Best Corporate Owned Life Insurance Plans in Calgary

For all the Calgary’s Controlled Private Corporations, Corporate Life Insurance is a tool which can be used to maintain the owner-manager relationship. The lives of the people that run the company can be insured through this insurance either for senior executives or for the employees.

Corporate Owned Life Insurance Calgary is an insurance which is obtained and owned by a company or employer for its employees or executives. The benefits of Corporate Owned Life Insurance in Calgary are payable to either the employer or to the family of the insured employee.

Corporate Owned Life Insurance provides liquidity at the time of an individual’s death and offers tranquility of mind as their family is taken care of in case of any emergency or mishap. If used properly, Corporate Owned Life Insurance in Calgary is an incredibly effective estate, tax and liquidity planning tool which provide its benefits today and not after death.

Types of Insurance

Life Insurance can be of two types:

1.      Term Insurance: Insurance which is fixed for a fixed period, generally for 5, 10 or 20 years. When the term ends, the policy and the insurance coverage expires, and thus because of its fixed nature, it is inexpensive.

2.      Permanent Insurance: It provides guaranteed coverage for life paying out the death benefit, regardless of your age or health changes. The permanent insurance policies require payments of premiums for life, but they are generally structured in a way that the investment component of the policy funds the premium payments after a fixed term.

Tax benefits of Corporate Owned Life Insurance

·         Death benefit is received tax-free by the company

·         Death benefit received can be treated as a part of a special account that can be paid out to the shareholder of the company tax-free

·         Leveraged Insurance Options

·         Providing business loan protection

Liquidity benefits of Corporate Owned Life Insurance

There are three situations where it can boost liquidity

·         General key-person life insurance

·         Estate equalization and

·         Capital gains taxes on death

 

Things to keep in mind

There are many tax benefits of owning life insurance within a corporation but the suitability of different policies will depend on various tax and non-tax factors. The type, amount and structure of the insurance policy vary depending on personal needs and circumstances and your personal and professional goals.  Products may also depend on several factors like age, amount of investment that can be made and overall health risk. It is always advisable to consult an insurance provider to explore different options and then selecting one which is right for you.

There are potential disadvantages or risks also of owning life insurance inside a corporation:

1.      Risk of capital losses and exposure to creditors

2.      Exposure of insurance proceeds to creditors of the company

3.      Coordination with other post mortem planning

4.      Liquidity risk

5.      Access to the capital gains exemption

Life insurance thus is a productive tool to help manage the business and tax costs. The benefits can be ripened fully if life insurance is used properly.