mortgage should you die before paying it off. Creditor insurance premiums are based on your age and the amount of coverage you are seeking. Similarly, mortgage life insurance, based on your joint lives and first to die, is a life insurance policy that pays your outstanding balance in full should either of you die. An alternative approach is to investigate the purchase of stand-alone insurance in an amount that would cover the balance of your mortgage and possibly an additional amount to replace income should either of you pass prematurely. This is especially important if you have young children or other dependents. When a stand-alone policy is purchased, frequently term insurance is used (rather than permanent insurance which costs more). When buying term insurance, consider getting the options to renew when the term ends and to convert to permanent insurance. This gives added flexibility to obtain new insurance even if you no longer qualify medically or if your circumstances change and you want the benefits associated with permanent insurance.
What are the implications of missing the deadline to file my income tax on Monday, May 1st? David. B
If you owe the government any taxes, interest may apply. Interest is compounded daily at the prescribed rate (currently 8%). If you have overpaid your taxes throughout the year, the interest rate paid on overpayments is 6%. As these rates can change every three months, get the current rates by going to the website, www.cra.gc.ca/interestrates or call 1-800-959-8281. Best to meet the deadline to avoid additional payments and, if you have overpaid, seek professional advice to avoid this scenario in the future.
Bev Moir is a financial planner with The Moir Team at ScotiaMcLeod in Toronto. ScotiaMcLeod is a division of Scotia Capital Inc., a member of the Scotiabank Group. Member CIPF.
This article is for information purposes only. It is recommended that individuals consult with a financial or tax advisor before acting on any information contained in this article. The opinions stated are not necessarily those of Scotia Capital or The Bank of Nova Scotia.
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