Taking Care of Business

Continuing Education for
Financial Service Professionals
Taking Care of Business:
Insurance Needs
of Business Owners

Taking Care of Business: Insurance Needs of Business Owners
Copyright © 2016 CLIFE Inc.
All rights reserved. Any reproduction of parts or all of this course and its contents by
any means electronic or mechanical is prohibited.
The information in this book is provided for educational purposes only; it should
not be construed or interpreted as providing advice. Agents and advisors should
always seek guidance from their principals and compliance experts in regards to
informing themselves and others about details of the products they sell and other
considerations of their business.
We welcome all feedback and suggestions for additions to the book. Please send
your comments to info@clifece.ca.
CLIFE INC.
1595 Sixteenth Avenue
Suite 301
Richmond Hill, ON
L4B 3N9
www.clifece.ca
Taking Care of Business: Insurance Needs of Business Owners provides continuing education credits upon
satisfactory completion of an online test. Please see the website for details or email info@clifece.ca.
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Table of Contents
Introduction: The Basics of Business 4
1. The Practicality of Business Prospecting 6
2. Business Forms and Structures 8
3. It’s Fundamental: The Buy-Sell Agreement 17
4. The Challenges of Business Ownership 21
5. Life and Death for Business Owners 27
6. A Living Buy-Out 35
7. The Risk of Key Employee Death and Disability 40
8. Time to Get Personal 45
9. Have Your Cake and Eat it Too --- For Now 58
10. Disability of an Owner 64
11. Wrap Up Your Understanding 77
12. For Love or Money 81
APPENDIX A:
A WINNING EXIT STRATEGY: THE TOP TEN TIPS 85
APPENDIX B:
SHAREHOLDER AGREEMENTS: A CHECKLIST FOR DISCUSSION
PURPOSES 97
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The Basics of Business
Look around your neighbourhood at its small businesses: they are the
retail outlets, restaurants, service industries, garden centres, convenience
stores, re-sellers, dental offices, professional practices, and
manufacturers of every kind of widget, software, and product you can
think of.
Small businesses comprised 98.2% of employer businesses in Canada
according to the most recent statistics from Industry Canada. That
percentage represents over 1 million employer businesses:
o Approximately 570,000 employer businesses are located in Ontario
and Quebec;
o Approximately 360,000 employer businesses are located in BC,
Alberta, Saskatchewan and Manitoba;
o The balance are split among the other provinces and territories.
Small businesses are those with 5-99 employees. Other classifications by
size include:
o A micro-business, which has 1-4 employees;
o A medium-size business, which has 100-499 employees;
o A large business, which has 500 or more employees.
Almost half of Canada’s total workforce is employed in a small business.
And, according to a poll taken by TD Bank, only about 30% of small
business owners have a succession plan for their business. This
translates into approximately 700,000 business owners without a plan in
place. As TD’s survey found:
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“many of those who do have a succession plan say they want to
eventually pass their business on to their children, but only half have
actually discussed this with them.”
What does this mean for you, the financial advisor? The number one
conclusion we can draw is that you are missing a great opportunity if you
have not prospected your local business market. They have a need and
you have a solution.
Consider the products you can provide:
Life insurance products for owners and partners to enable
business succession and manage risk;
Group life and health insurance products that can help the small
business owner attract and retain top talent;
Group retirement savings products for owners and employees.
Further, you can advise on the strategy of transferring the value of a
business owner’s life policy, while simultaneously being able to provide
investment products that can convert policy value into income.
Take a look at Appendix A, A Winning Exit Strategy, The Top Ten Tips
by Phil Thompson, business lawyer and corporate counsel, as an
excellent overview of the importance of business exit planning.
The course will review insurance products and the transfer strategy in
order to equip you with a tool kit of knowledge you can use to prospect,
sell, and service the small business market. You will learn to be the better
business insurance advisor.
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