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Thursday, March 14, 2019

Your life is stressful enough as a business owner, never mind adding a health scare to the mix. At BVA, our accountants have the experience to answer the “what if” questions and the forethought to structure your estate in a way that provides a sense of security and serenity for you and your family. 

Most people who are employed have Employment Insurance, Workers Compensation, or Short-Term Disability Insurance through their work. For longer term coverage they may receive Canada Pension Plan Disability or coverage from a Long-Term Disability insurance plan that can provide them with regular income while away.

However, a business owner’s situation is very different as they have to actively seek out health insurance options. Here are a few things you should consider including in your estate plan to protect you against a health scare:


1) Worker’s Compensation Board (WCB) Coverage

  • WCB is s a no-fault insurance that provides medical and return to work support services, protection against loss of income and lawsuit protection from employees that are hurt on the job. 
  • It will help provide your employees with the appropriate medical services they need to return to the job, compensate for lost wages and provide lawsuit protection if parties are covered by WCB.
  • To register for WCB go to the WCB.ab.ca website, in the Insurance and premiums section there is a get coverage option. 

2) Short Term Disability Insurance

  • Short term disability insurance protects you from any unexpected illness or accidents that make you unable to work and earn an income for up to 6 months.
  • This is important so that while you are sick you do not need to worry about earning income to pay the bills. This type of insurance will replace between 60% and 85% of your regular income and for self-employed individuals. It can also cover your business expenses if you’re unable to work. 
  • Get disability insurance through a life and health insurance agent.

 3) Long Term Disability Insurance 

  • Like short term disability insurance, long term disability will protect you from any unexpected illness or accident that makes you unable to work and earn income. 
  • Long term will begin when short term disability insurance runs out and will replace 60% to 70% of your normal income.
  • Get disability insurance through a life and health insurance agent.

4) Critical Illness Insurance

  • Critical Illness insurance is a form of health insurance that will help pay bills when you get a critical illness like cancer.
  • Most plans will provide the individual with a lump-sum payments after a waiting period that can be used however they choose. It can be used to help reduce the stress of debt, replace lost wages for a spouse who would like to take time off to care for the individual or bring in additional help for the family. 
  • Get critical illness insurance through your insurance company.

5) Canada Pension Plan (CPP) Disability Payment

  • This is a disability benefit to people who are disabled and cannot work at any job on a regular basis, who have contributed enough to CPP. 
  • This will help reduce the stress of trying to pay the bills while not working. 
  • To apply you will need to fill out the application form (ISP1151) and the medical report (ISP2519) on the Government of Canada website.

6) Savings 

  • When some of the other traditional options for preparing for a potential health issue that may affect your business are not available, one can self-insure by using savings in the business for a rainy day
  • If you are incorporated, you can increase your savings by leaving excess cash in the company that was subject to the reduced tax rate available to small business corporations.
  • Speak with your accountant to discuss a savings strategy that can meet your needs.

7) Life Insurance

  • Life insurance can be used to protect your business. It provides a payout upon the passing of a shareholder or key person of the company.
  • It is important as the life insurance will allow the company to continue on, in a time where a key individual has passed away. It can be used as an estate planning tool as well.
  • Ask your accountant or your life insurance provider to learn more.

8) Private Health Service Plan (PHSP)

  • This is Ideal for small business owners. Essentially you are able to deduct the medical expenses related to a select group (usually as the shareholders and/or their spouses) within the corporation.
  • This is set-up with a third party provider and usually for a small admin fee the company pays for the medical expense and the third party provider sends a reimbursement to the shareholder.
  • Ask your accountant to learn more.

We want to be clear that we are not health insurance salespeople, our goal is only to support you, your family, and your business in becoming more resilient and sustainable. With a little proactive planning, we can help maintain success by avoiding regular pitfalls and unfortunate circumstances. Please reach out to your BVA accountant and have an estate planning conversation.

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