Coverage and capital, working together.
A corporate insurance catalogue, organized by what it protects and what it builds. Each line below explains what it is first, in plain language, before getting into advantages or tradeoffs.
Written for incorporated businesses generally, established manufacturing, construction, logistics, and professional-service companies among them, not any single industry.
Permanent coverage owned by your corporation, with guaranteed cash value growth and a structured, predictable premium.
Corporate Universal Life Insurance →Permanent coverage with more flexibility, adjustable premiums and a cash value component the corporation can help direct.
Corporate Term Life Insurance →Lower-cost coverage for a fixed period, sized to a specific obligation such as a loan guarantee or a defined business risk.
Key-Person Protection →Coverage built around the financial disruption of losing an owner, executive, or specialist the business depends on.
Shareholder / Buy-Sell Funding →Funding a buy-sell agreement so a shareholder's death doesn't force a rushed sale or an unplanned cash shortfall.
Structuring where surplus retained earnings sit so they aren't taxed more than the circumstances require.
Retained Earnings & Investment Planning →Weighing a corporate investment account against an insurance-based structure for cash the business doesn't need right away.
Insurance-Based Estate & Wealth Transfer →Using a policy's death benefit to help move company value to shareholders or an estate in a planned, tax-aware way.
Immediate Financing Arrangements (IFA) →A leveraged strategy pairing a life insurance policy with separate third-party financing. Real borrowing costs apply.
Corporate-owned life insurance, explained simply
Corporate-owned life insurance means the corporation, not an individual, owns the policy. Three roles matter, and they can be held by different parties:
- The owner is the corporation. It applies for the policy, pays the premiums, and controls decisions about it, such as surrendering the policy or changing the beneficiary.
- The life insured is the individual the policy covers, typically an owner, executive, or other key person. That person has to consent to being insured and take part in the application, including any medical underwriting.
- The beneficiary receives the death benefit when the life insured dies. For corporate-owned coverage this is usually the corporation itself, though a policy can be structured to name a different beneficiary depending on its purpose.
This ownership structure is separate from the type of policy (term, whole life, or universal life, compared below) and separate from the reason the business holds it (key-person protection, buy-sell funding, or estate and wealth transfer planning). The same ownership structure can support any of those purposes.
In plain terms: the owner controls and pays for the policy, the life insured is the person it covers, and the beneficiary is who receives money when that person dies. The same party can hold more than one role, for example a corporation that is both owner and beneficiary.
Diagram: GroRight. Roles shown generically; see the ownership structure described in the text above for how this applies to a specific policy.
Four things that get confused
What kind of policy it is, who owns it, why the business holds it, and whether borrowing is involved are four separate questions.
- An insurance product is a contract with an insurer: term, whole life, or universal life. It determines coverage duration, premium structure, and whether cash value can build up. Compare the three below.
- An ownership structure describes who owns the policy, who is insured, and who receives the benefit. Corporate ownership is one such structure, explained above.
- A planning purpose explains why a business holds coverage. Key-person protection, buy-sell funding, and estate or wealth transfer planning are purposes, not products; the same policy can serve more than one purpose depending on how it's structured.
- A borrowing strategy is a separate arrangement layered on top of a policy. An Immediate Financing Arrangement (IFA) is the main example: a loan from a third-party lender, secured by the policy's cash value. It is not an insurance product itself, and it is not free access to money; see the Immediate Financing Arrangements page for the costs involved.
A corporate investment account, such as a portfolio or a GIC (Guaranteed Investment Certificate), is a separate asset entirely, outside any of this. It carries no insurance wrapper and no cost of insurance; compare it with insurance-based structures on the Retained Earnings & Investment Planning page.
Term vs. Whole Life vs. Universal Life
| Term | Whole Life | Universal Life | |
|---|---|---|---|
| Coverage duration | A fixed period, commonly 10 to 25 years | Lifelong, as long as premiums are paid | Lifelong, as long as premiums are paid |
| Premium structure | Level for the term; no cash value component | Level and predictable, set by contract | Flexible within limits; the corporation can often adjust how much is paid |
| Cash value | None | Builds on a guaranteed basis, managed by the insurer | May build, depending on the investment options chosen; not fully guaranteed |
| Guaranteed vs. non-guaranteed | The death benefit is the contractual guarantee; there is no cash value to illustrate | Cash value growth is generally guaranteed by contract; a participating policy may add non-guaranteed dividends on top | Any minimum guarantee is set by the policy itself; additional growth shown in an illustration is not guaranteed |
Term coverage runs for a fixed period and builds no cash value. Whole life and universal life last for as long as premiums are paid and both build cash value inside the policy, guaranteed on a set schedule for whole life, more flexible and less guaranteed for universal life.
Diagram: GroRight. Not to scale; see the comparison table above for the full breakdown.
Each has its own dedicated page: Term, Whole Life, Universal Life.
These are the planning topics we discuss with business owners. Which products and insurers suit you depends on your province or territory, your business and underwriting, and advice is given only where the advisor working with you is licensed.
Immediate Financing Arrangements also involve a third-party lender. GroRight’s role is the life insurance side; lending decisions and terms come from the lender, and tax and legal advice from your own accountant and lawyer.
Not sure where your business fits?
A strategy consultation can clarify which of these questions actually apply to your situation.