Insurance benefits

Over the years, you can save a significant amount of money by having your corporation pay for the premiums of your life insurance directly with income taxed at a corporate rate (17.5%) rather than assuming the cost personally with income taxed at the highest tax rate (e.g. 53% in Quebec). 

 

For example: Dr. insurable Practices in Quebec. She has a permanent life insurance. The cost of her premiums is $2,500 per year. If Dr. Insurable’s personal marginal tax rate is 53%, she needs to earn $5,320 a year to fund the policy premiums personally. If Dr. Insurable is incorporated and her corporation owns and pays for her life insurance policy, her corporation needs to earn only $3,030 a year to fund that same $2,500 premium. 

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This equals a $2,290 yearly saving. Most permanent life insurance premiums are paid over 20 years. This means that over 20 years, Dr. Insurable would save $45,800 for having her life insurance owned and payed for by her corporation.

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There are other insurance benefits that are available depending on the strategy applied and the type of insurance you may have.