Life Insurance Products for Businesses
Owning a business is exciting, rewarding and challenging. You work hard, you’ve got good ideas, and you’re likely shrewd with your capital. While you can’t foresee the future, planning for the possibilities can offset the unpredictable bumps in the road and provide you with peace of mind.
There is a vast range of life insurance products to protect you and your business in ways that you may not be aware of or may not have considered before. These underutilized policy options offer more than protection. Besides providing you with much-needed security, the preferential tax advantages to a business using life insurance products is extensive.
Strategies will be unique for each business owner, and the planning may be complex. This makes choosing the right advisor critical. Our knowledgeable advisors at Blair Insurance can review your current situation and future objectives, then design an optimal plan to reduce your financial exposures and ensure your goals are met.
What Types of Life Insurance Products are Available through Blair Insurance?
- Term Life Insurance
- Permanent Life Insurance (with cash accumulation)
- Disability Insurance
- Overhead Insurance (also known as Paycheque Protection)
- Critical Illness
- Guaranteed Investment Funds
- Group Health Benefit Plans
- Personal Health Spending Plans
What’s the Objective?
Owning a business comes with many risks but also many financial rewards. Whether you are just starting out, growing an existing business, want to protect your important human capital, need to safeguard an agreement, seek to utilize tax-sheltered options for wealth accumulation, or reduce taxes when you exit the business, we can show you the strategic benefits of accessing the right insurance products.
Blair Insurance has solutions:
- To protect your loved ones, replacing years of income, should you pass away prematurely
- To provide the capital required to offset debt and avoid liquidation of assets
- To provide health and dental coverage for your personnel
- To provide the liquidity required to offset the loss of key personnel
- To fund a buyout by existing partners or shareholders of a disabled or deceased business owner
- To provide funds while you are recovering from an injury or illness
- To create wealth accumulation, with liquidity, in a tax-sheltered way
- To provide an obvious solution for a corporation’s passive income taxation
- To fund a retirement plan
- To increase the value you take away from your business in an exit plan
- To guarantee capital values and shelter against creditors, fees, and taxes
- To provide the capital needed to meet the tax liability of your shares upon death
Why Buy a Life Insurance Product in the Corporation’s Name?
- There are several areas that require protection within the corporation
- Cost-efficient use of the corporation’s pre-tax dollars, and it’s a tax-deductible expense to the company
- Canadian corporations have significant tax advantages by utilizing the Capital Dividend Account
Business Life Insurance
A life insurance policy provides a tax-free lump sum of money to be paid to your corporation upon your death. Policies available are Term, Permanent, Universal Life, or a combination of these. This money can be used to fund a buy-sell agreement with your business partners or be paid into your corporation.
When your policy pays out, the corporation receives the death benefit tax-free. Utilizing the Capital Dividend Account allows for tax-free capital dividends to be paid to the new shareholders or into your estate. All in all, this is a very tax-efficient solution for business owners, allowing you to maximize the legacy you leave to your beneficiaries.
Business Loan Insurance Protection
Life insurance can be procured by a business owner to protect a debt. Procuring your own insurance policy to cover a debt has advantages over getting it through the bank.
- You can purchase it at a younger age, therefore reducing the cost
- You control the policy
- You can assign it to the bank instead of having to put another asset up as collateral
- The coverage is portable, so it can be reassigned to cover a different debt
Split-Dollar Critical Illness
The statistical reality is that we have a 1 in 5 chance of being diagnosed with a life-threatening illness such as cancer, heart attack, stroke, kidney failure, blindness, Alzheimer’s, paralysis, and more in our lifetime. Buying this type of policy on a Split-Dollar basis has many advantages for a business owner. With a Critical Illness policy, if you make a claim, the full coverage limit will be paid out to you in a lump sum. The proceeds of the policy can be used for whatever you choose. Other advantages are having access to `Best Doctors’ and an option to have the premium returned if you never claim on the policy. Talk to Blair Insurance for further advantages of strategically structuring this policy.
Overhead and Disability Insurance
A disability of the principal or a partner in a business can cause significant financial hardship. This coverage provides tax-free funds if an insured person becomes disabled due to an injury or illness. These low-cost coverage solutions are prudent protection, and the premiums are tax-deductible to the corporation.
Consider these two plans:
Overhead Expense Plan:
This disability insurance policy reimburses ongoing overhead expenses of the business in the event of a disability.
This plan is designed to provide the necessary funds, either in a lump sum or through an income stream, to enable one or more business owners to buy the shares of the disabled partner, thereby reducing the economic hardship for all.
Key Person Coverage
Every business has that key person or people who are vital to the success of the company. If you were to lose them suddenly due to a disability, illness, or death, what would the impact be? Protecting your human capital and setting a contingency plan so your profits won’t be affected is a prudent strategy. As a business owner, you can purchase insurance on your key people to help provide the funds you’ll need until a replacement is found.
Seg Funds or Guaranteed Investment Funds
Only available through insurance companies, these investment funds offer significant guarantees to the business owner. For your business savings and investments, these products are creditor proof and eliminate probate. In addition to security advantages, Seg funds can guarantee your principal investment regardless of how the market performs. They offer quality managed funds, growth of your investment, resets to lock in the growth, and flexibility.
Health Benefit Plans
This protection, purchased on an individual or group basis, typically covers extended health care, dental, hospital, prescription drugs, registered specialists & therapists, and vision care. There are three plans a business owner can select, each customizable to suit your specific needs.
- Individual Plan – usually for the sole proprietor or small business
- Group Employee Benefit Plan – for 3 to 200 personnel
- Private Health Services Plan – Business owners have the option to use this as an individual plan or as a top-up of health benefits to underlying group plans. This plan includes a much more extensive list of eligible health expenses.
While group plans are cheaper on average, all plans are a tax-deductible expense to the business. The obvious benefits are healthier employees with less absenteeism and usually more productivity. It also can be used as a factor to attract and retain talent.
Let’s Look at the Big Picture
Business life insurance products provide safety and security, protecting your company and the wellbeing of those who rely on you. By selecting the right coverage, you have more control over the outcomes and can ensure the proceeds go where they are needed. Protect your company’s human and financial capital and get the guidance you need from an expert insurance broker.
You can’t predict what will happen each day, but you can make decisions now that will minimize the negative effects of many challenges. Protect yourself and your business today and in the future with Blair Insurance. Contact us to learn just how affordable and advantageous a well-strategized insurance plan can be.