How to manage life insurance with the aim of protecting your business.


How to manage life insurance with the aim of protecting your business.


A life insurance policy is generally the best method for protecting one’s family and wealth, especially when succession occurs. However, this is not the only benefit of life insurance; an entrepreneur can also benefit much more.

The data from the Quebec Entrepreneurial Index in 2017 revealed that 40.9% of young Quebecers have an interest in joining the marketplace, a very high index that demonstrates that most individuals from this age group want to put up their own business. On the other hand, there is also a high percentage of business closures (11.3%). For the sake of your clients, you can avoid this kind of situation by being savvier and confident with good advice on how to succeed in life.

Life insurance plays an instrumental role in properly managing your financial resources, whether as a business owner, a business partner, or a self-employed individual.

Life insurance allows you to:

  • Adhere to your plan and vision of the business.
  • To mitigate, should a partner die, the financial repercussions for relatives, your family, and the business itself.

Discover the many options offered by life insurance for the protection of your business.

This article will show the different types of life insurance available in the market that can protect you and your business, and to limit or eliminate any chance of civil liability that could pose financial risks.


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Life insurance for a business owner: preserve your wealth

A multitude of assets owned by your company such as partners or key employees, vehicles, equipment, furniture, inventory, and at the center of all these, you, would truly benefit from having insurance. Life insurance constitutes an essential element in your company’s defense against potential hazards and risks.

From a business perspective, each company must have a risk management of its own. It is important, however, not to have too much or be too complacent and not obtain additional protection.

Do you think your business can survive disability or death if it strikes you or one of your associates? Do you have enough savings (in cash) to survive a possible emergency affecting your business?

Most of the time, these questions concerning risk will, unfortunately, end with a NO.


What types of life insurance will protect your business?

Don’t forget to pay close attention to the advice of life insurance brokers because they have expertise in this matter and understands what it means for your business to have changing needs.

Your business and your finances could suffer tremendously from the loss of one of its key employees. Fortunately, there are different life insurance plans to help you avoid these risks and protect your business and your family from them.

Find below some types of insurance that can positively affect your business.





Owners, partners, and key employees can benefit from these types of insurance.



Life insurance that saves the credit of business owners.

Life insurance provides protection for your family if an unfortunate event happens. It is especially important for individual businesses because the general indebtedness of the business relates exclusively to the owners.

Does a partner manage the business with you? If he were to die unexpectedly, what would be your options?

Will you have enough cash to buy out the shares in the company?

How will you survive the consequences of his loss to the business? Think about it quickly.

If you don’t have insurance to protect you, consider buying life insurance targeting your recent needs as a self-employed worker.

If you have already taken out insurance, prevent financial setbacks to your family and upgrade your coverage.



Critical illness insurance, an insurance solution for companies that don’t have insurance coverage.

Critical illness insurance gives you a lump-sum benefit if you are diagnosed with a critical illness. Self-employed individuals are more at risk. In fact, they usually work long hours every day and suffer from stress on a daily basis.

Financial support during a time of critical illness can be an enormous help. Your company can enjoy stability in the form of temporary liquidity which would include your current financial obligations during your absence such as salary substitutions, remuneration, and lack of income. Your lenders would stop worrying about you.



For a business, disability insurance is priceless.

Disability insurance makes sure that you get paid, for a limited time, if an impediment such as an illness or injury requires you to stop working. If the disability is a result of an illness or accident, how would you manage your financial obligations during this difficult time?

Disability insurance provides you with a source of income while you focus your energies on recovering without falling into a financial quagmire.



Key person insurance for a company, an important choice that protects the company.

Key person insurance protects important employees of your business so that if they should suffer any impediments, your business won’t suffer too much from the consequences of their loss.



Partnership insurance, an important element to ensure that a business remains operational after an unexpected death.

The repurchase agreement of shares of partners or partnership insurance is a protection that ensures the continuation of the smooth operation of a business and the buy-back of the shares (with funds) held by your partner/s if one of them dies.


Find out (from your accountant or insurance broker) the insurance that is deducted as expenses of the business and those payable by you on an individual capacity.


Here are the benefits of taking out life insurance as an entrepreneur

You no longer have a boss and can make your own dreams. You left your last employer and have channeled all your energies to a brand-new project.

If you no longer have group insurance, it is critical to have protection from accidents or death with the right coverage and level of protection.


Some advantages of owning a life insurance policy when running a business

 An excellent guarantee for borrowing funds

When taking out business start-up loans, an entrepreneur generally needs to offer personal collateral at a time when insufficient funds present him with challenges. A life insurance policy allows a policyholder to make available to his beneficiaries sufficient funds to pay off his debts. This also ensures that people who depend on your income can continue to enjoy your remaining assets.


A great way to prepare your legacy

Life insurance gives the opportunity to a self-employed person, business owner, or partner to:

  • Equitably divide the inheritance of the beneficiaries of the estate. When a business is the determining factor of an inheritance, dividing it I equally among the heirs is hard work for the owner.
  • Leave the company to his family after an unexpected death without a huge debt to be paid. Bequests to people who have worked for the company can also be included. The company maintains its operations even when the insured dies.

Life insurance then unfolds its full potential. In the event that a policy holder wishes to make a change upon retirement, switching to term life insurance (subject to a regular audit of the company and its value and amount of insurance) is fairly easy.

With regards to a change that happens precisely at the time of death, permanent life insurance (universal, with participation or whole) including the face amount of a cash surrender policy is relevant and adequate. The company will increase its value over time.

Life insurance also offers an option to buy back the shares of a partner who dies unexpectedly.


Save on your business taxes with life insurance

When your RRSP and TFSA would have been maximized for tax shelter purposes, business owners or private individuals can purchase universal (whole) life insurance. A business owner will be delighted with this type of agreement because the surplus of funds that can be invested will benefit him, his family, and help to reduce taxes on his estate.

In terms of performance, life insurance is not the most profitable investment. On the other hand, an entrepreneur who desires to reserve these funds for the company and not his creditors and having in mind the future of his company will be pleased with the protection that this type of policy provides his heirs and his legacy.


Protect yourself effectively from your creditors

In Quebec province, irrevocable have rights stipulated by a life insurance policy. These rights are found, for example, unseizable for the descendants, spouse, and heirs of the insured.

In contrast, a self-employed person, partner, or business owners have the responsibility of borrowing at a professional level. A seizure of assets by creditors can happen if they become ill, if fraud is committed by an employee, if customers default on payments, or if there is a loss of market. Subscribing to a life insurance policy also protects creditors from the money provided for the estate.


Cash Benefits paid tax-free

An entrepreneur who owns company shares and has a whole life or universal life insurance policy leaves designated beneficiaries with a large tax-free gift. Whether the beneficiaries are of their descent, a spouse, any individual, or the company itself, indemnity paid after the death of the insured is non-taxable.

The heirs may use this sum at their discretion. They can, for example, apply a buy-back agreement of the shares of other shareholders to continue to operate the business, meet the company’s financial obligations, or even fulfill a tax-related obligation for the transfer of assets.


Other types of insurance to protect your business if you are in trouble.


Some types of insurance (besides life insurance) that cover your income and business assets

If a tragic event damages your assets or your business premises, it could have disastrous consequences. You can have protection for your income and assets in anticipation of such a disaster.

Here are different types of insurance that can help you:

  • Business interruption insurance: If the business needs to close its doors temporarily after a fire or other type of disaster, this coverage covers you for lost revenues until your business re-opens.
  • Property insurance: insurance that covers the building, and assets of your company if they are destroyed or suffer damage caused by a covered event such as a fire.
  • Vehicle damage insurance: All of your company vehicles must be insured. Inform your insurer if you or your employees use your (personal) vehicles for work.
  • Contents insurance: Contents insurance protects the goods stored in the workplace of the company. As a renter, property insurance belongs to the landlord but you may need to obtain coverage for your own property. If you operate a business at your residence, you need a separate contents insurance policy for your business assets.


Avoid risks from lawsuits and have liability insurance specifically for your business.


Protect yourself from lawsuits with liability insurance specifically for your business

Mistakes happen every day. One of your suppliers, employees, yourself, or your equipment can cause injury to your customers, workers, or other individuals that have dealings with your company, even if by mistake.

For the protection of your business, it is wise to reduce the risks arising from legal action by obtaining certain types of insurance that can minimize your liability:

  • Professional Liability: It covers potential lawsuits from clients due to negligence, omissions, or errors in your conduct of professional activities.
  • General Civil Liability: Insurance that offers coverage to injuries sustained by your employees and customers in your workplace.
  • Cyber Liability: In case of a lawsuit, it protects the company against breaches in electronic security which can compromise commercial or personal data. This includes stolen equipment that holds data related to employees, customers, and the company or other types of data.
  • Civil Liability (for products): Insurance that protects your company in case you produce a product that results in injury to one of your customers.


Here’s an insurance that compensates for a client who reneges on payment: Credit insurance

A client who fails to pay can cause you a lot of problems. Your suppliers and employees still need to receive their payments or salaries, so you will find yourself in the crossfire. You need to take on the cost of goods without receiving your expected revenues.

The export market brings greater risks

Special exports insurance is available and is offered by the government to cover a new set of risks. Among other things, there are insured customer accounts.


Protecting your business is paramount: Consider shopping for insurance

Peace of mind comes only when you know that you have the right insurance for all your needs.

Stop juggling multiple types of insurance and contact one of our partners now, a successful and experienced insurance broker.

He will know immediately how to target your business needs and find a tailor-made solution. This will help protect all of your business assets and the people who are involved.


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