Corporate Life Insurance for Business Owners

One of the largest issues encountered by business owners is how to access money sitting in their corporation without having to pay tax on this money. Business owners work a lifetime accumulating money in their corporation. Many times, business owners accumulate millions of dollars in their corporation by way of retained earnings or surplus cash in the corporation but can’t access this money without giving half of it away to the government in taxes. Why pull money out of the corporation through payroll or dividends and pay tax on that money? Why not set up a life insurance policy in your corporation? This would provide tax sheltered growth and maximize the estate value of your company upon your untimely death in a tax-free fashion. Corporately owned life insurance is a tool often overlooked by business owners. It is the most effective tool used by businesses to get money out of their corporation without having to pay tax on that money. This is achieved through either a shareholder life insurance policy or a key person life insurance policy. This will allow the corporation to pay for the policy with corporate dollars. If something were to happen to the insured, the insurance company must pay out the death benefit. The death benefit of a life insurance policy owned by a Canadian Controlled Corporation is received by the corporation tax-free. It is them distributed to the shareholders of the corporation as a tax-free capital dividend. This is a fantastic way to pass money off to future shareholders of the corporation tax free. How else can you get money out of your corporation tax free?

There are many other features such as growth of money within the policy and a feature within the policy that allows the corporation to borrow against the cash value in the policy. We have been specializing in corporately held life insurance for years and know exactly how to set up a policy in order for a corporation to take advantage of all these features.