Owning life insurance in a corporation
The Corporation can be the beneficiary of the policy. This allows the Corporation to pay the premiums and then collect the proceeds upon death.
The premiums are normally not tax deductible, but can be financed by corporate dollars, which is better than using after tax dollars.
Once insurance proceeds are received, they are not taxable to the Corporation, and they are added to the capital dividend account of the corporation and can then be paid out tax fee to the shareholder as capital dividends.
Practical Uses
• Grow investments tax free
• Investment growth is not considered to be passive income (preserving the small business rate)
• Access cash value for emergency or other needs
• Corporate borrowing requirements
• Shareholder agreements
