Chances are, you are already aware of the importance of life insurance for business owners at this point. You probably purchased a policy when you started your business, hoping it would satisfy an immediate need and that was that. Your business and your family was young, and you went with the most basic policy you could find.
But that was a long time ago.
Now, years have gone by and you’ve forgotten that policy even exists, yet you’ve been paying those premiums out of your pocket the whole time.
Business owners: when was the last time you reviewed your life insurance?
But when was the last time you reviewed it? And more importantly, do you remember WHY you bought it in the first place? Is it still offering adequate protection?
Before we get to why it’s time for business owners to stop paying for their own policy, let’s revisit some life insurance basics.
The two main types of life insurance for business owners
So often we find our clients get their first life insurance policy at the beginning stages of their company. Usually, it’s one of the two main types of life insurance.
Term life insurance
Looking for temporary protection for your growing business? A term life insurance policy tends to be the most affordable option for providing coverage during a specific time period.
Permanent life insurance
On the other hand, permanent life insurance is meant to offer lifetime protection for a business against the death of a key person. While it tends to cost more than term life insurance, it also comes with certain advantages like building wealth inside your policy and a savings component.
But regardless of what kind of life insurance you bought when your company was created, it’s time to take another look.
(While we’re on the topic of life insurance, you can also click here to learn about using it as a retirement tool)
Life insurance is not “set it and forget it”
Ask yourself this: Would you ever forget to upgrade your car when your family is growing?
Let’s say you start off driving a fun two-door car. Then you get married. Then you have kids. Naturally, you’ll want to upgrade to a bigger car, and safety also becomes more important than ever.
Well, the same goes for your life insurance needs and your insurance tools. They need to be upgraded and reevaluated as your business and your life change.
Not sure how much life insurance is right for you? Here’s how to calculate how much you really need.
It’s time to revisit your life insurance policy and make sure it still suits your needs. On that note, it’s also time to stop paying for it out of your pocket.
Great news about life insurance for business owners
When you move your life insurance into a corporation, you ultimately save more money on income taxes!
That’s right: you turn this former expense into an asset. Life insurance in Canada is one of the best tax-saving tools you can have to solve both your insurance and your investment needs.
(For more ways to use your corporation to invest and save on taxes, click here.)
Here are three key points to remember from this article:
- Revisit your insurance needs (How has your business/family changed and grown?)
- Don’t own and pay for your life insurance personally (Move your life insurance into your corporation!)
- Seek a professional who can help maximize your tax efficiency (That’s us!)
Life insurance for business owners is more than just a way to protect your business. It can protect your family, diversify your assets, and even provide a big tax advantage. And we’re here to help. Using The Blueprint, we will ensure your dollars are working for you in all the right places and that your corporation is as tax-efficient as possible.
Click here to schedule a call and learn more.
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