Providing insurance solutions to business owners is a large part of what we do. Our objective is to protect what you have worked hard to build up over the years and to develop strategies that will allow you to transfer tax free wealth from your corporation to your loved ones. Some examples of the most common types of business insurance policies we provide follow.
Making sure your company's assets are adequately insured is extremely important, but have you considered insuring the people and skills that make your company work? How would your company cope if one of your key people were to die suddenly, or become unable to work due to illness or injury? Apart from the personal shock, how would it affect your company's viability? Would your company have sufficient cash reserves to fill the vacancy with a quality temp while you look for a full time replacement? Would your lenders be concerned about the potential losses to your business? Would you be able to meet your customers' orders, or would they need to move to a competitor to have their orders filled?
Stan can help you arrange appropriate coverage to provide your company with a lump sum, or a benefit paid monthly, in the event that a key person dies or becomes unable to work due to illness or injury. These funds can help to pay ongoing expenses while you fill the vacancy or compensate your company for possible loss of new and existing business.
When a partner in a business dies, the disposition of his or her business interest often creates many problems for his heirs as well as the remaining partners. There are many important issues that have to be dealt with. Who will purchase the shares of the deceased? What is a fair price for his shares in the business? Where will the funds come from?
These problems are easily resolved if a buy-sell agreement has been established.
A buy-sell agreement provides that:
How it works
Your corporation purchases a life insurance policy on your life and is named as the beneficiary of the policy. The corporation deposits amounts into the policy, creating significant cash values. At a point in time in the future, the policy is assigned to Manulife Bank as collateral security for a bank loan, which is structured like a line of credit. To provide you with the lifestyle you desire, your corporation may use the borrowed funds to pay you a dividend or a bonus or to redeem your shares. If the loan is structured properly, your corporation may be able to deduct the interest on the bank loan against its taxable income.
When you die, your company receives the tax free death benefit from the life insurance policy. The excess of the death benefit over the adjusted cost basis of the policy is credited to your corporations capital dividend account. Your corporation uses the proceeds to repay the bank loan and the excess proceeds are paid to your estate as a dividend. The dividend is a tax free dividend up to the amount available in the corporations capital dividend account, with any excess paid as a taxable dividend. The net death benefit from the life insurance policy passes directly to your heirs’ tax free.
Please contact Stan today for your no-obligation consultation.
Stan Peirson 905-878-8059 #100
Stan Peirson BA, B. Comm, MBA, FMA