BUSINESS TERM LIFE INSURANCE

Business Term Life Insurance is designed to protect companies and shareholders from the financial impact of a death. It provides liquidity at the exact moment it is needed most, helping ensure the business can continue operating smoothly during a period of transition.

Business Term Life Insurance is commonly used to support:

• Shareholder buy-sell agreements
• Key person insurance
• Business loan or debt protection
• Protecting retained earnings and business continuity

Each of these scenarios serves a different purpose and requires thoughtful planning around ownership, beneficiaries, and overall structure.

Business term insurance can be owned personally or corporately, depending on:

• The purpose of the coverage
• Tax considerations
• Shareholder structure
• Exit or succession plans

In corporately owned arrangements, the tax treatment of the death benefit and its potential impact on the Capital Dividend Account (CDA) should be considered as part of the broader planning conversation.

This is not a one-size-fits-all decision.

We are always happy to work alongside a client’s accountant and lawyer to ensure the policy ownership, beneficiary designations, and intended use align properly with the legal and tax structure of the business.

In shareholder scenarios, term life insurance is often used to fund buy-sell agreements. This ensures surviving partners have the liquidity required to purchase shares from an estate without relying on external financing, selling assets, or disrupting operations.

Properly structured coverage helps preserve control, stability, and continuity during a critical transition.

If the loss of an individual would materially impact revenue, operations, or lender confidence, key person insurance can provide financial stability while the business adjusts.

Proceeds can be used to offset lost profits, support recruitment or training, and maintain confidence among lenders, employees, and stakeholders.

Business insurance decisions should align with shareholder agreements, tax planning, and long-term strategy.

My role is to help ensure coverage is structured intentionally and integrated properly into the broader planning framework. This often involves coordinating with accountants and lawyers so the insurance supports the business strategy rather than operating in isolation.