Sylvia Ho welcomes insurance agent Aviva Abraham to a discussion about the benefits of life insurance. Aviva explains the differences between types of insurance and really details the best way to protect your real estate wealth and property from taxes when it’s time to pass it on.

Aviva points out that when you pass, the property and equity investment you’ve been working on will be subject to a final tax return after your death. This impacts the family left behind and may derail the strategy you’ve been planning to take care of your children after you’re gone. She explains why personal life insurance bought through a qualified agent is the best protection against this.

Sylvia and Aviva break down the differences between personal life insurance, group benefits life insurance through work, and bank life insurance. They all fill different functions but only one will ensure your real estate assets are safe in the future. Aviva shares that it’s easier now than ever to get life insurance, that the process has been streamlined, and that as an agent, she can help anyone find the best company to suit their needs or health constraints. This episode sheds important light on a topic nobody likes discussing but that needs to be addressed.

About Aviva Abraham: 

Aviva’s focus is on providing small to mid-size business clients customized group benefit plans- helping them to grow their businesses and manage their plans through effective cost containment.

Aviva also works with management and key employees to protect their financial future with life insurance, disability and critical illness coverage.

Aviva started her career in public accounting in New York City, working as a CPA in both the public and private sector, and later moved to Toronto. In 2006, she changed careers and began at CPFG, becoming licensed in 2009.

Aviva believes strongly in the importance of volunteer work in her community, particularly in her children’s schools, involving herself in various fundraising endeavors.

Aviva Abraham’s email at Creative Planning Financial Group: aviva@cpfg.com

Resources mentioned in this episode:

• Aviva Abraham on LinkedIn
• Aviva Abraham blog
• Aviva Abraham at Creative Planning Financial Group

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Sylvia Ho | Mortgage Edge Agent 1 | LIC #10680 FSCO# M08003923: schedule a call | facebook | linkedin | youtube | instagram

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Transcript

Sylvia Ho: [00:00:05 ] Hey, friends, have you ever wondered how you could pay off your mortgage faster? Or maybe you like to help your kids get into the real estate market. Or better yet, retire with some passive income. Well, you're in the right place. Welcome to the Sylvia Ho Mortgage Podcast. My name is Sylvia. I'm here to teach you how to achieve your goals simply by owning just one more property.

Sylvia Ho: [00:00:29 ] Hey everyone, welcome to the J.O.M.P. podcast. My name is Sylvia Ho, and I'm going to be your host today. Today, we're going to hear from Aviva Abraham and Aviva Abraham is an insurance agent. And in today's podcast, we're going to talk about the differences between the different types of insurance. But what she really talks about is about how us as clients are in the J.O.M.P. program and how we're trying to build wealth through real estate so that we could eventually pass it down to the next generation, to our kids, and how to protect that plan and how to protect that asset. So let's listen in. Thank you very much, Aviva, for joining us today. We started chatting. We were talking about life insurance and the importance of life insurance and how to protect your real estate investment. As most of you guys know, I promote the J.O.M.P. program. The J.O.M.P. program's all about buying one more property and building wealth through real estate, basically copying what the wealthy people do. The rich people do, right? The rich people never have dead equity, right? They always have debt against an appreciating asset. And right now we have Aviva here. She's going to talk to us about what life insurance is all about. Aviva is giving me five questions here and we're going to go through these questions, a little bit of a different format, but that's what we're going to do today. So Aviva, welcome. Thank you very much for coming on to the podcast today.

Aviva Abraham: [00:02:02 ] Thank you so much for having me and I love your J.O.M.P. program. It definitely ties in with a lot of things that I discuss with clients as well, helping them protect their assets, helping them pass it on to their family so that they don't have to lose whatever they worked so hard to build to taxes whenever they pass.

Sylvia Ho: [00:02:23 ] Mm hmm. Yeah, absolutely. Passing is such a difficult thing to think about, people just don't want to think about it. Right? But, you know, we go through so much effort to set up this whole J.O.M.P. program. And if you're not protected at the back end, then you've done everything for nothing, right? Like, I hate for the government to get more money than they really should. So, Aviva, let's go through the five questions that you've given us. So how does life insurance protect our real estate investment? So talk to us about that.

Aviva Abraham: [00:02:50 ] So in the early years, Sylvia, when the mortgage is high, equity investment is low, you've got debt. If something happens to somebody, again, like you were saying, you want to protect the strategy that you're helping your clients implement, but it takes time. So if something happened to you or your family and they're left with a lot of debt, they may have to sell that property in order to pay. There's that final tax return that people have to file on the death of a family member. So on that death of the family member, it's as if the asset was sold and then there are taxes that are due. Having the life insurance policy that protects the debt so that people can keep that asset and not have to sell it, they can pay the estate taxes, they can pay down the mortgage, really, life insurance provides you with cash so that your family can hold on to that asset that you bought. They can pay off part of the mortgage, they can use it whatever they want. They can even use it to buy a new property if they want. So they have the flexibility there to use that money in whatever way they need and want.

Sylvia Ho: [00:04:01 ] Yeah. So it's all about protecting your investment, right? Next question you have here is, My mortgage is paid off, no debt. I don't have to worry about any debt. So why do I need insurance for my real estate property? How does that even make sense?

Aviva Abraham: [00:04:16 ] Right. So that's a great point to reach, actually. And that's what you're helping clients with, right? So in the early years, you're protecting the debt. But once that debt is paid off, like I was saying before, if somebody were to die and you're holding that real estate property, their family then has to file a final tax return that says these are the assets that I owned and it's as if it's sold. CRA wants their share of it. Even though there's no debt on the property, there's going to be capital gains. So what did you buy it at? What is it worth now? And there are taxes on the capital gains and those taxes will come due and the family will have to pay for it. So how will they have the money to pay those capital gains taxes? That's where the life insurance comes in.

Sylvia Ho: [00:05:06 ] Okay. So help me understand this. Let me run through a scenario with you. So let's just say the house is worth a million bucks. There's no mortgage on it. They originally bought it for 500,000 and it's doubled in value. It's worth a million. No mortgage on it. Let's just say it's under one person's name. Upon death that property is technically sold to, let's just say the husband dies, to the wife. Right?

Aviva Abraham: [00:05:32 ] So when there is a couple, there is a rollover. So it's really if somebody is single, not married, divorced at that point in time, because if there's a couple - and also it depends how the real estate is held, if it's held personally or in a trust, there could be other scenarios - but ultimately, whether you're single or a couple, at some point in time that real estate will show up on a final tax return.

Sylvia Ho: [00:06:00 ] Okay, so either you dip into the equity to pay that bill or you use life insurance to pay that final bill upon death.

Aviva Abraham: [00:06:10 ] Exactly. So if you have no mortgage, yeah, you can't draw on that. If you have no line of credit or mortgage existing, then what's going to happen? The kids are going to have to take out a mortgage on on the property. It gets very complicated and messy. The easiest, easiest way and actually the most cost effective, the cheapest way to do this is through insurance. And it provides cash in a very timely way.

Sylvia Ho: [00:06:37 ] Yeah, I was just thinking, like as a real estate investment property, you never want to have a property that's free and clear and just sitting there anyways, right? If that's a real estate investment property, like we want to draw down on it again, use that money, go buy another property.

Aviva Abraham: [00:06:50 ] Yes, that's true. What I find as well i