Business Insurance

Introduction

There are many situations where life insurance can provide for the needs of a business following an individual’s death. The funding needs covered include the following:

Business Loan Protection

Business loan protection involves the use of life insurance to create immediate working capital for a business...

Key Person Insurance

Key person insurance protection involves the use of life insurance to create immediate working capital for a business...

Buy-Sell Funding

A key component of an integrated financial plan is planning for business succession. The business interest often accounts...

Capital Gains Tax Planning

Life insurance can also be an effective way of funding the tax liability that arises as a result of a deemed disposition...

Wealth Creation

Often the retained profits or surplus cash of a business, whether an operating company or an investment holding company...

Executive Compensation

Another business use of life insurance is in situations where an employer is interested in providing an employee with a supplementary...

Business loan protection involves the use of life insurance to create immediate working capital for a business to repay business debts in the event of the death of a business owner or other key executives.

Key person insurance protection involves the use of life insurance to create immediate working capital for a business to meet immediate cash needs and to find a replacement in the event of the death of a business owner or a key executive.
A key component of an integrated financial plan is planning for business succession. The business interest often accounts for a substantial portion of the wealth the business owner has accumulated.
Life insurance can also be an effective way of funding the tax liability that arises as a result of a deemed disposition of capital property at death. Paragraph 70(5)(a) of the ITA provides that, unless a rollover is available,…
Often the retained profits or surplus cash of a business, whether an operating company or an investment holding company, are invested in GIC’s, or taxable investments, and are not paid out to the shareholder.
Another business use of life insurance is in situations where an employer is interested in providing an employee with a supplementary benefit package. Supplementary benefit packages are often used by employers as a means of attracting executives.

Conclusion

There are many instances where insurance meets a need in the business context. Life insurance can play a vital role in the planning process to ensure funds reach the hands of intended parties to complete a business transaction, provide risk protection, or to fulfil another funding need.