What we should know about RRSP Contribution

There is a very important difference between purchasing RRSP from the banks and from the life insurance companies. Life insurance companies can give you protection of your RRSPs from your creditors. Your RRSP with the banks are not protected from your creditors even though you may have named beneficiaries.

In the two law cases of ROBSON and STOCK, British Colombia Court of Appeal decided RRSPs issued by insurance companies, qualify for the same creditor protection as would conventional life insurance polices.

The importance of Creditor-proof benefits is obvious to business and professional people. However, no matter what occupation we are in, we cannot afford to neglect this benefit. In today's litigation world, anyone can be sued at any time. One common example is that if we knocked down a pedestrian while driving and he/she is a professional, he/she may claim millions of damages. Our third party liability insurance may not be enough to cover this claim. Our RRSPs could then become the target.

Buy RRSPs from a big life insurance company can give you a peace of mind. Life insurance companies with top credit ratings and hundreds of billions of assets are as safe as the big banks. They have similar customer protection as the banks through Canadian Life and Health Insurance Compensation Corporation (CompCorp).

If you are a businessperson and your business is a private corporation, you may think your personal RRSP is safe from the creditors. Think again, your creditors can grab your personal asset for loans made to your business co-signed by you as a personal guarantee.

Note: The above information is for reference only. If you want detail information, please call me at (780) 473-4928.