Top 10 Financial Planning Concepts for Business Owners: #3 Protect What Matters Most

Milestone Wealth Management Ltd. - Jun 15, 2024

In any business, the most valuable assets are its people and protecting those assets is important to the business’ long-term success. If a key employee or owner were to unexpectedly be unable to come to work, become disabled, or pass away, it could be very disruptive to the business, other employees and customers.

Part of a successful business plan is to have life and disability insurance on key individuals and owners. In the event of an unfortunate incident, insurance benefits payable to the company could provide the funds to recruit, hire and train a replacement, and can prevent unnecessary disruption for employees and customers.

Insurance proceeds can also be used to buy out an owner. If this is to be the purpose for the insurance, this should be incorporated into a legal Buy-Sell Agreement between owners.

Additionally, by having insurance on key individuals in the business, this financial flexibility can also ease lenders’ concerns about the corporation’s financial stability. Showing this coverage to a lender can make it easier to borrow originally and easier to maintain payments in an event does occur in the future.

As always, we encourage you to reach out to your trusted tax planning professional for information and advice tailored to you and your business.


©2024 Milestone Wealth Management Ltd. All rights reserved.  

Opinions and estimates are written as of the date of this report and may change without notice. Any commentaries, reports or other content are provided for your information only and are not considered investment or tax planning advice. Readers should not act on this information without first consulting Milestone, their investment advisor, tax advisor, financial planner or lawyer. This communication is intended for Canadian residents only and does not constitute as an offer or solicitation by anyone in any jurisdiction in which such an offer is not allowed.