Business owners and other key executives spend considerable time and effort to acquire the knowledge, experience, judgment, reputation, relationships and skills that make them valuable to the business. When they die, it can have a severe financial impact on the company.

Large corporations are often in a much better position to prepare for key executive turnover because of sheer size and numbers. In small business situations, finding a qualified replacement immediately is much more difficult.

The impact of this situation can be considerably reduced if the business has purchased an insurance policy on the life of the business owner and/or key executives. If they die, the life insurance proceeds give the business working capital to meet immediate cash needs and provide a source of funds for finding, attracting, hiring, and training a replacement or to hire interim management. Key person insurance provides assurance to a small business’s creditors and employees that the business will continue even if a key person dies.

Shared Ownership/Reverse Split Dollar

Benefits and costs associated with an exempt life insurance policy are typically shared between an individual and a corporation – matched to the parties more requiring the benefit.

An advantage when a corporation needs insurance on key employees; an employee needs tax deferred cash accumulation; high income & tax bracket; maximized RRSP & pension benefits and when there’s a need for additional tax shelter & supplemental retirement iincome.