Key points
- Key person and buy-sell cover protect the company and its owners if someone central dies or can't work.
- Overhead insurance pays fixed business costs while the owner is disabled.
- Group benefits and a group RRSP are part of how employers pay staff, with their own payroll tax rules.
- Life insurance premiums a company pays are generally not deductible; death benefits to a private corporation can flow through the capital dividend account.
- Property, liability and vehicle cover come from a licensed broker; this page is about cover for people.
Which cover answers which risk
| Risk | Cover often discussed |
|---|---|
| An owner or key employee dies | Key person life insurance; partner and shareholder (buy-sell) cover |
| The owner can't work for months | Overhead insurance for the business; disability insurance for the owner's income |
| Hiring and keeping staff | Group benefits; a group RRSP |
| Tax at death and passing the business on | Corporate-owned life insurance; estate planning |
Key person cover
A key person policy is owned and paid for by the company on the life of someone it depends on: a founder who brings in the work, a manager with the client relationships, a partner whose name is on the loans. If that person dies, the company receives the money to hire, repay debt or wind down in order. Some policies also cover disability or critical illness of the key person.
Business insurance and tax
- Life insurance the company owns, for key person or buy-sell purposes: the premiums are generally not deductible. A limited deduction can apply when a lender requires the policy as collateral for a business loan.
- Death benefits to a private corporation are received tax-free, and the amount above the policy's adjusted cost basis is added to the capital dividend account, from which tax-free capital dividends can be paid to shareholders.
- Overhead expense insurance: the premiums are generally treated as a deductible business expense and the benefits as business income.
- Group benefits: the employer's premiums are generally deductible to the business; for employees, health and dental plans are generally not a taxable benefit, while group term life and some other plans are.
- A policy the company pays for that you own personally can be a taxable benefit to you as a shareholder or employee.
Where Finvo fits
We record premiums and policies in your company's books, track the capital dividend account, set up taxable benefits on payroll, and work alongside your lawyer on shareholder agreements. Our risk management service looks at the accounting side of business risk.
Finvo itself does not sell insurance or give insurance advice. Finvo can connect you with a licensed insurance agent from our partner network who can help with insurance advice if you need it. The licensed agent advises on products and coverage; Finvo covers the tax side. Insurance and other specialists are joining Finvo as contractors, so a group of consultants can work on your file together and you don't have to go from place to place.
Whoever you deal with, you can check that an agent is licensed: in British Columbia with the Insurance Council of BC licensee directory, and in Alberta with the Alberta Insurance Council agent lookup.
This page is general information, checked against the sources below on 5 Nov 2026. Every policy and plan has its own terms; it isn't insurance, tax, investment or legal advice for your situation.