Corporate Insurance
Protect the longevity of your business with insurance solutions designed to secure its future, support succession planning and provide peace of mind for business owners and stakeholders alike. Many Canadian business owners may not realize the substantial advantages of life insurance and shared ownership critical illness insurance policies. Below are some essential points:
Life Insurance for Business Owners
As a business owner, protecting the company you've worked hard to build means planning for the unexpected. Corporate insurance plays a vital role in securing the financial stability and longevity of your business in the face of unforeseen events such as the loss of a key partner, unexpected transitions or long-term estate considerations.
Life insurance, when used strategically, can help protect your business, provide continuity and offer peace of mind—for you, your team and your family.
Key Person Insurance
Protects the business in case a key leader or employee passes away unexpectedly. The policy provides financial support to help the company recover and manage operations during a transition.
Buy-Sell Agreement Funding
A Buy-Sell Agreement is essential for businesses with multiple owners. Life insurance can fund a buy-sell agreement, ensuring that a business can smoothly transfer ownership in the event of a partner’s death. This can help avoid conflicts and provide financial resources for the other partners to buy out the deceased’s share.
Estate Planning for Business Owners
Life insurance can help business owners leave a legacy for their heirs, while also covering any estate taxes that may arise upon death, preventing the business from having to be sold to settle debts.
Shared Ownership Critical Illness Insurance
When a business partner or key employee is diagnosed with a critical illness, the financial and operational strain on the company can be significant. Shared Ownership Critical Illness Insurance is a proactive strategy that helps mitigate these risks—protecting both the person and the business in the face of serious health challenges.
This type of insurance offers a tax-efficient structure in which the premiums and policy ownership are shared between the business and the person insured. If a covered illness is diagnosed, the policy pays out a lump sum—providing much-needed liquidity to support the business during a potentially vulnerable period. This coverage allows businesses to maintain operations while providing insured partners financial flexibility for personal care and recovery, whether for temporary leadership, revenue losses or medical costs.
Shared Ownership Critical Illness Insurance Benefits
Business Continuity — The lump-sum benefit can be used to protect cash flow, retain clients, and stabilize operations while the affected partner or employee recovers.
Key Employee Protection — Helps the business absorb the impact of a key employee's absence by funding interim support or addressing lost productivity.
Shared Risk, Shared Protection — Shared ownership benefits both the company and the insured, protecting personal and business interests.
Tax Efficiency — Premiums usually aren't tax-deductible, but strategic structuring can offer tax-free benefits, easing financial impact and aiding long-term planning.
While the premiums for shared ownership critical illness insurance are generally not tax-deductible, the tax-free insurance payout and liquidity it provides can help business owners protect their interests and maintain business operations. By structuring the insurance policy strategically, such as through a buy-sell agreement, business owners can ensure a tax-efficient transition in case of critical illness, while also securing the long-term viability of the business. Depending on how the policy is structured, it is possible to receive a tax-free return of premiums after 15 years or by age 65—provided no claims have been made.
Together, these policies provide financial security, business continuity, and tax benefits, ensuring the business can survive and thrive even in the face of unexpected events.
Disability and Business Overhead Expense (BOE) Insurance
Unexpected illness or injury can affect more than just your personal wellbeing—it can also disrupt the day-to-day operations of your business. As a business owner, protecting both your personal income and your company’s stability is essential. That’s where Disability Insurance and Business Overhead Expense (BOE) Insurance can help: two key solutions designed to support you and your business when you need it most.
1. Disability Insurance for Business Owners
Disability insurance provides income replacement if you cannot work due to illness or injury, allowing you to focus on recovery, while receiving partial income.
How it works
Replaces a portion of your income; typically between 60% and 85%.
Supports your personal living expenses when your earning ability is affected.
Customizable waiting periods (e.g. 30, 60, 90 or 180 days) and benefit periods (e.g. 2 years, 5 years or until age 65).
Premiums are based on age, health, occupation and the level of coverage selected.
Why it matters
Your business often relies heavily on you. If you’re unable to work, you might not earn an income, but your personal expenses and financial obligations continue. Disability insurance will help cover those expenses, acting as a financial safety net and giving you the income support you need to maintain stability during a difficult time.
2. Business Overhead Expense (BOE) Insurance
BOE insurance is designed to cover your business’s fixed monthly expenses if you become disabled. While disability insurance replaces your personal income, BOE ensures your business can continue running—even if you’re temporarily out of commission.
How it works
Reimburses ongoing business expenses such as rent, employee wages, utilities, equipment leases, insurance premiums and professional services.
Typically provides coverage for a set period, usually 12 to 24 months.
Only pays for documented expenses—not projected losses or profits.
Premiums are generally tax-deductible as a business expense in Canada.
Why it matters
The financial demands of your business don’t pause if you’re unable to work. Payroll, rent, and other overhead costs continue regardless of your health. BOE insurance provides the funding to keep your business afloat, helping to retain employees, maintain your client base, and preserve your reputation—so you don’t lose everything you’ve worked so hard to build.
Together, Disability Insurance and BOE Insurance create a comprehensive safety net—protecting both your personal income and your business operations, and offering peace of mind during life’s most unpredictable moments.
FAQ
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If you own a business in Quebec and want to minimize taxes, ensure smooth succession and protect your estate’s value, corporate life insurance is a powerful estate planning tool. Consulting with a tax specialist and an insurance advisor can help structure it optimally for your situation.
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Term Life Insurance – Affordable, provides coverage for a specific period (e.g., 10, 20 years).
Permanent Life Insurance (Whole Life or Universal Life) – More expensive but includes a cash value component.
Key Person Insurance – Protects the company if a key employee or owner dies.
Buy-Sell Agreement Funding – Ensures smooth ownership transition if a shareholder or partner dies.
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Cover business expenses during recovery
Pay off loans or debts
Provide income replacement for the business owner
Fund a buy-sell agreement if an owner can no longer work
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Consider:
Outstanding business loans and liabilities
The cost of replacing a key employee or owner
Business overhead and operational expenses
Succession planning needs
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Yes, corporate life insurance can be a valuable tool for estate planning for business owners in Quebec. It offers several advantages:
Tax-Efficient Wealth Transfer: By holding life insurance within the corporation, business owners can facilitate a tax-efficient transfer of wealth. The corporation can receive the life insurance payout tax-free, and the funds can be credited to the Capital Dividend Account (CDA). This allows the corporation to distribute tax-free dividends to shareholders, reducing the overall tax burden on the estate.
Minimizing Personal Tax Liabilities: Holding life insurance corporately, rather than personally, can minimize personal estate taxes. The proceeds from the policy are not subject to estate taxes when owned by the corporation, making it a more tax-efficient way to transfer wealth to beneficiaries.
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