Corporate-owned life insurance —put corporate dollars to work.
If you own a corporation, you have a choice most Canadians don't: fund your life insurance with corporate dollars instead of personal ones. Structured correctly, corporate ownership can improve premium efficiency, protect the business itself, and open the door to one of Canada's most powerful estate tools — the Capital Dividend Account.
The same protection, a smarter funding source.
Corporate-owned life insurance simply means your corporation — rather than you personally — owns the policy, pays the premiums, and is typically the beneficiary. Because most Canadian-controlled private corporations pay tax on active business income at a lower rate than their owners pay personally, funding premiums with corporate dollars can require meaningfully less pre-tax income than funding the same policy personally.
The structure serves the business as well as the family. A corporately owned policy can protect the company against the loss of a key person, fund the buyout obligations in a shareholders’ agreement, and secure lending relationships that depend on an owner’s continued involvement.
At death, the insurance proceeds are generally received by the corporation tax-free, and the amount by which proceeds exceed the policy's adjusted cost basis creates a credit to the corporation's Capital Dividend Account — which can then allow tax-free capital dividends to be paid to shareholders or their estates, subject to CRA rules.
None of this happens by accident. Ownership, beneficiary designation, and documentation must be structured correctly, and the plan must fit your corporate structure — holdco, opco, or both. That’s why Tanya builds these strategies alongside your accountant from the very first meeting.
Four jobs a corporate policy can do at once.
Premium efficiency
Premiums funded at corporate tax rates can require less pre-tax income than personal funding — the same coverage, sourced more efficiently. Your accountant confirms the math for your corporation.
Key person protection
If the business depends on you or a partner, a corporate policy delivers capital to stabilize operations, reassure lenders, and buy time if that person dies.
Buy-sell funding
A shareholders' agreement without funding is a promise without money. Corporate insurance guarantees the buyout capital exists exactly when the agreement is triggered.
The CDA pathway
Death proceeds in excess of the policy's adjusted cost basis credit the Capital Dividend Account, which may allow tax-free capital dividends to shareholders or their estates, subject to CRA rules.
Same policy, different consequences.
Personal ownership
Premiums paid with after-tax personal dollars; proceeds paid directly to named beneficiaries, generally tax-free. Simple and appropriate for many needs.
Corporate ownership
Premiums paid with corporate dollars; proceeds paid to the corporation with a potential CDA credit. More efficient in the right structure — and more moving parts.
The deciding factors
Who needs the protection, where the money should land, your corporate structure, and creditor considerations. Tanya and your accountant weigh these together before anything is signed.
For incorporated business owners in Alberta, BC, and Ontario, this decision often has six-figure consequences over a lifetime of premiums and a seven-figure impact at estate time. It deserves a designed answer, not a default one.
Where corporate ownership changes the outcome.
The owner-operator
An incorporated contractor in Grande Prairie needs $2 million of permanent coverage for family and estate purposes. Funding it corporately instead of personally can meaningfully reduce the pre-tax income required each year — savings that compound for decades.
Two partners, one agreement
Two shareholders sign a buy-sell agreement. Corporate-owned policies on each partner guarantee the surviving partner can actually fund the buyout — without loans, without selling assets, and without negotiating with a grieving family.
The holdco with retained earnings
A professional corporation has accumulated passive investments that attract high corporate tax rates. Repositioning a portion into corporately owned permanent insurance may offer tax-advantaged growth within Income Tax Act limits, plus an eventual CDA credit — reviewed with the accountant, always.
The family business transition
Mom and Dad's operating company will pass to one child. A corporately owned policy funds an equalizing inheritance for the others and covers the tax bill on the shares — keeping the business intact and the family whole.
Corporate-owned insurance, answered plainly.
Are corporately paid premiums tax-deductible?+
What exactly is the Capital Dividend Account?+
Should my holdco or my opco own the policy?+
What happens if I sell the company?+
Does this only make sense for large corporations?+
Corporate insurance advice across three provinces.
Tanya designs corporate-owned insurance strategies for business owners throughout Alberta — including Grande Prairie, Edmonton, Calgary, Red Deer, and Lethbridge — across British Columbia, including Vancouver, Surrey, Kelowna, Kamloops, and Victoria, and throughout Ontario, including Toronto, Ottawa, Mississauga, Hamilton, and Kitchener-Waterloo. Consultations with your accountant at the table are welcomed and encouraged.
Find out what your corporation could be doing differently.
Bring your accountant if you like — the best corporate strategies are built with everyone at the table from day one.