Transferring a Corporate Insurance Policy Can Cause a Tax Hit

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Philip Porado

Updated Dec 15, 2021

Philip Porado

Updated Dec 15, 2021

You founded a business, put everything into it for decades and now you’re ready to sell your company shares and move on.

But, when you sell those shares, you should still make sure to walk away with a very valuable asset — the “key person” insurance policy the company took out on you in case you passed away.

A majority of Canada’s baby-boom era business owners are at a crossroads, with 76% saying they plan to sell out or transfer ownership to the next generation within the next decade, according to a Canadian Federation of Independent Business report. That is over $2 trillion in business assets that will likely change hands within the next ten years.

If you’re among those founders and want to hang on to that insurance policy, you should know that transferring it is doable, but can come with a tax hit.

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Philip Porado Former Senior Editor

Philip Porado was formerly a senior editor at Money.ca and has written for numerous financial publications in Canada and the U.S.

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