As we often preach in the information that we provide in these articles, it is important to distinguish between "why" a person would choose a recommended solution before deciding "how" it can be done. Often times we see that our relationships have placed a large emphasis on the "what if's" of personal and business planning with respect to death. As our firm has evolved, we often see that the "what if's" with respect to living are equally important. Health has been cited as one of the most important personal values that drives people to take action and implement recommended solutions and as a result, Living Benefits have become an increasingly important part of our planning solutions. We find that most of the entrepreneurs and professionals we deal with have not aligned their goals to protect their health (which represents their largest asset) appropriately.
Could your business survive if you, your partner or a key person was unable to work due to a critical illness or a disability?
Could your business afford to buy out that partner, hire a replacement, or assist with the high payments commonly associated with a critical illness or a disability?
Could your business support potentially high debts payments without the key person in the business due to a critical illness or a disability and if so, would it prefer to spend that extra cash flow somewhere else?
Many people find that the high cost to certain types of Living Benefits contracts are hard to handle because the money is lost should no claim event happen. As the industry has evolved and products have become more sophisticated, clients are able to get up to 100% of the money back should the contract not be used.
Individuals who are involved with corporations are in a position to benefit from their association. Living Benefits contracts in many situations can be structured as a corporate expense even though the individual receives the money should a diagnosis occur. This is an opportunity that if used correctly can add extra tax relief that is always welcome!
Critical illness whether held personally or corporately pays out a lump sum benefit tax free that can be used for anything that the beneficiary decides:
- Pay ongoing medical costs
- Buy out shares from business partner unable to continue duties in business
- Purchase equipment to assist with everyday living
- Pay off outstanding mortgages or debts held personally or corporately
- Take some time to recover before going back to work
- Take some time to travel
Disability coverage whether held personally or corporately pays a periodic amount that is used to replace income that is not being earned in a time of need. A major consequence of not having earned income is ones inability to save for the future. No earned income = no Registered Retirement Saving Plan contribution room. There are solutions to eliminate this potential danger.
Overhead Expense coverage held corporately and pays a periodic amount used to cover the costs to keep the business going during the absence of the insured. The costs of these types of plans are always a tax deductible to the corporation.
Priority Health Care coverage gives individuals access to more specialized treatment without being concerned with the increasing wait times within the Canadian health care system.
Key people in a business are worth protecting! |
