Key Person and Buy-Sell Insurance
Protect the business from losing the people it depends on. We connect Ontario business owners with licensed advisors who structure key person, buy-sell and overhead coverage.
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Key Person and Buy-Sell Insurance
Many businesses depend on one or two people: the owner who holds the client relationships, the partner with the technical expertise, or the manager who runs operations. If that person dies or becomes seriously ill, revenue, financing and even the survival of the business can be at risk.
Key person insurance and buy-sell insurance are how business owners plan for that. They are usually life, disability or critical illness policies owned by the business or the shareholders, designed around a specific business need.
Connect NowHow CommercialInsurance.ca works
We are not an insurer or an advisor. We find you the right one.
Matched by need
We connect you with an advisor who works with businesses and families like yours.
Licensed life and health advisors
Life and health insurance advisors in Ontario are licensed by the Financial Services Regulatory Authority of Ontario (FSRA).
Fast follow up
Once we receive your information, a professional in our network will connect with you within 24 hours.
No cost to be matched
Our referral service is free. You deal directly with the advisor for quotes and coverage.
Common business insurance strategies
An advisor, working with your accountant and lawyer, will match the strategy to your structure.
Key person insurance
The corporation owns a policy on a key person and receives the benefit if they die or, with disability or critical illness coverage, become unable to work. The money can replace lost profits, repay loans and fund recruiting.
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Shareholder buy-sell funding
A shareholders’ agreement often requires the surviving owners to buy a deceased owner’s shares. Life insurance funds that purchase so the family is paid fairly and the business is not drained of cash.
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Business loan protection
Lenders may require coverage on owners who guarantee business debt. A policy you own and control can be more flexible than lender insurance.
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Business overhead expense
Disability coverage that pays the fixed costs of running the business, such as rent and staff wages, while the owner recovers.
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How corporate owned life insurance is taxed
The general rules
In general, premiums for corporate owned life insurance are not tax deductible, and the death benefit received by a private corporation is not taxable. Much of the benefit can be credited to the capital dividend account, which can allow it to be paid to shareholders as a tax free capital dividend.
These rules are technical. Always involve your accountant and lawyer when structuring coverage.
Key Person and Buy-Sell FAQs
Are key person insurance premiums tax deductible?
Generally no. Premiums for corporate owned life insurance are usually not deductible, although there are limited exceptions, such as coverage required as collateral for a loan.
Is the death benefit taxable to the corporation?
Generally no. A private corporation receives the benefit tax free, and much of it can be credited to the capital dividend account.
Do we need a shareholders’ agreement?
Yes. Buy-sell insurance works alongside a shareholders’ agreement that sets out how shares are valued and bought. Your lawyer drafts the agreement and your advisor funds it.
Can key person coverage include disability?
Yes. Key person disability and critical illness coverage protect the business when a key person cannot work, which is statistically more likely than death during a career.
What to expect from a benefits advisor
A licensed advisor handles the details so you can make a clear decision.
1Discovery call
Share who needs coverage, what matters most and your budget. For businesses, bring your current plan and renewal if you have one.
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2Plan design
Your advisor recommends coverage levels and cost sharing that fit your needs, and explains the trade offs in plain language.
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3Compare insurers
Your advisor gathers quotes from multiple insurers and compares price, coverage and service side by side.
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4Enrol and support
Once you choose, your advisor handles the application and enrolment, and stays available for claims questions and renewals.
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5/5 rating on GoogleThe Commercial Insurance Difference: Feedback from those referred
Proactive Broker Relationship.
The most noticeable difference was the fact that I no longer felt that I was needed to manage the broker... the brokers came to me with proactive recommendations and knew when to push and shop the market and when not to. When the topic of business insurance comes up, I always refer fellow business owners.
Steve T
Security Blanket For My Business
I was always the type of customer that never believed in insurance and only really got it because I had to. Then I connected with a broker through Commercial Insurance.ca and they asked me questions no one else ever did and that's how I knew something was different. They took the time to understand and evaluate the risks. Well, I ended up getting some extra coverage (legal expense) and thank goodness I did. Something fairly innocent turned into something quite nasty and I didn't have to do too much... my coverage took care of it. Now I look at Insurance as a security blanket for my business.
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They had my back
No one likes buying insurance because it's a bit of a bet against yourself. You just hope that when the bad things happen that insurance will do what it said it would do in the first place. Their specialist stand behind the policy's that they bind. They never professed to get me the best price, but they did say they have my back, and have my back, they did.
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