Independent financial planning · Alberta & Yukon
Insurance → Business owners
Insurance for business owners
When you own a corporation, insurance is part of how the business is financed, not just personal protection. Who owns the policy, who pays the premium and who receives the money all change the tax result, and they’re hard to change later. It pays to set it up right the first time.
Four questions
When the business needs money most
Four questions every business owner should be able to answer
If you die, how does your partner buy your shares?
A buy-sell agreement commits your partner to buy and your estate to sell. Without funding behind it, the money may not be there.
What happens if the person who makes it all work is gone?
That might be you, or the employee who holds every client relationship. The business takes a real hit while it rebuilds.
How it works
Corporate-owned life insurance and the Capital Dividend Account
When the corporation owns a life insurance policy, the death benefit can move from the company to your family with little or no tax. Here’s how.
Before any of it
Three things to settle first
What is the business worth?
Most strategies on this page depend on knowing the value of your company. A buy-sell agreement based on an old valuation may not match what the business is worth today.
Who owns the policy, and who pays for it?
The corporation or the shareholder. That choice affects how the payout is taxed, whether creditors can reach it, and what your estate receives. If the corporation pays for a personally owned policy, it can also create a taxable benefit.
Is your accountant involved?
Every strategy here has a tax side. I’d rather your accountant weigh in before anything is signed than after.