Liquidity in the Event of a Death

  • Key Person Insurance – In the event where the loss of a key person can mean a monetary loss for the company
  • Buy/Sell Insurance – This can be used to fund a buy/sell arrangement between two or more partners
  • Estate/Succession Planning – This helps to transfer shares of the corporation to family, other business partners, or charity
  • Taxes – Life insurance can be used to pay off taxes. Taxes at death are typically the largest bill when shares are divested
  • Charitable Giving – Life insurance funds can be used to donate money to charity

Build Wealth

  • Enhance Investment Returns – Investments inside an insurance policy grow on a tax-sheltered basis. This can help increase investment returns
  • Estate Equalization – Life insurance can help business owners distribute family assets fairly and equitably. In many cases, not all children are involved with the business

Advantages of Corporate Owned Insurance

  • Premiums are paid by corporate after-tax dollars. This is typically less expensive than paying with premiums with after-tax personal dollars
  • Life insurance proceeds can be paid to shareholders without tax through the capital dividend account
  • Premiums can be tax-deductible (only if it is required to secure financing)

Disadvantages of Corporate Owned Insurance

  • No creditor protection. Personally owned policies are creditor protected. Corporate policies are not.
  • Capital losses can erode the amount of life insurance proceeds paid out tax free to shareholders.
  • Certain policies can increase the share value of your corporation at death. This can increase the cost if family members want to purchase the shares of the business.
  • Certain policies could also be viewed as a passive business asset. This could risk access to the small business tax rate.

Keep in mind that, each person’s situation is unique. We can help you figure out what makes sense in your situation.

Immediate Financing Arrangement

An IFA is a financial planning strategy that combines life insurance coverage with tax-advantaged wealth accumulation.   

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Split Dollar Critical Illness

Split dollar critical illness insurance is a strategy where a corporation and key employee/shareholder purchase a critical illness insurance policy. The split dollar arrangement is a formal legal agreement between the parties that addresses:

  • Allocation of premium costs
  • Ownership interest
  • Share of rights and benefits
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Corporate Insured Retirement Program

For business owners, retirement benefits can be tied into their business, therefore the corporate insured retirement program can be an effective strategy for business owners/shareholders to receive retirement benefits through their corporately owned permanent life insurance policy.

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Health Spending Account

Although we enjoy health care benefits in Canada, there are still some benefits that are not covered by the government. There are a number of ways to pay for these benefits such as directly paying out of pocket, using a health insurance plan or health spending account or a combination of these structures.

Take the Next Step

Our team in Nanaimo has acquired decades of experience specializing in providing quality financial advice in areas of financial planning, investments and insurance. Book a meeting with us to learn how we can help you with your finances.

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Our Expertise

Rather than offer our clients generic, mass-market financial solutions, we work exclusively with a small number of privileged clients who benefit from the expertise of skilled wealth management specialists. With our professional qualifications, we are highly experienced in creating close and trusted partnerships with clients and delivering innovative solutions.

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Disclaimer: The title, Financial Planner, or the performance of financial planning, described as providing objective, integrated and comprehensive advice following an assessment of an individual’s current financial situation and current and future financial needs, except as is required in the performance of the licensee’s duties as a life insurance agent, can only be executed by an individual registered and certified as a Certified Financial Planner (CFP).

Each individual professional, David LeNeveu, Terry Gwilliam, & Adrian Spitters, have specific designations, professional skills and qualifications. Please ensure to ascertain that the professional(s) you engage with have the designations and qualifications that you seek.

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