Corporate insurance · Business owners · British Columbia
A buy-sell clause without money behind it forces the survivors to buy out an estate they can't afford, on a timeline they didn't choose. Key-person, buy-sell and continuity coverage turn bad news into a funded plan instead of a fire sale.
The three corporate policies
When a partner dies, the policy pays the corporation or surviving shareholders exactly enough to buy the estate's shares at the agreed price. The family gets fair value in cash; the survivors keep control of the company.
The rainmaker, the licensed professional, the operator who holds the client relationships. Key-person life and CI coverage gives the company cash to survive the revenue hit, recruit a replacement, and reassure lenders.
The most common business disaster isn't a death — it's the owner out for eight months with a cardiac event. CI pays a lump sum on diagnosis; business overhead expense coverage keeps rent, payroll and leases paid while you recover.
Continuity planning
Continuity isn't one document — it's knowing which money arrives, and who signs the cheques, for each scenario.
Surgery, injury, a family emergency. The business survives on delegation and cash flow — if signing authority and client coverage were arranged in advance.
A serious diagnosis or long recovery. Revenue drops, fixed costs don't. This is the scenario that quietly kills profitable small companies.
The shareholder agreement executes: shares are valued, the estate is bought out, leadership transfers. Without funding, this becomes litigation.
Straight answers
The agreement can create a buyout obligation, but it does not automatically provide liquidity. Funding options may include insurance, retained cash, borrowing or staged payments. Review the agreement with legal, tax and insurance professionals.
It depends on the agreement, tax objectives, policy type, beneficiary and buyout mechanism. Corporate ownership may create capital-dividend-account consequences for life-insurance proceeds, but the calculation and access to funds require accounting and legal advice.
Premiums and available terms may differ. The shareholders and advisors should decide how costs are allocated and document the arrangement rather than assuming equal premiums.
Some lenders request life insurance or an assignment as a financing condition. Group Shield can help obtain quotes and coordinate assignment paperwork, while the lender and insurer determine their requirements.
Group benefits, corporate continuity coverage and personal owner protection can be reviewed together, but they are separate contracts with different eligibility, tax and administration considerations.
Official references
Product provisions, eligibility and tax treatment vary. The issued policy or certificate governs.
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