CLHIA-ACCAP - Consumer Information

A guide to life insurance

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30 TODAY'S WORLD - TODAY'S NEEDS Self-employed individuals have a need to protect their stake in their businesses. This means liability and disability insurance, group insurance for employees, and life insurance for themselves and their key people. Here's how life insurance can be used: • As collateral for a business loan, sometimes at the request of the financial institution making the loan. If it is necessary to assign the policy as security, a portion of the premium is deductible as a business expense. • To fund a buy-sell agreement, and to provide surviving partners or shareholders with the cash to buy out the deceased's share and to keep the business going. • To insure the key people in the company. Life insurance is often used as a safeguard against financial loss to the firm caused by the death of the owner, a partner or a key employee. • To provide protection to the business person's family against the debts of the company. Unless the company is set up as a limited company, the individu- al (and his or her estate) assumes full personal responsibility for the business debts. Self-employment: Businesses small and large Did you know that your mortgage or car loan may become fully payable upon your death? Creditors group insurance offered through lending institutions and car dealers repays the loan in the event of your death and sometimes disability. At the time of a major credit purchase, you may be advised of this option. Before you sign, be aware of any restrictions or exclusions. Some policies may not pay a claim if it's related to a pre-existing condition or suicide. There may be age limits. Also, check to see if your existing life, accident, disability or sickness insurance is sufficient to pay off your debts, or could be increased to do so. Protecting your debts: Creditors group insurance

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