Do You Own A Business in Canada? Is It Worth Protecting?
Insurance for business overhead expenses, key employees, and disability buy-sell agreements
If you own a small business or even a medium sized operation in Canada you could benefit from business disability insurance to protect your most valuable investment. Does your business rely heavily or totally on your input each day to turn a profit? If you have ongoing debt obligations, rental and lease payment, insurance costs, employee wages (and the list goes on) you can protect yourself and your business in the event of your own disability or the disability of a key person or business partner.
Make Sure Your Business Can Always Pay the Bills
You—and perhaps your co-owners—make a significant contribution to the business. In fact, it’s so significant that if you were disabled for any length of time, your absence would impact the bottom line.
That’s why Disability Overhead Expense Insurance has become such a popular insurance plan for Canada business owners. At Life Guard Insurance we can help you understand and structure the right policy for you and your partners or co-owners.
Details of Business Overhead Expense Insurance:
- Your plan has guaranteed premiums locked in until you reach age 65. It can then continue but premiums are renewable yearly after age 65, as long as you remain employed full time (minimum of 30 hours per week) and responsible for the expenses of maintaining an office or business.
- Monthly benefits range to suit your needs, from $500 to $30,000 per month.
- Decide whether your benefits will be paid over a period of time of either 15 or 24 months, enabling you to cover fixed business expenses such as payroll, property taxes, rent and utilities for up to 2 years.
- Benefits may start after as few as 15 days of disability, allowing your business to remain a going concern until you are able to return to work.
- Premiums may be tax deductible.
- Various enhancements are available to make your policy more valuable.
- Includes Return to Work Assistance if your insurance company finds it appropriate.
Protect Your Business Against the Loss of a Key Contributor
If a key member of your team was to become totally disabled, how would your bottom line may suffer in the short-term? How costly would it be to find a replacement if the disability was long-term? Because key employees have unique and valuable knowledge and skills, immediate business losses and replacement costs would be expensive.
Think about these scenarios: You may have to pay a recruiter to find someone with suitable skills; one or more areas of your business may have to be put on hold, both during the search and while you train a replacement; even if you are able to promote someone internally, you may still lose revenue while the replacement gets up to speed.
Life Guard Insurance can design a Key Person Disability Insurance plan to protect your Canada business.
Details of Key Person Disability Insurance:
- Your plan cannot be cancelled by your insurance company until the insured person is over 60 or terminates full-time employment with your business.
- The minimum benefit payable is $2,500 per month for 12 months, with a maximum of $15,000 per month for 12 months.
- Benefits can start after 60 or 90 days of Total Disability.
- Coverage may be available for purchase for persons aged 18 – 55.
Protect Your Business Against the Loss of a Partner’s Contribution
If the buy sell agreement you have with your partners or shareholders only offers life insurance protection, you may want to consider disability buy sell insurance.
For example, disability buy sell insurance can help ensure your business has the funds available to purchase the interests and/or shares of a partner who becomes permanently disabled and is unable to return to work. The existence of a formal disability buy sell agreement is very important, as it will govern the terms of the buy-out. The disability buy-sell agreement is drawn up by your lawyer, but the funding for the agreement has to come from somewhere – either retained earnings, future revenues or an insurance policy.
Life Guard Insurance can design a Disability Buy-Sell Insurance policy to compliment your legal agreement(s).
Details of Disability Buy Sell Insurance:
- Your plan is guaranteed lock-in premium until the insured person reaches age 64 or terminates full-time employment with your business.
- Up to $1,000,000 benefit amount is available: choose to receive monthly payments, a single lump sum payment or a blend of the two, which ever is most tax efficient for you.
- Benefits may become payable after 360 days of Total Disability when it is likely you or your partner is not coming back any time soon.
- The policy may be owned by the corporation or partnership, or each owner can own a policy on each of the other owners.
- The company must be a partnership or professional corporation that has been in business for at least three years and has a net worth of at least $50,000.
- You can purchase the right to increase coverage at a later date.