Critical Illness Insurance For Business Owners

By | Business Services, Individual Services, Living Benefits | No Comments

Running a business is a labour of love, and a tremendous amount of work. Without proper protection, all the time and money spent building your company could be at risk. A corporately owned critical illness policy ensures that if you are diagnosed with a serious illness, your business will continue to operate, allowing you to focus on your recovery.

Use corporate dollars to provide a lump sum benefit, whether you continue working or not, to inject cash into your business which can be used to replace lost revenue, pay for alternative or private medical care, hire additional staff to help with some of your duties, or any other use.

If you are fortunate to never get sick and never have a claim paid, these policies can be structured to provide a retirement benefit in the later years, when 100% of ALL premiums paid are refunded on a tax-free basis.

Why Critical Illness Is Relevant to Me:

Current statistics from Heart & Stroke Foundation and Canadian Cancer Society site the following:

  • 1 in 2 Canadians will be diagnosed with Cancer in their lifetime
  • 63% of Canadians diagnosed with cancer are expected to survive at least 5 years
  • Every 7 minutes, someone has a heart attack in Canada
  • 9 in 10 Canadians have at least one risk factor for heart disease or stroke
OVERVIEW OF CRITICAL ILLNESS (CI) INSURANCE:
  • Critical illness insurance pays out a lump sum payment of the entire CI benefit 30 days after diagnosis
  • The lump sum payment can be used in any way you chose, there are no limitations or stipulations
  • Basic plans cover cancer, heart attack and stroke and more comprehensive plans cover many other
  • Serious illnesses including but not limited to – paralysis, multiple sclerosis, bypass surgery, dementia etc
Benefits of Critical Illness Policy owned in My Corporation
KEEP THE LIGHTS ON – critical illness policy pays a tax-free lump sum to help ensure that overhead is covered, and financial obligations are met, allowing you to focus on treatment and recovery.
USE CHEAPER DOLLARS – You can use corporate dollars to fund a critical illness policy. While the premiums may not be tax deductible, paying with corporate dollars is typically more tax efficient.
FLEXIBLE PAYOUT – The lump sum payment can be used in any way you choose. Income replacement, overhead expense coverage, demand debt repayment, hiring additional temporary staff/replacement for key executive during recovery, fund a buy-sell arrangement etc.
GET YOUR MONEY BACK – You can add a return of premium option to the coverage and the return of premium is not considered passive income when it is paid back to the corp.
ESTABLISH A RETIREMENT FUND – The return of premium can be used for retirement funding etc. (see article on PPP, Personal Pension Plans, for terminal funding concept that is deductible to your corp)

To receive a customized quote and talk to an advisor please click here and someone will reach out to you within one business day.

PPP – Personal Pension Plan

By | Business Services, Retirement Income Solutions | No Comments

Personal Pension Plan (PPP) – The best-kept secret in retirement planning?

Historically, owners, senior executives & many government employees were provided generous pensions that guaranteed lifetime retirement income. Their companies would make significant deductible contributions every year in order to fund a pension plan to guarantee a certain amount of income in retirement.

Did you know that your small business or professional corporation could do the same thing for you?

A PPP offers a solution for small business owners to create their own defined benefit pension so that while you are focused on your income today, you know you will be set for your future retirement.

Below is a summary of this powerful tool, including how it works, who it is right for, and the various tax and other benefits.

WHAT IS A PPP AND HOW DOES IT WORK?
  • PPP is a personal pension plan that allows you to save more than a traditional RRSP
  • PPP allows a business owner to fund their own pension plan through their business
  • All contributions are deductible business expenses as are any costs associated with the pension plan (ie. Actuarial fees, management fees etc)
  • PPP is similar to an IPP (Individual Pension Plan) but allows greater contribution flexibility
AM I A CANDIDATE FOR A PPP?
  • Do you own a professional corporation or other business?
  • Are you currently maximizing your annual RRSP contributions?
  • Are you looking for ways to save additional monies on a tax-deferred basis for your retirement?
  • Does your annual T4 income exceed $120,000?

If you answered yes to the above questions, then you are a candidate for a PPP

KEY BENEFITS OF A PPP
  • Increase in contributions that can be made into a retirement fund to grow on a tax-deferred basis
  • Ability to make a catch-up payment for an increased room in the first year of setting up of PPP, generating a large corporate deduction and a bump in asset base for tax-deferred growth
  • Deductibility of fees and expenses related to PPP at a business level
  • Terminal funding amount that can generate additional corporate deduction while providing significant funds for retirement
  • PPP can be terminated and pension income initiated, prior to actual retirement
  • Transferability of PPP if the company is sold without a hassle
  • The flexibility of annual contributions in the event cash flow is limited in certain years
  • Assets inside a PPP can pass from generation to generation without triggering a deemed disposition
  • Assets inside a PPP are trade-creditor protected

To receive a customized quote and talk to an advisor please click here and someone will reach out to you within one business day.