Match the duration to the obligation
A temporary business debt and a lasting succession need are different problems. Compare term and permanent coverage against the period you actually need protection.
Business continuity
Keep the business plan and the family plan connected.
Corporate-owned life insurance is a policy owned by a corporation on an insured person’s life. It can help address a business obligation or a future cash need. The right arrangement depends on who needs the proceeds, how the company is structured, and how the policy fits the wider plan.
Start a private conversationSpeak with an advisor, or prepare a brief first.
Before choosing a policy
Four questions
worth asking.
Who should own the policy and receive the proceeds?
Is the need temporary, lifelong, or a combination?
Can the company sustain the premiums through a slower year?
How does the arrangement fit your accountant’s and lawyer’s work?
Options and tradeoffs
The details
make the difference.
Separate protection from projections
Ask which policy values are guaranteed, which can change, and what happens if funding stops. A projection should not be treated as a promise.
Coordinate ownership before applying
The policy owner, beneficiary and shareholder agreement need to work together. Have your accountant and lawyer review the structure and its tax implications.
Common questions
A clearer
starting point.
Is corporate-owned insurance right for every owner?
No. It depends on the business purpose, cash flow, ownership and personal needs. Personal ownership or a different funding approach may be a better fit.
Are the premiums tax-deductible?
Do not assume they are. Deductibility and the treatment of proceeds depend on the facts and applicable rules. Review the proposed arrangement with your tax advisor.
What should I bring to a first conversation?
A simple ownership chart, the purpose of the coverage, existing policy summaries and any relevant shareholder agreement are useful. Do not send confidential documents through the introductory form.
General information to prepare for a conversation. Coverage depends on underwriting and the policy contract. Your circumstances require individual advice.
Further reading: BDO: Corporate-owned life insurance
A family name behind the advice