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Top Things To Consider When Negotiating Your New Job

4 Min Read
Andrew Seale
A man negotiating his job offer with his new employer

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Gone are the days where salary is the only point of negotiation when looking at a new role. As employers look to woo top talent who are more concerned about work-life balance than loyalty. Perks like financial and physical wellness programming, charitable matchmaking programs where employers support employee-directed causes, unlimited vacation days and the ability to work remotely are becoming commonplace, sweetening renumeration packages beyond traditional offerings like medical coverage and pensions.

But every employer’s offerings are different.

Whether you’re right out of university and looking for your first job or making the jump from freelancer to an in-house position, here are the questions you need to be asking about the benefits plan once a job offer has been tabled.

When Does the Probation Period End?

Some employers will offer up benefits immediately, while others may require you to work for upwards of three months before benefits begin. Be sure you understand and are comfortable with the probation period before you accept an offer.

What Are the Stipulations Surrounding Medical and Dental Insurance?

How much will coverage cost you? Do you pay up front as in a health spending account system or are premiums deducted before tax dollars from your paycheque? Who’s covered under the plans: spouse? common-law? same-sex partner? children? And what about travel insurance, does the company cover you even on vacation?

What Opportunities are There for Bonuses or Compensation Beyond Your Base Salary?

Never accept a job offer without taking some time to consider it. If the salary isn’t what you were hoping or falls below industry standards (you can research through glassdoor.ca or monster.ca) maybe there’s some wiggle-room surrounding other benefits. Could the base salary be extended to bonuses and stock options? And if there are bonuses, how are they determined? How much would that incentive be on average as a percentage of your salary? Does the company have RRSP matching? Do they offer share matching programs?

Does the Company Have a Pension Plan?

It’s also good to inquire about life insurance and pension plans — does the company offer one or both? And if so, how are they structured? What does the company contribute? Is your contribution taken directly off your paycheque or made separately? Is there a contribution limit?

How do Vacations and Flexibility Work?

Asking about vacation or a sabbatical during the job interview might not be a wise move, but once an offer is in hand, now’s your chance to talk more about vacation days and working remotely. Outside of the basics like whether working from home is an option and how many vacation/sick days you have, ask whether you can roll-over days from a previous year and if there’s an opportunity to convert overtime into lieu days. Will you be paid for vacation days? Can you take an unpaid sabbatical at some point? What about mental health or personal well-being days, does the company allow them?

Are There Transportation Benefits?

Some companies offer car allowances or mileage and gas, others – if you’re commuting – will foot all or some of the bill for transit. What information will you need to supply the company with? What records will you have to keep?

What Other Unconventional Benefits Programs are There and Do You Need to Opt-in?

Companies are trying to attract top talent by providing unique perks. What opt-in benefits are there? Pet insurance? Is it a pet friendly work-place? Will there be bonuses for recruiting friends? Does the employer match employee donations to charities? Does the company cover gym memberships? Will the company support lifelong learning or continuing education tuition reimbursement? Are any of these benefits available to spouses or dependents? What sort of parental leave is available?

Whether or not all these benefits apply to you, knowing the questions to ask and taking some time to review the benefits policies before you take on a job will ensure you end up at an organization that fits your lifestyle – and offers some room to grow.

*Home and auto insurance products are distributed by RBC Insurance Agency Ltd. and underwritten by Aviva General Insurance Company. In Quebec, RBC Insurance Agency Ltd. Is registered as a damage insurance agency. As a result of government-run auto insurance plans, auto insurance is not available through RBC Insurance in Manitoba, Saskatchewan and British Columbia.

This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.

Home > Discover & Share > Page 7

Three Things To Do Before You Buy Life Insurance

5 Min Read
Alexandra Macqueen
A woman talking about 3 things evenyone needs to know before buying life insurance

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If you’re planning to buy life insurance, you might be worried about what you need to know and the kinds of questions you’ll be asked. But buying life insurance is different for everyone, because your needs are unique, but a little preparation can help ensure you get a policy tailored to your needs.

Here are three things you can do first to prepare.

1. Estimate how much insurance you need

Probably the most important step in preparing to buy life insurance is to get some idea of how much insurance coverage you might need. While a professional can help guide you through this decision, having a general idea of your needs can save you time.

Start by reviewing your existing financial situation and your future financial goals. Here are the kinds of questions you might ask yourself:

  • How much debt do I currently have? Include your mortgage, any car loans, lines of credit, student loans, and any other money you owe currently.
  • What future expenses do I expect? This might include the cost of raising a child, paying for post-secondary education, and saving for retirement.
  • What are other final expenses? This can include funeral costs, possible capital gains, legal fees, estate taxes, and small cash gifts for beneficiaries.

Once you’ve added these up, you’ll have a better idea of the amount of insurance that might be right for you — and you’re more prepared to get the most out of meeting with an advisor.

2. Find the right professional advisor for you

The next step is to find a professional advisor you trust.

Life insurance can be an important step in securing your financial future — helping ensure financial goals are achievable even if the unexpected happens. That’s why it’s important to find a professional who is the right fit for your family, your situation, and your goals.

What characteristics should you look for in an insurance advisor? The right advisor for you is one who:

  • Communicates well with you and your family. You and your family should be comfortable asking your advisor questions, as well as answering detailed questions about your finances.
  • Shows they have your best interests at heart. Your advisor should take the time to get to know you and build the trust required for a successful partnership.
  • Is a qualified life insurance advisor. Your advisor is there to help you understand different kinds of policies, consider your coverage options, and help you decide what best fits your needs.

How can you find an advisor who fits these qualifications?

Your best option is to interview several candidates to find the best fit. Ask friends, family and others you trust for their recommendations, or speak to a trusted organization you’ve worked with in the past. Then don’t be afraid to reach out to more than one potential advisor. Credible advisors often offer free insurance reviews with no obligation to buy. This can be another great way to find out if they’re a good fit.

3. Prepare answers for application questions

When you’re buying life insurance, your policy will be tailored just to you, based on factors like your health, your habits, and your activities. That means in addition to financial questions, you’ll need to answer questions about your health, your job, and what you do in your spare time, such as:

  • Do you smoke? Many insurers categorize people as smokers if they regularly use tobacco or nicotine in any form.
  • What kinds of activities does your work require? Are you exposed to any risks in your job?
  • What hobbies or activities do you do in your spare time? Do you participate in potentially higher-risk activities, like snowboarding or scuba diving?

In addition to answering questions like these, your overall health will probably be assessed. This information is used to ensure you’re getting an insurance quote that matches your health, as well as confirming the information is accurate. Although these questions may feel overly personal and even intrusive, they are important to ensure the policy you get is right for you.

By doing these three things, you’ll be better prepared to have a discussion about life insurance with an advisor. Knowing how much coverage you might need, the type of questions you might be asked, and being prepared to answer them honestly and completely, can help make applying for insurance easier.

Another way to prepare is to do some initial research online. RBC Insurance has tools and information for researching all aspects of your insurance needs — from calculators to help you understand how much life insurance is right for you, to information on the different types of insurance for your needs.

*Home and auto insurance products are distributed by RBC Insurance Agency Ltd. and underwritten by Aviva General Insurance Company. In Quebec, RBC Insurance Agency Ltd. Is registered as a damage insurance agency. As a result of government-run auto insurance plans, auto insurance is not available through RBC Insurance in Manitoba, Saskatchewan and British Columbia.

This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.

Home > Discover & Share > Page 7

Investing With a Purpose: Understanding Socially Responsible Investing

4 Min Read
Diane Amato
Couple and their child sitting and smiling in a park

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Socially Responsible Investing (SRI) has boomed in recent years as investors have discovered they can put their money behind investments that contribute to important social and environmental issues. According to SIMFUND Canada, Canadians invested more than $3.2 billion in Canadian-based environmental, social and governance (ESG) funds in 2020, while total net assets in these funds exceeded $22 billion – a 37% increase over the year before.

At the same time, studies have found that companies in SRI funds have better environmental, social and governance practices that may make them more sustainable long-term and therefore healthier and less volatile financially. A company’s ethical practices have also been shown to reduce exposure to scandals, disasters and lawsuits.

All of these factors can positively affect share prices and impact returns for investors.

Understanding SRI

When it comes to responsible investing, there are a number of terms and acronyms investors may come across – such as Impact Investing, ESG and SRI, which are sometimes used interchangeably. Understanding the difference between them can help new investors navigate this landscape.

For example, a company may be considered a responsible investment if it has a diverse board of directors – a company that manufactures weapons, on the other hand, would not be. ESG investing, meanwhile, considers how Environmental, Social and Governance factors affect the performance of a company, both positively and negatively (and therefore an investor’s returns).

Impact investing is a way to invest your money to create measurable positive outcomes. While SRI and impact investing both aim to bring about social change while delivering a financial return, impact investing requires that the change be more timely and impactful. Impact investing often involves private funds from institutional investors, while SRI investing involves investments available to all retail investors.

There’s more than one way to be a socially responsible investor

SRI investments aren’t simply selected by typical performance metrics such as earnings, growth and profit margins, but also by whether a company’s business practices align to the investor’s values – or not. To determine which companies to select for a fund, a fund manager has two methods to use: positive and negative screening.

Positive screening is a process that identifies companies making positive social or environmental contributions. Those with better ESG practices compared to their competitors are more likely to be included in the fund. While in many cases positive screening techniques highlight organizations that are actively furthering environmentally sustainable or positive social practices, positive screening is not limited to investing in companies within environmentally or socially focused industries. Companies with a stronger commitment to ESG practices in any industry may be considered as socially responsible investments.

Negative screening is one of the most basic methods of separating socially responsible investments from those that are likely to have a negative effect on society. It is one of the most widely used processes of weeding out companies that do not align with an investor’s values, such as those in industries like alcohol, tobacco or gambling, organizations associated with human rights violations or environmental damage or companies that do not meet diversity standards.

Both methods can lead to socially responsible investing. While negative screening prevents investors from supporting practices they find undesirable, positive screening purposefully supports those companies that are actively doing good and supporting investor values.

Investing in line with your values can pay off

For Canadians looking to invest in funds that can make a positive difference in the world, the future is bright. New funds continue to be introduced as interest grows in SRI investing. Companies with strong ethical and environmental practices may perform better in the long-term because they’re more sustainable. With a win-win situation like this, it’s no wonder Canadians are increasingly adopting socially responsible investment practices.

*Home and auto insurance products are distributed by RBC Insurance Agency Ltd. and underwritten by Aviva General Insurance Company. In Quebec, RBC Insurance Agency Ltd. Is registered as a damage insurance agency. As a result of government-run auto insurance plans, auto insurance is not available through RBC Insurance in Manitoba, Saskatchewan and British Columbia.

This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.

Home > Discover & Share > Page 7

Segregated Funds Versus Mutual Funds: Understanding the Differences

5 Min Read
Shannon Lattin
Lady using ipad while comparing Segregated Funds to Mutual Funds

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Surprisingly, there’s an option that you may not have heard about: segregated funds. Discover the differences between segregated funds and mutual funds and why the former might make a great addition to your investment portfolio.

Key takeaways

  • Segregated funds and mutual funds both involve pooling investments with other investors to create more options and reduce risk, but they also have some key differences.
  • Segregated funds are an insurance product with unique benefits, such as guarantees on your original investment, estate-planning perks, and potential protection against creditors.
  • Before choosing your investment route, speak with a certified professional about considerations that include your retirement timeline, tax planning, and risk tolerance.

What are segregated funds?

Segregated funds, also known as guaranteed investment funds (GIFs), are similar to mutual funds in that they involve the pooling of money by multiple investors. In both cases, a professional fund manager will take that pooled money and invest it in various stocks, bonds, and/or other securities (known as a “portfolio”), based on the fund’s investment mandate. This strategy allows investors to put their eggs in a variety of different baskets, which may limit the risk of market fluctuations.

The major way that segregated funds are unique is that they include insurance guarantees, which means you may be able to protect part or all of the money you originally invested. At their most basic, segregated funds are mutual funds combined with an insurance policy.

How do segregated funds and mutual funds differ?

Mutual funds and segregated funds are similar in many ways: they have professional portfolio managers, they allow you to diversify risk, and they offer potential creditor protection on registered accounts.

But, there are some unique benefits of segregated funds.

Principal protection

When investing in mutual funds, there’s always the risk that the market could be experiencing a downturn when you’re hoping to access your savings for retirement. With segregated funds, the amount you invest (known as your “principal”) is protected by two guarantees.

  • Maturity guarantee: At the maturity date (the date the term is up for your investment—typically, 10 years or longer), you’re guaranteed to receive either the current market value of your investment or a minimum guaranteed amount, whichever is greater (the difference paid is often called a “top up”). The minimum guaranteed amount is typically 75 to 100 per cent of your principal, minus management fees and other costs.
  • Death benefit guarantee: Should you pass away, the person or people you name as your beneficiary or beneficiaries will receive either the current market value or a minimum guaranteed amount (75 to 100 per cent), whichever is greater.
Estate-planning benefits

Normally, the settlement of an estate takes time and involves a public probate process (where the courts formally recognize and review an individual’s will) with fees and taxes. With a segregated fund, the death benefit may be paid out faster to your named beneficiary or beneficiaries, bypassing a lengthy, public, and expensive estate settlement and probate.

If you have a blended family, a segregated fund may reduce potential conflict by allowing you to set aside assets from your overall estate to go directly, and privately, to a specific beneficiary.

The quicker process with the segregated fund could also help your beneficiary or beneficiaries when its proceeds are intended to provide ongoing financial support.

Resets

With segregated funds, you may be able to “reset” the guaranteed amount of your principal investment. Say you invested $10,000 in a segregated fund, and the market rises over the next year, so your investment is now worth $11,000. With a reset, you can lock in your principal guarantee at $11,000 to protect your gains. Just note that your maturity date will likely reset as well.

Potential creditor protection

Segregated funds are an insurance product. That means, unlike mutual funds, segregated funds can potentially protect both registered and non-registered assets from creditors. If you’re a business owner or are self-employed, this perk might be particularly attractive.

Liquidity

Both segregated funds and mutual funds can be cashed in at any time at their current market value. However, you’d need to hold the segregated funds until their maturity date in order to access the maturity guarantee amount.

Fees

Sometimes, the fees for segregated funds may be higher than for mutual funds, due to their additional benefits.

Factors to consider when choosing between segregated funds and mutual funds

When deciding between various mutual fund and segregated fund portfolios (or choosing a mix), you’ll want to consider several factors.

  • Investment goals and timelines: Segregated funds are a long-term investment and will match best with your long-term goals, such as planning for retirement or planning a financial legacy for your family.
  • Risk tolerance: Mutual funds and segregated funds have investment options for all risk tolerances, but segregated funds are generally considered safer, because of the principal guarantees.
  • Liquidity needs: Do you need to be able to liquidate your assets at a moment’s notice? Both segregated funds and mutual funds allow you to access your invested capital at any time; although, cashing in early means you lose your guarantee.
  • Estate-planning considerations: Segregated funds can be a smart idea if you’re planning a financial legacy for your beneficiary or beneficiaries or you want privacy for your estate plans.

This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.

Any amount that is allocated to a segregated fund is invested at the risk of the contract holder and may increase or decrease in value. RBC Guaranteed Investment Funds are individual variable annuity contracts and are referred to as segregated funds. RBC Life Insurance Company is the sole issuer and guarantor of the guarantee provisions contained in these contracts. The underlying mutual funds and portfolios available in these contracts are managed by RBC Global Asset Management Inc. When clients deposit money in an RBC Guaranteed Investment Funds contract, they are not buying units of the mutual fund or portfolio managed by RBC Global Asset Management Inc. and therefore do not possess any of the rights and privileges of the unitholders of such funds. Details of the applicable Contract are contained in the RBC GIF Information Folder and Contract at silver.rbcinsurance.com/gif.

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What are Segregated Funds, and How Can they Complement an RRSP Portfolio?

3 Min Read
RBC Insurance
Woman drinking coffee while checking her RRSP portfolio on a computer

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But when thinking about the type of funds to choose, keep in mind that as you approach retirement, your financial needs, goals, and how you invest will start to change.

While retirement may still be in the distant future, eventually you’ll need to protect the money you’ve worked hard to save, while still making it grow in order to carry you through retirement. In fact, according to an RBC Insurance survey, 87 per cent of Canadians aged 55 and over agree that they’d like an investment product that guarantees the money they invest, but that also offers opportunities for growth. Yet 60 per cent are not aware that this option is available with segregated (seg) funds.1

Growth and Guarantees for Your Investments

Segregated funds are an investment solution only available through insurance companies. They help to grow and protect your hard earned savings with the added security of principal guarantees. Think of it as a combination of a mutual fund and an insurance policy. In other words, money is invested in professionally managed and diversified assets with the growth potential similar to mutual funds. But segregated funds have additional insurance components that protect the original amount invested.

Segregated funds offer several other unique benefits that other investment products don’t have, including:

  • Protection through guarantees.2 A maturity guarantee helps to protect your initial investment (at contract maturity), while a death benefit guarantee ensures that your named beneficiaries will receive 75% or 100% of the amount that was invested (depending on the guarantee option chosen by you) on your death.
  • Reduce estate-planning costs. After a person dies, there is a legal approval process required to validate their Will. This process is called probate, and can be a lengthy administrative hassle that incurs fees. As an insurance product, segregated funds death benefits paid to specific beneficiaries are not subject to the probate process, meaning that funds go directly to the beneficiary, without any estate or probate fees3.
  • Potential protection from creditors. Segregated funds are considered an insurance contract so they may be exempt from seizure by creditors if the named beneficiaries are in the protected class under provincial law. This may be an important benefit for professionals, entrepreneurs and business owners who might be involved in an unexpected lawsuit or bankruptcy.
  • Increase your protected amount. If your investment has earned money, you may have the option to “reset” the guaranteed value of your investment, which locks in the gains you’ve earned.

These guarantees and benefits, combined with the growth potential, are what make segregated funds so appealing to those who are planning or approaching retirement.

1) https://www.rbc.com/newsroom/news/article.html?article=123680
2) Guarantees are proportionally reduced by withdrawals.
3) Probate fees and requirements vary by province.

This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.

Any amount that is allocated to a segregated fund is invested at the risk of the contract holder and may increase or decrease in value. RBC Guaranteed Investment Funds are individual variable annuity contracts and are referred to as segregated funds. RBC Life Insurance Company is the sole issuer and guarantor of the guarantee provisions contained in these contracts. The underlying mutual funds and portfolios available in these contracts are managed by RBC Global Asset Management Inc. When clients deposit money in an RBC Guaranteed Investment Funds contract, they are not buying units of the mutual fund or portfolio managed by RBC Global Asset Management Inc. and therefore do not possess any of the rights and privileges of the unitholders of such funds. Details of the applicable Contract are contained in the RBC GIF Information Folder and Contract at silver.rbcinsurance.com/gif.