The importance of a critical illness recovery plan
canada remains the only country • Reduce your financial stress
Today, MoRe PeoPLe aRe ConsIdeRIng in the world with a critical illness • Reduce or pay off debts Assante Financial A BUILDER, STEWARD AND PRESERVER OF MULTIGENERATIONAL WEALTH
product that still has guaranteed M
• aintain your business Management Ltd.
exTRa InsURanCe CoveRage future premiums. or practice
Beyond MedICaRe Today, though, if you are diagnosed • Maintain your independence
with and survive a critical illness, • odify your home to better
M CLIENT QUARTERLY sPRIng 2003. voL 1/#2
Nobody wants to think about illness. your total RRSP investment could critical illness insurance pays a address mobility and hire oRIgInaLLy PUBLIshed In 2003 By FRank MaLInka
Yet most of us know someone who be reduced by as much as $134,000 lump sum benefit to use in any additional help during recovery
has suffered from the financial and (because of taxes attached to a manner you choose, providing you A
• llow a family member to take
emotional devastation caused by an large, lump sum withdrawal).
illness such as cancer. Would you All of these issues are important
with greater financial resources to:
• n Canada, pay for drugs and
a leave of absence to help
The crucial role insurance plays
be prepared if you — or one of your but much more important is being
loved ones — were confronted by able to find — and afford — the
treatment not covered by
provincial health plans
Sooner or later, sadly, we all must
deal with the challenge of critical in financial planning
a critical illness or a severe injury? resources needed to heal and O
• utside of Canada, pay for illness in our lives. The most we can
consider your answer very carefully. recover. Timely access to medical, timely treatment that may do is be prepared ahead of time. Join
Many people spend a lifetime large family asset or business.
Facing a critical illness can be one assistance and rehabilitative not be available at home and me for a cup of coffee and a risk
of the most difficult challenges in services can have a significant for your family’s travel and management review and let’s talk IT’s an IMPoRTanT building and growing an estate, In most cases, the premium
paying taxes all along the way, isn’t the problem, it’s the solution.
life. Beyond dealing with the fear affect on a person’s ability to cope lodging expenses about it. PaRT oF RIsk and still have canada customs In this issue of client Quarterly,
and anxiety of coping with the
illness itself, consider: finances,
with and recover from a critical
illness. That’s why you do not
ManageMenT and Revenue Agency wanting to we feature the story of one very
wealthy individual who has always
take a large share at the end of
meeting the day-to-day needs want financial issues to be a major WhaT CRITICaL CondITIons aRe CoveRed? Frank Malinka of the same name to eventually
your life. Life insurance can play appreciated the value of insurance.
of your family and much, much consideration when you are trying BCom, CFP, CLU, ChFC an important roll in helping people Every year, when he and I review his
Alzheimer’s Disease Blindness become the world’s most famous
more. Whether you are coping with to find the best possible solutions maintain and preserve their estates, financial plan, we always reconsider
insurance company. It was there the role that insurance has to play.
an illness yourself, or caring for to a critical illness in your family. Benign Brain Tumor coma particularly when it involves a
nsurance should play that the term “underwriter” evolved, I hope his story will help you better
someone you love, the demands can For all of these reasons, you should a critical role in theto describe those who signed their special asset subject to taxation.
coronary Artery Bypass Surgery Deafness
“risk management” of names beneath each other on a Estate equalization strategies using understand the importance of
sometimes seem overwhelming. carefully consider critical illness insurance in your financial planning
Heart Attack kidney Failure your life and financial portfolio. policy, with the amount of the risk insurance can help parents to treat
Serious financial consequences are insurance — for yourself and all of and I welcome the opportunity to
Appropriate insurance coverage is they were prepared to cover. their children equally in estate
also possible. Retirement savings your loved ones — as part of your Loss of Speech Life Threatening cancer discuss your needs.
Today, insurance has evolved to
especially crucial if your estate is large distribution, particularly when it is
can be severely affected by a critical overall insurance strategy. Major Organ Transplant Motor Neuron Disease not in the best interest to split up a
and there are many beneficiaries to meet a broad spectrum of needs.
illness. For example, if you were critical illness insurance in the consider. But insurance can benefit Life insurance, of course, is probably
forced to withdraw a net $75,000 future will not be the product that Multiple Sclerosis Occupational HIV Infection
just about everyone, with different the most familiar form of insurance
from your RRSP to deal with the we know today. There are many Paralysis or Loss of Limbs Parkinson’s Disease and still plays an important role in
needs at different times of life, and JOIN US FOR A cUP OF cOFFEE
financial needs caused by a critical indicators that point to a higher-
Severe Burns Stroke
you should definitely reconsider protecting family dependents from AND A RISk MANAGEMENT REVIEW
illness, the actual gross amount of priced product in the future. In fact, your insurance strategy every time possible financial hardship. Less well
you review your financial plan. understood are the tax advantages These days, a lot of people are taking a hard look at their over-all
of life insurance. You can maximize
Insurance in various forms has been finances and insurance risk management.
your investment growth in the
with us for a long time. The earliest Some people want to make sure they have enough coverage while
known type of life insurance was tax-sheltered environment of a
MALINKA FINANCIAL A BUILDER, STEWARD AND PRESERVER OF MULTIGENERATIONAL WEALTH permanent life insurance policy.
for the cost of burial that Greek and
others want to make certain they are not paying for too much coverage.
changes in group benefit plans and the Provincial Medical Services
Roman religious societies provided The cash equity can also be used
Plan— along with continuing uncertainty about the economy and
Financial Planning / Corporate Planning / Risk Management / Unbiased & Independent for their members, although no for emergencies, as well as
actuarial calculations were used. for opportunities, and to help long-term employment — are creating insecurity for people
Trusted professional wealth advice for your long term investments, insurance and concerned with what might happen if they were either sick or hurt.
The Tontine Annuity System, supplement your retirement income.
financial planning since 1985 founded in Paris by the 17th century If you’re sick or hurt, long-term We can help. That’s why we have instituted our “cup of coffee and
Italian born banker Lorenzo Tonti, disability income insurance can Risk Management Review Hour” from 8:45 am to 9:45 am, Monday
has been regarded as an early be used to replace your income. through Thursday. We will offer you a sound opinion on what type
Assante Financial Management Ltd.
attempt to use the law of averages critical illness coverage, not so and what amount of insurance is right for you. No cost. No obligation.
Malinka Financial Suite 1588 – 789 West Pender Street, Vancouver, B.c. V6c 1H2 well known or understood, is the
and the principle of life expectancies
emailus@MalinkaFinancial.com Tel: 604-688-0300 Fax: 604-688-2423 And when you stop by our office, we’ll also buy you a cup of coffee.
as the basis for payment of focus of much attention these
www.MalinkaFinancial.com days, given the state of our medical
annuities. In the 18th century, Lloyd’s may not have all the answers but we might have one which could be
of London evolved out of humble services plan. It is discussed in the best financial decision you will make this year.
beginnings in a London coffee house more detail on page four.
THE GRANDFATHER & THE GRANDSON
HOW A GREAT FORTUNE WAS BUILT OVER
The premium isn’t the
John Donaldson’s grandfather emigrated from Eastern Europe early problem—it’s the solution
in the 20th century. Equipped with only a grade three education,
do everything possible to prevent it office staff, contracted people and me not to make adequate provision like a much better business person
Ed Marcus opened a store in Noranda, Quebec, and successfully
InsURanCe Is a neCessaRy and ReasonaBLy PRICed from being broken up. But for those employees. It’s just not a business for my family and my business,” because I am making decisions for
operated it for 13 years.
soLUTIon To The RIsk ManageMenT IssUes InvoLved who care enough to pass the baton that should be wound down quickly.” he said. “I feel responsible for my the short and long terms based on
to the next generation, insurance family, my employees and my factors that are important at the
In 1946, Ed came to British columbia intending to retire. But he was In PReseRvIng a MaJoR esTaTe and BUsIness provides an excellent solution.” cONFRONTING THE contractors. The death of one person time and in accordance with my
tempted by the possibilities of real estate in the young province and
‘BIG QUESTIONS’ should not wipe out everything I strategic plan. I don’t need to factor
began successfully buying and selling land and property. Within a
few years he had built a prosperous commercial real estate company.
LIFE INSURANcE John is able to take a very rational have worked for during my entire in any considerations for insurance
John Donaldson took over his preserving his mother’s estate, he A key component of a well-planned approach to his insurance needs but life. Most importantly, though, needs because those decisions have
John was born in 1960 and Ed took an immediate interest in troubled grandfather’s estate in realized there would be a tax liability estate must be life insurance. recognizes that some people can my wife and family will be able to long since been made.”
his infant grandson. For his part, John was fascinated by his 1988 and grew it from an asset base when his mother passed away. The “In my will and estate planning find this hard. pass through a period of mourning
grandfather’s business and, when he was only three years old, would of about $15 million to its present family business and the estate would my first priority is my wife,” John “The difficulty in talking about without having to worry about any PARTNERSHIP INSURANcE
visit Ed in his offices. The old man took time to explain the business worth of more than $90 million. both owe taxes. The solution to the said. “she will survive to care for insurance is that you have to face financial considerations.” John recently entered into a
to the child, who was a very quick learner. Today, he owns and manages a problem, he discovered, was to take the children and she will need to your own mortality. you have to business relationship with a key
real estate company involved in all out a life insurance policy on his make important decisions about confront great ‘What if’ questions A STRATEGY FOR RISk employee of his company. Naturally
“He would show me business documents and explain what they
aspects of property development mother’s life that would pay for the the future of the estate and the like, ‘What if my family was not MANAGEMENT enough, he applied the principles
were for, why they were needed,” John recalled. “In fact, he was the
including owning, leasing and taxes owing after her death. family business. I do not want her to fully provided for, what if my When it comes to business and of risk management to this new
first person to talk to me about insurance when I was very young.
managing commercial properties. “The plan was essentially very be worried about monetary issues business was not able to carry on financial planning, John always business venture as well.
He explained to me why insurance was important and why he had
As well, he acts as a real estate simple,” John said. “My accountant during the necessarily difficult time without me, etc.?’ emotionally, as includes insurance as a strategy for “We carry partnership insurance
taken out the policies he had. I really was interested in what he had
consultant for third parties, providing and other professionals analyzed after my death.” well as mentally, these are tough risk management. on each other so in the event that
to teach me.
counsel on commercial real estate, the value of my mother’s estate, Strategic planning review issues to “Insurance something happens to one of us, the
“I was very close to him and he was also my mentor. He asked me if I lease negotiations, portfolio reviews including the family business. With Now operating his own practice, consider. “ “If you build an asset should be estate or family of the other partner
would work with him and carry on the legacy of the family business. and strategic planning. those numbers it was possible to Frank continues to serve as John’s “smart and you should secure that considered will be able to buy out the partner’s
I agreed to do so and began working with him part time, before and He is a very smart, savvy guy in his assess what the estate taxes would financial consultant. Every year, focused asset. It’s really as simple part of the interest in the business or retire the
early 40s who has also worked very be when my mother passed away. during their review of John’s business people infrastructure debt on the property so there is no
after school, or weekends, depending on his needs.” as that in business and
hard to achieve his success. Guided We then acquired a policy from the financial plan, he and Frank assess know these of any financial crisis or need to dispose of anything.
In 1978, John graduated from high school and began attending London Life Insurance Company that whether the plan includes adequate decisions are
the principle also applies plan,” John For example, if I died my partner
by a grandfather who acted as an
the University of British columbia. He continued working for his early and powerful mentor, John would provide the cash required to risk management in the form of critical but
to managing your wealth believes. “If you would get a million dollars from my
grandfather part time while he completed a Bachelor of Arts in acquired the habit of education as meet that government requirement.” insurance coverage. They take may still avoid
and estate. you do it build an asset partnership policy and he would be
Political Science. When John graduated, Ed asked him to join the a very young boy and never lost the Frank Malinka was then an agent great care in the planning. Three them. Just as partly through insurance you should able to say to my estate: ‘If you want
family company full time. John agreed to do so and has remained habit. In his field, he probably has for London Life, where John was generations of John’s family are some people and partly through secure that to hold the remaining share and
with the company ever since. more degrees behind his name than primarily insured. He took over protected in order to preserve the will avoid building a sound asset. It’s really continue doing business with me,
When he began working for his grandfather full time, John just about anyone else in the same John’s file in 1988. estate in its entirety. The family questions portfolio.” as simple as that is fine or, if you like, I will buy
established a pattern of hard work and continual self-improvement business. He has also worked literally “Frank fine-tuned our existing business, which currently employs about that in business you out at fair market value.’
that continues to dominate his life. Up bright and early, he would be night and day on his business to policy and made it work really dozens of people, will also be whether they have a will in place, and the principle also applies to This kind of insurance is
at the company offices by six o’ clock. He’d start with maintenance build a large and secure estate for well,” John said. preserved as a functioning entity in or whether they have made managing your wealth and estate. particularly important for someone
chores — landscaping, opening all the buildings and getting them his family. That’s why insurance For very good reasons, Frank the event of his death. instructions for the guardianship you do it partly through insurance like my partner, who does not have
ready for the day, other odd jobs. Then he’d get on with the “real” matters so much to him. continues to advise clients that “I have sufficient insurance to of their children, or how they and partly through building a sound a large asset base at this time in his
business of the real estate company, including tenant relations “When you come right down to it,” insurance can play a critical role in provide for any tax liabilities, family want to be buried. you can’t avoid portfolio.” life. his wife and son will be protected
and other property management issues. During his spare time, he said in an interview, “insurance preserving an estate after death. security and charities that I wish to bringing up the big questions Naturally enough, a byproduct of from any outstanding debt that
John would attend part-time courses at UBc or BcIT, continually is basically about estate and “despite today’s lower capital gains support,” John said. “I also needed when you bring up the smaller a wise insurance strategy should might remain after his death. They
improving his knowledge of the business. wealth preservation.” taxes, paying these taxes using life to protect my business so that my ones. and many people just can’t be peace of mind and John has
This is a true story about a client
John wants very much to preserve insurance is like paying pennies on wife would not necessarily be forced face the big questions.” The key been able to find that through
of Malinka Financial. however,
Like his grandfather, John believes that education is a critical factor his estate for future generations. the dollar — eliminating your taxes to wind it down after my death. It’s to John’s approach is personal his planning.
the client’s name and some of
in business success and he continues to take more business courses at a significant discount,” Frank very important that she have the responsibility coupled with sound “knowing that my business and the details of the story have
every year. He has acquired an impressive — and lengthy — array of PRESERVING AN ESTATE advises. “Clearly, not everybody option to not just sell everything and business and personal financial personal affairs are well planned been changed to protect our
professional credentials behind his name. In the 1980s, when John has the desire or, in some cases, the close it because literally hundreds of planning. and that insurance is in place to client’s confidentiality.
considered the problem of obligation to maintain an estate and people would be affected —tenants, “I would consider it irresponsible for manage the risk makes me feel