How insurance will get more expensive in 2017

Tax changes will make some insurance more expensive next year

How insurance will get more expensive in 2017

Insurance News

By Ryan Smith

Tax changes will make insurance more expensive in 2017, according to a report by Global News.

Changes enacted by the previous government mean that starting Jan. 1, the tax treatment of universal life policies will be less favourable, Global News reported. New policy holders won’t be able to build investment gains above death benefit premiums on a tax-free basis to the extent they’re able now.

A new formula for calculating insurance will result in policies being slightly more expensive or reduced death benefits, according to the report.

There will also be increases in some tax amounts, including maximum RRSP contributions, tax brackets and the maximum amounts of some credits, according to Global News. Those are set to increase in 2017 to keep pace with inflation, but the tax-free savings account limit will remain at $5,500.

Still, most changes announced in the 2016 budgets of the federal and provincial governments have already been implemented.

“There are a few changes that are unique for 2017, but the average Canadian is not going to see much difference between 2016 and 2017,” Jamie Golombek, managing director of CIBC Wealth Advisory Services, told Global News.

But Jason Safar of PricewaterhouseCoopers warned that more changes were possible next year. Safari told Global News that the federal government could get rid of other tax credits and might feel pressure from tax cuts made in the U.S. under the Trump administration.

“I do find it interesting to consider that given (Donald) Trump’s election in the US and the promise of lower tax rates in the US, what’s going to happen with Canadian tax rates?” he said.

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