Using insurance to protect your business

Every day, you make crucial business decisions affecting the financial health of your business and you understand the importance of having various solutions in place in order to make the right decisions.

We can provide you with access to a vast array of products and services geared towards the needs of your business or corporation

Instances where we use insurance to protect your business:

Tax-Exempt Life Insurance

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A unique opportunity presented to small business, including holding companies, stems from using tax-exempt life insurance. This is a tax-efficient means of transferring wealth out of a corporation into the hands of the next generation when the business owner passes away.

Funding buyout agreements

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In the case of partnerships, the death or disability of one partner can have a devastating effect on the survival of a business. Insurance can be used to fund buyout agreements so that the remaining partner takes full control of the business and the surviving family is properly compensated.

Shared ownership

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For companies that wish to retain top employees, the shared ownership of a permanent insurance policy can be an attractive opportunity. The strategy protects the company against the death of a top employee or can motivate that person to remain with the firm through the enticement of an attractive, low-cost retirement asset. This arrangement can create a win-win solution for all parties involved.

Minimizing corporate taxes

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If corporate assets are invested in fixed income vehicles, an insurance strategy can reduce taxable income and lower the value of the business by the amount of the investment, thereby reducing the inevitable capital gains tax liability.

Maximizing corporate assets

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By taking advantage of tax-deferred growth inside a Universal Life or Whole Life policy, corporate assets can avoid accrual taxation and grow to a much greater value than if they were invested in a regular account. Upon death, most, if not all, of the proceeds can be paid out of the corporation tax-free rather than paid out as taxable dividends, which would require approximately one third of the value to be paid in taxes.

Executive life insurance planning

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Executive life insurance enables you to provide managers and executives with a supplementary benefit package. In this instance, both you and your executive purchase a tax-exempt life insurance policy with your executive named as the insured. Both of you will share the benefits. This form of insurance provides protection for an executive's family, while you benefit from an investment offering tax-deferred growth.

Business succession planning

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A business succession plan can help protect your business when an owner-shareholder retires or passes away. Elements of a successful business succession plan include buy-sell agreements, a Will and powers of attorney. A buy-sell provision is a shareholder agreement that allows for the orderly transfer of shares in the event of disability, death or retirement of a shareholder. Upon the death of a shareholder, the buy-sell agreement generally instructs the corporation to purchase the shares of the deceased. Insurance is a cost-effective way of providing the necessary funds to carry out those instructions.

Key person insurance

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Many companies, public or private, large or small, often rely on the skills and contributions of a single person. Proficient with all levels of the firm's operations, respected by staff and trusted by clients, such key individuals play a crucial role in the company's success. The sudden departure of a key person can create a void, difficult, if not near impossible and costly, to fill. Taking out life insurance on the key person, or people, in your organization can help mitigate these costs.

Using insurance to protect your personal assets

We understand that creating and managing your wealth is just part of the equation. It's also important to preserve it. Through the use of insurance strategies, we can help you preserve your wealth during your lifetime and protect and maximize the value of your estate for your family and other beneficiaries.

Instances where we use instance to protect your personal assets:

Estate creation and preservation

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You can offset costs that are incurred at death and preserve your estate by having insurance proceeds pay them for you. Taxes, liabilities, estate-related and other future costs can all be offset by your permanent insurance coverage. By taking advantage of the preferred status of tax-exempt life insurance, you can maximize the value of your assets and maximize the value being transferred to the next generation. Living benefits insurance is also vital to estate preservation, by ensuring funds are available should you require them at a time of illness.

Tax minimization

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Tax-exempt insurance can reduce taxes you pay on annual investment growth, as well as taxes payable when you pass away.

Income enhancement

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Certain solutions using insurance products can provide a supplemental stream of cash, thereby enhancing retirement income. The net income derived from this strategy may be significantly higher than what is achievable with traditional fixed-income vehicles, especially during times of low interest rates.

Disclosure: Insurance products are offered through RBC Wealth Management Financial Services Inc. (“RBC WMFS”), a subsidiary of RBC Dominion Securities Inc.* RBC WMFS is licensed as a financial services firm in the province of Quebec.

Certain solutions using insurance products can provide a supplemental stream of cash, thereby enhancing retirement income. The net income derived from this strategy may be significantly higher than what is achievable with traditional fixed-income vehicles, especially during times of low interest rates.