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Insurance Planning for Incorporated Professionals

For incorporated professionals, making sure your practice is financially protected can be overwhelming. Incorporated professionals face a unique set of challenges when it comes to managing risk. Insurance can play an important role when it comes to reducing the financial impact on your practice in the case of uncontrollable events such as disability, or critical illness. This infographic and article address the importance of corporate insurance.

The 4 areas of insurance a incorporated professional should take care of are: 

  • Health 

  • Disability 

  • Critical Illness 

  • Life

Health: We are fortunate in Canada, where the healthcare system pays for basic healthcare services for Canadian citizens and permanent residents. However, not everything healthcare related is covered, in reality, 30% of our health costs* are paid for out of pocket or through private insurance such as prescription medication, dental, prescription glasses, physiotherapy, etc.

For incorporated professionals, offering employee health benefits make smart business sense because health benefits can form part of a compensation package and can help retain key employees and attract new talent.

For incorporated professionals that are looking to provide alternative health plans in a cost effective manner, you may want to consider a health spending account.

Disability: Most people spend money on protecting their home and car, but many overlook protecting their greatest asset: their ability to earn income. Unfortunately one in three people on average will be disabled for 90 days or more at least once before the age of 65.

Consider the financial impact this would have on your practice if you or a key employee were to suffer from an injury or illness. Disability insurance can provide a monthly income to help keep your practice running.

Business overhead expense insurance can provide monthly reimbursement of expenses during total disability such as rent for commercial space, utilities, employee salaries and benefits, equipment leasing costs, accounting fees, insurance premiums for property and liability, etc.

Key person disability insurance can be used to provide monthly funds for you or key employee while they’re disabled and protect the business from lost revenue while your business finds and trains an appropriate replacement.

Critical Illness: For a lot of us, the idea of experiencing a critical illness such as a heart attack, stroke or cancer can seem unlikely, but almost 3 in 4 (73%) working Canadians know someone who experience a serious illness. Sadly, this can have serious consequences on you, your family and business, with Critical Illness insurance, it provides a lump sum payment so you can focus on your recovery.

Key person critical illness insurance can be used to provide funds to the practice so it can supplement income during time away, cover debt repayment, salary for key employees or fixed overhead expenses.

Buy sell critical illness insurance can provide you with a lump sum payment if your business partner or shareholder were to suffer from a critical illness. These funds can be used to purchase the shares of the partner, fund a buy sell agreement and reassure creditors and suppliers.

Life: For an incorporated professional, not only do your employees depend on you for financial support but your loved ones do too. Life insurance is important because it can protect your practice and also be another form of investment for excess funds.

Key person life insurance can be used to provide a lump sum payment to the practice on death of the insured so it can keep the business going until you an appropriate replacement is found. It can also be used to retain loyal employees by supplying a retirement fund inside the insurance policy.

Loan coverage life insurance can help cover off any outstanding business loans and debts.

Reduce taxes & diversify your portfolio, often life insurance is viewed only as protection, however with permanent life insurance, there is an option to deposit excess funds not needed for operations to provide for tax-free growth (within government limits) to diversify your portfolio and reduce taxes on passive investments.  

Talk to us to make sure you and your practice are protected.

Contact Us
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Group Insurance vs Individual Life Insurance

Group Insurance vs Individual Life Insurance

“I already have life insurance from work, so why do I need to get it personally?” or “Work has got me covered, I don’t need it.”

While it’s great to have group coverage from your employer or association, in most cases, people don’t understand that there are important differences when it comes to group life insurance vs. self owned life insurance.

Before counting on insurance from your group benefits plan, please take the time to understand the difference between group owned life insurance and personally owned life insurance. The key differences are ownership, premium, coverage, beneficiary and portability.

Ownership:

  • Self: You own and control the policy.

  • Group: The group owns and controls the policy.

Premium:

  • Self: Your premiums are guaranteed at policy issue and discounts are available based on your health.

  • Group: Premiums are not guaranteed and there are no discounts available based on your health. The rates provided are blended depending on your group.

Coverage:

  • Self: You choose based on your needs.

  • Group: In a group plan, the coverage is typically a multiple of your salary. If your coverage is through an association, then it’s usually a flat basic amount.

Beneficiary:

  • Self: You choose who your beneficiary is and they can choose how they want to use the insurance benefit.

  • Group: You choose who your beneficiary is and they can choose how they want to use the insurance benefit.

Portability:

  • Self: Your policy stays with you.

  • Group: Your policy is tied to your group and if you leave your employer or your association, you may need to reapply for insurance.

Talk to us, we can help you figure out what’s best for your situation.

Contact US
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Group Retirement Benefits

Working at an organization that offers a pension plan is one of the greatest financial advantages a Canadian can enjoy. Pension plans are designed to provide retirement income and help employees reach their retirement goals and for business owners- help retain key employees.

Pension plans can offer:

  • Employer contributions

  • Forced retirement savings for employee

There are 2 main types of pension plan:

  • Defined Benefit Plan

  • Defined Contribution Plan

Defined Benefit Plan

  • Retirement income is guaranteed, contributions are not.

  • The pension amount is based on a formula that includes the employee’s earnings and years of service with the employer

  • Usually, contributions are made by the employee and employer

  • The employer is responsible for investing the contributions to ensure there’s enough money to pay the future pensions for all plan members.

  • If there’s a shortfall, the employer pays the difference.

Defined Contribution Plan

  • Contributions are guaranteed, retirement income is not.

  • Usually, contributions are made by the employee and employer.

  • The employee is responsible for investing all contributions.

  • The amount available in retirement depends on how the investment performs including total contributions.

  • At retirement, the money in the account can be used to generate retirement income through purchasing an annuity or transferring the amount to a locked-in retirement income fund.

In summary, a defined benefits plan guarantees you a retirement income and a defined contribution plan guarantees contributions but not retirement income.

Talk to us, we can help.

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Insurance Planning for Business Owners

For business owners, making sure your business is financially protected can be overwhelming. Business owners face a unique set of challenges when it comes to managing risk. Insurance can play an important role when it comes to reducing the financial impact on your business in the case of uncontrollable events such as disability, critical illness or loss of a key shareholder or employee.

This infographic addresses the importance of corporate insurance.

The 4 areas of insurance a business owner should take care of are:

  • Health

  • Disability

  • Critical Illness

  • Life

Health: We are fortunate in Canada, where the healthcare system pays for basic healthcare services for Canadian citizens and permanent residents. However, not everything healthcare related is covered, in reality, 30% of our health costs* are paid for out of pocket or through private insurance such as prescription medication, dental, prescription glasses, physiotherapy, etc.

For business owners, offering employee health benefits make smart business sense because health benefits can form part of a compensation package and can help retain key employees and attract new talent.

For business owners that are looking to provide alternative health plans in a cost effective manner, you may want to consider a health spending account.

Disability: Most people spend money on protecting their home and car, but many overlook protecting their greatest asset: their ability to earn income. Unfortunately one in three people on average will be disabled for 90 days or more at least once before the age of 65.

Consider the financial impact this would have on your business if you, a key employee or shareholder were to suffer from an injury or illness. Disability insurance can provide a monthly income to help keep your business running.

Business overhead expense insurance can provide monthly reimbursement of expenses during total disability such as rent for commercial space, utilities, employee salaries and benefits, equipment leasing costs, accounting fees, insurance premiums for property and liability, etc.

Key person disability insurance can be used to provide monthly funds for the key employee while they’re disabled and protect the business from lost revenue while your business finds and trains an appropriate replacement.

Buy sell disability insurance can provide you with a lump sum payment if your business partner were to become totally disabled. These funds can be used to purchase the shares of the disabled partner, fund a buy sell agreement and reassure creditors and suppliers.

Critical Illness: For a lot of us, the idea of experiencing a critical illness such as a heart attack, stroke or cancer can seem unlikely, but almost 3 in 4 (73%) working Canadians know someone who experience a serious illness. Sadly, this can have serious consequences on you, your family and business, with Critical Illness insurance, it provides a lump sum payment so you can focus on your recovery.

Key person critical illness insurance can be used to provide funds to the company so it can supplement income during time away, cover debt repayment, salary for key employees or fixed overhead expenses.

Buy sell critical illness insurance can provide you with a lump sum payment if your business partner or shareholder were to suffer from a critical illness. These funds can be used to purchase the shares of the partner, fund a buy sell agreement and reassure creditors and suppliers.

Life: For a business owner, not only do your employees depend on you for financial support but your loved ones do too. Life insurance is important because it can protect your business and also be another form of investment for excess company funds.

Key person life insurance can be used to provide a lump sum payment to the company on death of the insured so it can keep the business going until you an appropriate replacement is found. It can also be used to retain loyal employees by supplying a retirement fund inside the insurance policy.

Buy sell life insurance can provide you with a lump sum payment if your business partner or shareholder were to pass away. These funds can be used to purchase the shares of the deceased partner, fund a buy sell agreement and reassure creditors and suppliers.

Loan coverage life insurance can help cover off any outstanding business loans and debts.

Reduce taxes & diversify your portfolio, often life insurance is viewed only as protection, however with permanent life insurance, there is an option to deposit excess company funds not needed for operations to provide for tax-free growth (within government limits)  to diversify your portfolio and reduce taxes on passive investments.

Talk to us about helping making sure you and your business are protected.

Contact Us
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The Key Differences Between a Defined Benefit and Defined Contribution Pension Plan

The Key Differences Between a Defined Benefit and Defined Contribution Pension Plan

As an employer, you may be thinking about offering your employees a pension plan. If so, you have two main options:

  1. Defined benefit pension plan

  2. Defined contribution pension plan

A defined benefit pension plan offers your employees a set amount of money when they retire, whereas a defined contribution pension plan, does not.

There are four key areas you should be aware of when selecting a pension plan:

  • Contributions

  • Investment Management

  • Costs

  • Employee Retention

We will compare each of the areas to give you a better understanding of the differences between the two types of pension plans.

Defined benefit pension plan

Defined contribution pension plan

Contributions

Both the employer and the employee will contribute to the pension plan. The amount that you contribute each year will depend on what kind of expenses the pension plan has, and the amount of funding it will require that year.

Employees contribute a set amount each year into their pension. As an employer, you can choose to match or “top up” the employees’ contributions to a set amount that you define in advance.

Investment Management

As an employer, you or your pension plan administrator will be responsible for managing the funds. This is applicable whether the employee is actively contributing to the fund or has retired and is receiving funds from it.

You can let your employees choose how they want to invest their funds. This provides employees with more flexibility and choice and takes the responsibility off you, as the employer, to manage pension funds. However, you will still need to have a range of funds for your employees to select from.

Costs

An actuary will work with you (approximately every three years) to calculate how much money you will need to cover the pension expenses. The actuary must consider everything from cost of living adjustments to how many employees will be retiring.

The costs will be lower as less active management is required. Employees will receive whatever amount their investments are worth when they retire.

Employee Retention

Both types of pension plans will help attract and retain employees. Since a defined benefit plan builds in value each year, it is more likely to attract employees interested in staying with the company for a long time.

A defined contribution plan will also attract employees, but the pension will be less appealing than a defined benefit plan. 

The Takeaway

A defined benefit plan will cost you more to set up, maintain, and administer, but it offers your employees more stability in their retirement. A defined contribution plan will give you and your employees more flexibility and cost you less to manage.

Either type of plan will help you attract and retain employees. For both types of plans, contributions are tax-deductible for the employee.

If you are considering offering a pension plan to your employees but don’t know where to start, please do not hesitate to contact us. We’re here to help.

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Defined Contribution vs. Benefit Pension Plan for Employees

The Key Differences Between a Defined Benefit and Defined Contribution Pension Plan

As an employer, you may be thinking about offering your employees a pension plan. If so, you have two main options: a defined benefit pension plan and a defined contribution pension plan. A defined benefit pension plan offers your employees a set amount of money when they retire, whereas a defined contribution pension plan does not.

There are four key areas you should be aware of for pension plans:

  • Contributions

  • Investment Management

  • Costs

  • Employee Retention

We will walk you through each of these to help give you a better understanding of the differences between the two types of pension plans.

Contributions

In a defined benefit pension plan, both you, the employer, and the employee will contribute to the pension plan. The amount that you will have to contribute each year will depend on what kind of expenses the pension plan has, and the amount of funding it will require that year.

In a defined contribution pension plan, employees contribute a set amount each year into their pension. As an employer, you can choose to match or “top up” their contributions to a set amount that you define in advance.

For both types of plans, contributions are tax-deductible for the employee.

Investment Management

As an employer, you or your pension plan administrator will be responsible for managing the funds in a defined benefit pension plan. This applies whether the employee is actively contributing to the fund or has retired and is receiving funds from it.

With a defined contribution pension plan, you can let your employees choose how they want to invest their funds. This provides your employees with more flexibility and choice and takes the responsibility off you as the employer to manage pension funds. You will still need to arrange to have a selection of funds for your employees to select from.

Costs

In a defined benefit pension plan, an actuary will work with you (approximately every three years) to calculate how much money you will need to cover the pension expenses. The actuary must consider everything from cost of living adjustments to how many employees will be retiring.

In a defined contribution plan, the costs will be lower as less active management is required. Employees will receive whatever amount their investments are worth when they retire.

Employee Retention

Both types of pension plans will help attract and retain employees. Since a defined benefit plan builds in value each year, it is more likely to attract employees interested in staying with your company for a long time. A defined contribution plan will still attract employees – but the pension will be less appealing than a defined benefit plan would be.

The Takeaway

A defined benefit plan will cost you more to set up, maintain, and administer, but offers your employees more stability in their retirement. A defined contribution plan will give you and your employees more flexibility and cost you less to run.

Either type of plan will help you attract and retain employees.

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