Whole Life Insurance for Business Owners in Canada

Business owners should know that whole life insurance benefits employees, their families, and the business. These tiers of satisfaction and emotional care lead to a stronger work ethic and easier recovery, and they are usually less expensive than most business owners believe.

Whole life insurance for individuals is sold off as something that not everyone needs, but most businesses cannot ignore the countless benefits offered. Read on to discover how whole life insurance can affect your employees, their families, and your business.


What Is Whole Life Insurance?

Whole life insurance, also known as permanent life insurance, is a policy that is specifically designed to offer coverage over a lifetime. This is a major focus for life insurance policies for business owners because it provides extensive coverage and benefits extending through a person’s career.

It differentiates from term life insurance and estate planning life insurance in a few ways. Whole life insurance can have a higher premium, but it remains the same over time. This policy is also guaranteed permanent coverage and has a cash value.


What Can Whole Life Insurance Cover?

Whole life insurance is designed to cover expenses such as:

  • Final expenses incurred at the end-of-life
  • Children’s expenses (college, daycare, or just getting started)
  • Replacing lost income
  • Paying off debts
  • Buying the shares of a business partner

The fact is that the listed beneficiary of a whole life insurance policy can use the funds in whatever way best benefits them. Friends or families of the deceased can benefit from these funds when that source of income is lost, and businesses listed as beneficiaries can use them to alleviate the shockwaves of losing a valued employee.


What are the Benefits of Whole Life Insurance for Businesses?

The benefits of whole life insurance for individuals are straightforward. If an individual dies then their loved ones can receive financial care.

The benefits of whole life insurance for businesses are less discussed, and they are less straightforward. When you evaluate whole life insurance plans for businesses you discover that they can lead to easier succession, increased employee satisfaction, and covering business debts.

Whole life insurance policies also carry a cash value, distinguishing them from term life policies. This can prove to be a major benefit to companies at any stage of development.


Easier Succession

Whole life insurance policies can keep the path of succession within the business. When the company takes out a policy on a shareholder or co-owner the payout can go to cover the shares or ownership of the deceased without putting the company in a position to sell.

Whole life insurance can also streamline the process for replacing key employees by providing the funds necessary to cover their job, search for a suitable candidate, and get someone with the proper experience and future goals into that position.

Businesses benefit from an easier line of succession because it does little to disrupt other positions and prevents other employees from stressing about the future of the business.


Increased Employee Satisfaction

A company that offers whole life insurance as a perk of working for them will see an increase in employee satisfaction, starting with its increased ability to find hard-working candidates for positions.

Employees understand the value behind a life insurance policy, and when they are faced with working for a business offering them a company-paid policy or a business that has no additional perks they will choose the first. When a business does the work to care for employees and their dependents even after their death it shows their true nature.


Covering Business Debts

A whole life insurance policy can go on to cover business debts, regardless of whether they are tied to the deceased individual or not.

In most cases, you want anyone who has taken on debt in the company name to have some sort of plan for paying it back, and whole life insurance can ensure that these debts get paid.

Beyond this, companies that are the beneficiaries of an individual’s business whole life insurance plans can use the funds in whatever way needed to benefit the business, and paying off debts does exactly that.


Cash Value

Whole life insurance policies have a cash value, which means that you can borrow against the accumulated value in many instances. By obtaining such loans you can help the business in difficult times or invest in its growth.

This can be both a benefit and an issue, depending on how you look at it.

When your business invests in whole life insurance policies, the tax can be deferred. This can be an issue later on, but being able to put money aside without paying an immediate tax on it is beneficial to many businesses and financial situations.


Is It Cost-Effective to Purchase Whole Life Insurance Through Your Business?

Whole life insurance is much more expensive than term life insurance, and premiums can cost up to 5 times as much. When you purchase whole life insurance through your business you can unlock group discounts and set the business as a beneficiary to protect it in the future.

For these reasons purchasing whole life insurance through your business is not only cost-effective, but it pays off in the end. The added security and peace of mind will help your business continue to thrive in a stressful time, reducing the ripple effects of death in a business setting.


Final Thoughts

Whole life insurance policies are not something the business owners in Canada should brush off. The benefits they offer are worth much more than their costs, and they show that you value employees and their role in the business.

Whole life insurance policies are also a great way to offset the lack of a retirement plan or savings, and this can help business owners that fail to create either have a plan for their family if they die.

Whole life insurance is a complex subject to consider, and employing the help of someone who is at the top of the business can help you reach a decision quickly and efficiently. Contact Sim for help with your financial planning.


Essential Planning for Financial Security

Helping business owners and self employed professionals grow retained earnings tax-free, pass more wealth to the next generation, and protect their biggest asset – themselves, the executive of the business by acquiring a key person life insurance policy.


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