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Business insurability coverage

Business insurability coverage (BIC) is the best way to meet the insurance needs of a growing business. Offered when purchasing life insurance, BIC gives business owners a chance to take out additional life insurance without proof of insurability, based on the growth and fair market value of their business.

These additional life insurance amounts can be used to:

  • Fund a buy-sell agreement
  • Pay the capital gains tax for the increased value of the business
  • Pay off business debt
  • Cover other financial consequences resulting from the death of the business owner
  • Business owners: Sole proprietors, shareholders and partners who are expecting the value of their business to increase significantly over the next 10 years.
  • Businesses that don't have the financial resources to cover financial losses resulting from the death of the business owner.

Caractéristiques

Policyowner
  • The policyowner must be a business corporation that's been in business for at least 3 consecutive years
  • Only one policy per business is allowed
Insured person
  • All business owners can be insured under the same policy and take out their own BIC as long at the policyowner is the business
  • If the proposed insured owns more than one business, each one must take out their own insurance policy
Issue ages (age nearest)
  • 18 - 65
Issue insurance amounts
  • Minimum: $100,000
  • Maximum amount the lesser of:
    • The proposed insured's share of the business at fair market value
    • $3.3 million
    The amount must not be more than 200% of the total life insurance amount
Option period

The business can exercise an option at the anniversary of their policy during the first 10 years.
Amount that can be exercised during each option period

The maximum amount available when exercising this option is the lesser of:

  • The insured's share multiplied by the increase in the fair market value of the business
  • The cumulative BIC minus any additional life insurance amounts previously exercised

The share of the insured at the time the exercise is the lesser of:

  • The percentage of their share when the policy is issued
  • The percentage of their share when the option is exercised

Every time an option is exercised, the financial statements for the last 3 years as well as a document indicating the insured's ownership share of the business must be provided.
Maximum cumulative insurance amount

The maximum cumulative insurance amount is up to 3 times the business insurance coverage amount.


For example, if the BIC is $3 million, the business will be able to exercise up to $9 million in additional life insurance over the first 10 years of the policy, without needing to provide proof of insurability for the insured persons.
Products available when exercising an option

Option can be exercised with these insurance products:


Traditional life insurance

  • T10, T15, T20, T25, T30 and Term to 65
  • Term to 100
  • Whole Life Guaranteed 10, 15 and 20 Pay
  • Whole Life Guaranteed to 65 and to 100

Participating whole life insurance

  • Accelerated Growth (10 Pay, 20 Pay, or to 100)*
  • Estate Enhancer (10 Pay, 20 Pay or to 100)*
  • 5 pay PAR

Universal life insurance

  • T10, T20 and T100

* If the Additional Deposit Option is added, evidence of insurability maybe required. For more details, see the Add or change Additional Deposit Option section on your secure site.
Premium
  • Fixed
  • Payable over 10 years.
    For the 5 pay PAR life insurance, the premium is payable over 5 years.
End of coverage

When the first of the following situations arises:

  • When the policyowner changes
  • When the tenth anniversary of coverage is reached
  • When the insured person dies
  • When the maximum cumulative insurance amount has been exercised
  • When the business is dissolved
  • When the BIC is terminated
  • When the insured person's life insurance coverage is terminated

Work tool

Client document