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Business Life and Health Insurance

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“Key person” life insurance

WHY YOU NEED "key person" life insurance?

“Key person” is a person who is responsible for the success of the organization, it can be the owner/partner or employee.

The loss of this person would affect the business, the company could suffer financial losses and also it would be hard to replace this person.

One of the options for the organization is to place a protection, to buy life insurance for the “key person.”
That will help to cover some expenses such as:

  • Making up for losses revenue
  • Recruiting and training a replacement
  • Cover overhead expenses until the business will be back on track

We can help you identify how much coverage your business will need if your company loses the key employee or partner/owner, and find the best way to set life insurance with less tax implications for the business.

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Buy-sell agreements

What do you think will happen if your business partner dies?

Many businesses have several partners, at least more than one. There are plenty of stories when one of the owners lost his/her partner and had to deal with his/her family member who does not know what to do with the business. Sometimes it is challenging to negotiate with relatives of the deceased partner. In this type of situation, the business can be under great threat.

Buy-selling agreements will help you protect your business from similar situations. A lawyer may help you set up a buy-selling agreement. However, not all business owners have enough savings to buy out a portion of the business.

Here we can use the service of the insurance companies to provide enough funds to buy a portion of the business.

There are different options how to structure business agreement:

  • Cross-purchase agreements – is often funding by criss-cross insurance
  • Redemption agreements – is often funding business-owned insurance

Depending on how business owners decide to set up buy-sell agreements, there will be different ways to set up life insurance: different consequences, payout, and tax implications will be in place.

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Group Life Insurance

Group life insurance is offered by employers to a group of people who are employees

Group life insurance can also be available for business, retail or an occupational association, alumni for a specific university etc.

The most common group is the employees whose employers want to attract their workers by offering good benefits.

Usually, employers will set up a limit for coverage in one or two annual incomes. For example, if an insured has an annual salary of 80,000 CAD, this will be the coverage the insured will be eligible for. If an employee leaves the job, no more benefits will be provided.

Many people want to find employment that provides a full package of benefits. It is also beneficial for the employer as good benefits will attract more talent, and premiums can be deducted as business expenses.

Group insurance is especially beneficial to people who could not get individual coverage based on their health as there is no medical underwriting for the group.

Group life insurance often includes Accidental Death and Dismemberment (AD&D).

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Group Health Insurance

Group Health Insurance - group coverage provided by an employer to his/her employees

Employers can also deduct premiums as business expenses and attract more people to the company by providing those benefits.

Group Health Insurance covers what is not covered by provincial health insurance, such as:

Group health and disability/critical illness plans

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Health Spending Account

A health spending account is a great flexible plan for employees

A health spending account is an alternative to a group insurance plan, which offers more flexibility to employees in terms of benefit choices.

Only incorporated businesses can open an account, and only employers will be allowed to make contributions and have to provide coverage for all his/her employees, but everyone can have a different maximum amount.

You can find allowable expenses on the government website.

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