Life Insurance For Business Owners

5 things you need to know

A life insurance policy owned by a corporation can be thought of as a financial swiss army knife – many benefits, all with their unique attributes and characteristics.

Below are 5 benefits a life insurance policy can bring to you, your company and your family.

1) Do you want to be able to transfer cash and real estate tax-free from your corporation to your estate and family?

A corporately-owned life insurance policy will credit your capital dividend account (CDA) when a life insurance policy is paid out.

If you have a credit to your capital dividend account, you can pay tax-free capital dividends out of your corporation up to this credit.

For example, if you had a $1,000,000 credit, you could transfer $1,000,000 worth of cash and real estate tax-free from your corporation to your estate and family. This would save you a significant amount of tax.

2) Would you like to convert your retained earnings into tax-free growth?

Permanent life insurance policies are corporate investments which grow on a tax-free basis. The dividends you receive into your policy on an annual basis are tax-free, unlike a stock portfolio which can attract annual taxes.

3) Do you have rental properties, a cottage, vacation homes or an office that you want to pass down to your children or grand children?

One of the biggest issues when passing down a secondary property are the capital gains taxes owed.

Life insurance is the most cost-effective way to come up with a future amount of money you’ll need so you can pass down your properties to your children, grand children and other beneficiaries.

4) Would you like guaranteed access to tax-free capital?

Permanent life insurance policies come with guaranteed access to the cash value. 

The cash value is the investment component within a permanent life insurance policy.

This means you have access to guaranteed capital on a tax-free basis for emergencies, investments and any other business need.

You do not have to jump through financial hoops and approvals, lending ratios, income statements, etc. 


5) Do you have business partners?

What would happen to your company if a partner suddenly passed away?

Your company can pay for a life insurance policy on each partner, which will protect everyone’s ownership in the company and provide the funds to buy out their shares if they suddenly passed away.

This allows the company to continue operating and the partners’ family to receive the value they deserve for the equity they had in the company.

If you would like to discuss the benefits that life insurance can bring to yourself, your company and your family, please inquire below:

For monthly articles like these, please subscribe: