Page 65 - A Canuck's Guide to Financial Literacy 2020

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policy would be the business and the premiums would be paid by the business to the
insurance company. On the death of the insured individual, the business would get the
working capital needed to continue operating the company and perhaps facilitate in training
programs for the new hire. Key person insurance is also available if the individual were to
suffer a disability.

Loan Protection

Often in small sole proprietorship businesses, lenders will typically require that key
personnel are insured before they could provide a loan. The insurance coverage would
typically be for the duration of the loan. With life insurance, businesses would have an
advantage in obtaining financing.

Business Overhead Insurance

Business overhead expense insurance is meant to help you cover the costs of running your
business if you suffer a disability. This type of insurance benefit would pay the ongoing
business expenses such as wages, electricity, heating, etc. This insurance strategy is
especially useful when a business relies heavily on a single individual, such as in a single
proprietorship. In partnership agreements, the other business owner may be able to help
pay a portion of the expenses.