Corporate ownership of a life insurance policy, however, has its share of advantages and drawbacks – and depending on how it is managed, this form of cover can play a crucial role in helping a business move forward.
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How does life insurance for business owners work?
Corporate-owned life insurance can be tailored to meet the different needs of a business. Policies generally fall into two categories, with each type working differently.
1. Term life insurance
As the name suggests, business-owned term life insurance provides coverage for a specific period or “term,” typically five, 10, or 20 years. Premiums stay the same for the duration of the term and are relatively less expensive compared to those of permanent life insurance.