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Welcome To Corporate Life Insurance<\/h1>\n\n\n\n

If you\u2019re a successful business owner of a privately-owned Canadian company, looking to reduce your corporate tax bill and looking for a tax-effective way to transfer your corporate assets to your family, then you have come to the right website.<\/p>\n\n\n\n

Business owners who are shareholders of private corporations who have cash flow in excess of what is required to operate their business will often accumulate wealth within their company as retained earnings<\/strong>. Some may even set up a holding company to house these investment assets. Most business owners prefer not to take extra income or dividends from the company since their annual income is sufficient enough to maintain their lifestyle. By leaving the money in their corporation, there can be a significant tax deferral rather than distributing it through dividends or income then paying personal tax on it.<\/p>\n\n\n\n

The problem<\/strong> is that these retained earnings, or surplus of cash, build passive investment income that is taxed at the highest corporate rate. The high amount of tax<\/strong> paid on passive<\/strong> investments and the loss of wealth due to loss of compounding growth can make this type of investment in your corporation at times less desirable. Withdrawing and transferring these amounts from your company to your heirs could also mean a high tax bill and a less than optimal after-tax estate.<\/p>\n\n\n\n

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A tax-exempt permanent insurance plan does not<\/u> produce passive investment income\n<\/strong><\/p>\n\n\n\n

An alternative solution<\/strong> is to transfer the passive income being earned annually by the corporation to a tax-exempt corporate-owned permanent insurance plan. This type of insurance plan does not<\/u> produce passive income. Since the corporation is the owner and beneficiary of the plan, everything stays inside the corporation. No salary or dividend tax to pay. It\u2019s a simple strategy of re-allocating taxable corporate investments dollars to a tax-exempt insurance plan. The benefit here is that all of the insurance policy cash-values (the investment component of the insurance plan) grow tax sheltered; there is no income tax to pay as long as the money is left to grow inside the plan.<\/p>\n\n\n\n

Not only does a corporate-owned exempt insurance plan allow for tax-deferred growth of the cash value of the policy, there\u2019s also a mechanism that allows the death benefit proceeds to go tax-free to shareholders through the corporation\u2019s capital dividend account (CDA).  The CDA credit is unique to corporate-owned life insurance. Upon death of the life insured person (usually the shareholder), the corporation receives the death benefit tax-free and that amount less the adjusted cost basis (book value) of the policy can be released tax-free through the corporation\u2019s capital dividend account. <\/p>\n\n\n\n

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Is corporate-owned life insurance right for you?<\/strong><\/p>\n\n\n\n

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Ask yourself these questions:<\/p>\n\n\n\n