Why business owners should consider life insurance

Every business owner who has achieved any level of success knows that building a viable company requires dedication, commitment, hard work and maybe even a little luck. For most, it takes years of sacrifice, discipline,and consistent focus; not to mention blood, sweat and tears.

How can you fail to plan for the effective transition of your business; the one thing you have dedicated so much time,energy, heart and soul to? Let us help you ask the right questions and develop your business succession planning strategy.

Why would life insurance help in my business succession plan?

Let’s take a look at four situations where life insurance can solve some pretty big problems that can arise in the succession of a business.

Death of a key person.

The smaller your business, the more critical you’re likely to be to the success of the business. What if you were gone tomorrow? What if another employee – perhaps your most important employee – dies suddenly? Having insurance on the lives of key people in your business will provide cash to the business that could be critical to smoothing over a rough period, or even keeping the business afloat, while the rest of the team looks to find a successor. No wonder many lenders, and investors, require companies to carry key person insurance.

Equalizing an estate.

If you own a business and have one or more children, but
not all of them are working with you, you need to consider what
would happen if you passed away. It often makes sense to
leave the shares of the business to the child, or children, who
are working in the business day to day. The reason is that the
children who are not working in the business would likely have
different objectives; they may prefer to receive dividends from the business rather than see all
the profits reinvested each year, while those working in the business may have a different
perspective. A better solution may be to leave the shares to the children working in the business
and equalize things by leaving the other children cash provided by an insurance policy.
The insurance premiums may be a small price to pay to maintain harmony in the family
when you’re gone.

Covering taxes on death.

At the time you pass away, you’ll be deemed to have sold, among
other capital property, your private company shares. While you
may be able to claim the lifetime capital gains exemption, to
shelter up to 848,252 of the capital gain if the shares qualify, you
could end up paying approximately 25-per-cent tax on any capital
gains that a gains that are above and beyond the exemption. How will your
executor pay that bill? Life insurance plays an important role in
allowing your executor to be able to pay your final tax bill.

Efficient transition of ownership and control of the business.

Smooth transition of ownership is critical to the continued success of
the company. When an owner passes, considerable uncertainty can
permeate an organization. Therefore, preparation and proper
execution of a succession plan can have a huge impact on future
success of the business. A business can be dramatically affected in
a number of ways if one of the owners is no longer there: 

  • How is the business going to replace the owners contribution to the company?
  • How long will it take to find a replacement? And at what cost? 
  • Will funds be available to buy-out the deceased owner’s estate? What is their equity interest? What is the value of the company? 


When there are multiple shareholders, a buy/sell agreement funded by an insurance policy can answer all these questions and solve many succession planning needs.

Ask yourself the following questions and let’s start the conversation to make sure you have the right
succession plan (and coverage) in place today. 

  • Is there an existing plan in place? When was the last time it was reviewed and updated? 
  • What are your personal goals? How long do you want to work? 
  • How are you going to replace income when you retire? How will you maintain your lifestyle? 
  • What is the business worth? How are you going to get maximum value for the business? 
  • What is your desire for the business if you died or become disabled? 
  • Who would manage the company in the short-term? Who would eventually own the business?
  • Is the company going to pass to your family members or will the company be sold to a third party? 
  • If you are a one owner company, does your spouse know anything about the business? Have you communicated to your spouse or key employee what would happen if you died?
Worldwide coverage up to a maximum of $5 million

*Trip lengths up to 182 days (different options available)

*No age restrictions unless it is a family plan then up to age 59
Worldwide coverage up to a maximum of $10 million

*Trip lengths up to 125 days (different options available)

*Available to persons up to and including age 59
Different sums available for purchase

*No age restriction for single person. Family plan up to age 59. Two people plan up to 64
Different sums available for purchase.

Includes:
• Emergency medical coverage
• Trip cancellation or interruption
• Accidental death and dismemberment
• Baggage
Must be purchased with a travel health plan.

*Maximum limit for air flight/common carrier accident is $100,000

*Maximum limit for 24-hour accident is $25,000
Includes the following:

• Emergency medical insurance
• Trip cancellation & trip interruption
• Accidental death & dismemberment
• Baggage insurance

*Only available I 59 years or under

*Pre-existing condition clause does apply
Includes the following:

• Emergency medical insurance
• Trip cancellation & trip interruption
• Accidental death & dismemberment
• Baggage insurance

*Only eligible for customers no more than 89 years old
Baggage Insurance

Rental Car Insurance (physical damage only)

Contact, adventure or extreme sports coverage

*Must be purchased with another plan
Baggage Insurance

Canadian Expatriates Plan

Inpatriates to Canada
Must be purchased with a travel health plan.

*Trip interruption can be purchased separately
Basic or Select plans available

*Only eligible for customers no more than 89 years old

*Trip interruption can be purchased separately
Must be a student and less than 40 years of age

*$2million in coverage
*Family plan available ifunder 40
None available
Must be a student and less than 69 years of age

*$2 million in coverage
*Family plan available if under 59
Must be a student and less than 60 years of age

*$2 million in coverage
*Coverage available for spouse & dependents
Worldwide coverage up at maximum of $5 million.

Policy options:
• Within Canada
•Worldwide
• Worldwide (excluding the USA)

*Pre-existing condition clause does apply

*Persons over the age of 55 must complete a medical questionnaire.

*Different deductible options are available
Worldwide coverage up at maximum of $10 million.

Policy options:
• Worldwide including USA
• Worldwide (excluding the USA)

*Only eligible for customers no more than 89 years old

*Persons over the age of 60 must complete a medical questionnaire

*Pre-existing condition clause does apply

*Different deductible options are available
Worldwide coverage up to a maximum of $5 million

*Trip length up to 32 days or less. Additional days available for purchase if under the age of 55

*Available to persons up to and including age 74
None available
None available
Airfare cancellation or Holiday cancellation packages available

*Must be purchased within 72 hours of initial deposit.
Includes the following:

• Trip cancellation before or after trip
• Missed connections
• Emergency travel health coverage
• Air flight or common carrier accident
• 24 hour accident
• Baggage and baggage delay
• Transportation of deceased

*Must be purchased within 72 hours of initial deposit.

* Trip cannot exceed 32 days in length

*Pre-existing condition clause does apply
Titled ‘Travel Accident Plan’ and must be purchased along with another plan.

*Different sums available for purchase.
Sums insured: $25,000, $100,000 or $250,000

Flight accident also available for purchase
None available
None available
Worldwide coverage up at maximum of $5 million.

*Persons over the age of 55 must complete a medical questionnaire

*Pre-existing condition clause does apply

Visitors to Canada Holiday Package
Student Medical Insurance (Inbound) – Students coming to Canada
Visitors to Canada – Emergency Medical Insurance (Single Trip)
Emergency Medical Insurance – Multi Trip Annual
TuGo
Manitoba Blue Cross
Emergency Medical Insurance – Single Trip
Trip Cancellation / Trip Interruption Insurance
All Inclusive Holiday Packages
Additional Coverages
** Exclusions apply, please refer to a broker formore information **
Accidental Death & Dismemberment Insurance
Student Medical Insurance (outbound) – Canadian Students studying abroad
Allianz Global Assistance
Different sums available for purchase

*Only eligible for customers no more than 89 years old
The mortgage lender
Pay off mortgage
With your mortgage payment
The mortgage lender
Often underwritten at time of death
Not neccessarily guaranteed
None
Usually not available
Often same rates given, regardless of other factors
Benefit decreases as mortgage paid off
If you move, the insurance ends You will have to requalify
Can only cover the mortgage
Decreasing Term
Bank
Anyone - you decide
Beneficiary decides
Invest? Pay off mortgage?
Monthly, semi-annually,annually
Get level benefit Or lower benefit overtime to match yourmortgage
Underwriting at time of application
Fully guaranteed
Premium based on gender, smoking, health, lifestyle
Preferred underwriting available
Individual policies can be customized
Deal with licensed advisors
Insurance stays with you - even if you refinance or change lenders
Take care of all insurance needs with one policy
Term or Permanent
Insurance
Broker
Payment Frequency
Other Life Insurance needs
How Insurance will be used
Beneficiary
Your best options are available through an insurance brokerage.

Let's Compare!  
Type of Life Insurance
Benefit Level
Underwriting Time
Premium Rates
Premium Guarantees
Options and Riders
A needs analysis will take a look at the whole picture and help us determine a plan to suit your needs. A customized insurance plan will put the control where it should be...in your hands.
Now you know the facts, but how does this all fit together?
Lifestyle Discounts
Advice
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Business succession planning that’s simple, easy, and clear.
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