Critical Illness Insurance Kicks In Where Others Leave Off

You might have seen the news about Sarah Burke, the professional snowboarder who succumbed to her injuries in January. Questions were raised about whether Burke had adequate insurance coverage when her business manager requested donations to cover medical expenses.

Regardless of the Health insurance coverage limits, it is clear that a Critical Illness (CI) policy could have provided a lump-sum cash benefit that would have helped to cover at least some of her expenses. After the accident, Burke fell into a coma, one of the many conditions that trigger a CI payout.

In 2008, a Canadian runner suffered a heart attack while participating in the Berlin Marathon. He survived and incurred hefty medical expenses. Again, the additional benefits provided by a CI policy would have gone a long toward paying for his medical expenses.

Health insurance coverage can be exhausted rapidly by these and other critical illnesses and occurrences. Consider the multitude of Health insurance variables: In network care vs. out of network, required referrals to specialists from PCPs, etc. — particularly when these events occur out of state or country.

Anyone can be involved in an accident or suffer an injury during a snow outing, while working out, or during any number of other recreational physical activities. Consider the peace of mind that a CI policy could offer.

Advertisements

ONCAP II Hits Home Run With Sale of Canadian Securities Institute

Canadian Securities Institute Global Education Inc. was recently sold by one of Onex’s private equity funds to Moody’s Analytics for $155 million Cdn.

ONCAP paid $25 million for a 91% stake in the company which was spun off by the securities industry back in 2006. Onex’s share of the company was 40%.

When the sale was made back in 2006, the multiple that ONCAP paid was somewhat frothy. However, closing regional offices, converting all exams to mutiple choice for quick computerized marking, coupled with 200% fee increases to take an industry exam made CSI extremely profitable on what can be considered a monopoly as an education content provider in the securities industry in Canada.

As an industry participant, one can only hope that Moody’s will keep fees reasonable as educational requirements keep increasing and double digit course fee increases seem to be the norm.

Your comments are always appreciated.

Action List Worth A Look

Our Canadian research comes from National Bank. Since November, 2009, they have produced an Action list where their analysts provide their best ideas. In conjunction with their recommendations, they also recommend when to sell these holdings based on price appreciation or earnings surprises.

From November 30th, 2009 to June 30th, 2010, 27 names have appeared on the list with 13 still on the list. In the last quarter, five names were removed while six were added.

In the last quarter, the NBF Action List returned 3.76% vs. -0.33% for the TSX. Since November 30, the Action List netted 6.13% vs. 0.81% for the TSX.

The Action List is updated daily. To get the current action list, please don’t hesitate to contact us and we would be happy to email or send you a copy.

Have a great weekend. Your comments are always appreciated.

Alberta Capital Bonds On Their Way

Albertans are sure to be inundated with marketing on Alberta Capital Bonds in the coming weeks as the Alberta government looks to individuals to raise capital to fund their current deficits. Details of the offering were provided to financial institutions such as ourselves this week. The bonds will go on sale February 16th until March 1.

Unlike Canada Savings Bonds, Alberta Capital Bonds are not redeemable and must be held until maturity except for some very limited circumstances. The bonds will be dated March 15, 2010 and have a 5 year term. Interest can be paid annually or compound annually.

The minimum purchase amount will be $1,000 with a $25,000 maximum regardless of how the bonds are registered. You would not be able to buy $25,000 for yourself, $25,000 for your RRSP account and $25,000 jointly with your spouse. The government will not provide certificates which is also a different format compared to Canada Savings Bonds.

While the bonds are not CDIC insured, they do have the full backing of the Alberta government. They will be eligible for RRSP’s within a Self Directed Plan. The only thing that we don’t know about the bonds is probably the most important number.

What are they going to pay? The highest 5 year GIC is currently 3.30%. Expect the announcement to come in around that level.

If you are interested in higher rates, please don’t hesitate to contact us. We have access to some Alberta Capital Finance Authority which is a government agency accrual notes yielding over 5%.

Your thoughts and comments are always appreciated.

It’s Time to Rename Tax-Free Savings Accounts

Reading the Financial Post this weekend, an incredible statistic was reported about TFSA’s. About 90% of all tax-free savings account contributions were held in actual savings accounts earning a paltry .25% give or take. With interest rates like that, who cares if the earnings are tax free as you earned $12.50 over the course of the year on a $5000 contribution.

Part of the problem no doubt were the teaser rates that companies offered for the first three months of the year at 3% – 4%. After that, the rates came down but who could bother changing things at that point. Obviously, 90% of contributors couldn’t be bothered.

Tax Free Savings Accounts should be renamed Tax-Free Investment Accounts. After all, we are allowed to buy stocks, bonds, mutual funds, etc… in these accounts. Corporate bonds still offer yields in the 4% – 7% range that can be very attractive when no tax is being paid. A $5000 investment would yield $200 – $350 per year depending in the bond purchased. Considerably higher than the $12.50 more than 90% of TFSA holders earned last year.

If you did open one of these accounts last year, its time for a review. Oh!!! If you did put your contribution in a savings account, consider talking to a financial advisor about your options as your bank or trust company didn’t do you any favours by paying you .25%. Your comments are always appreciated.

RRSP Loans…Now More Than Ever

With Christmas around the corner, the last thing most people are thinking about right now are taxes and RRSP contributions. That being said, this season is the perfect time to start thinking about saving taxes and building your retirement nest egg.

A recent survey has shown that most Canadians have not contributed to RRSP’s in the last couple of years with the recession and poor equity markets in 2008 as the major culprits. Another sobering statistic is that Canadians closing in on retirement in the next 5 years are those that have stopped contributing the most which will lead to a more difficult retirement.

We have just received our details for RRSP loans for this 2010 season and the borrowing rates are lower than ever starting at 3% on loans up to 24 months. Considering investors can borrow at these low rates and get higher returns on corporate bonds, it becomes very attractive to build back your savings and save some taxes at the same time.

To contact us for more information, you can click “HERE“. Your feedback is always welcome.

Canadian Investment Idol Competition

We would like to congratulate Mr. Joseph Weisz of Montreal, Quebec for winning the first Rothenberg Capital Management Canadian Investment Idol Competition powered by Claymore ETF’s. Mr. Weisz had a return of 15.02% over the eight week time frame.

To view all of our weekly winners, you can click on the link HERE.

 

Have a great week.