PARTNERS
For business owners
Corporate-owned life insurance is one of the most effective planning tools available to Ontario incorporated owners, and one of the most often misused. Sized to the actual exposure and held in the right entity, it delivers cash exactly when the tax arrives.
We do not start with a carrier or a policy. We start with your estate tax exposure. Insurance is the last step: the funding for a plan already built around your numbers.
The short answer
Corporate-owned life insurance is a policy owned and paid for by your corporation, usually the holding company. At death, the corporation receives the benefit, and the amount above the policy’s adjusted cost basis is credited to the capital dividend account, so it can be paid to your estate or shareholders as a tax-free capital dividend. It works when the coverage matches your real exposure and sits in the right entity.
A personally owned policy pays its beneficiary tax-free. A corporate-owned policy can do more: the death benefit credits the corporation’s capital dividend account, allowing a tax-free capital dividend to the estate or shareholders.
≈ $860,000
Tax avoided when a $2 million death benefit with a $200,000 cost basis is paid out as a capital dividend instead of a regular dividend taxed at up to 47.74% in Ontario in 2026.
Why the entity matters. A policy held personally, or by the operating company when it belongs in the holding company, can miss the capital dividend account, face creditor exposure and fail to fund succession as intended. Getting ownership right at the start costs far less than correcting it later.
The coverage gap. The most common problem is not missing coverage. It is coverage sized for yesterday’s business. A company that grew from $2 million to $5 million can carry a gap of roughly $740,000 against the tax at death.
Retained earnings put to work. Surplus that is tax-inefficient to withdraw personally can fund premiums inside the holding company, with the death benefit later flowing out through the capital dividend account.
Eight insurers, one recommendation
Eagle Wealth Partners places coverage through HUB Financial, a managing general agency, and compares eight major Canadian life insurers rather than one company’s product shelf. Differences in design, cost and dividend treatment between carriers on a corporate policy can be significant. One quote from one company is not planning.
01
A focused conversation about your corporate structure, assets, family situation and goals. No forms and no product discussion.
02
We map your estate tax exposure and audit existing policies: owner, death benefit, cost basis and capital dividend account treatment.
03
We show the dollar gap between your obligation and your coverage, and the tax effect of your current structure versus the right one.
04
We design the coverage and compare solutions across eight insurers on structure, cost and capital dividend account treatment.
05
We coordinate with your accountant and lawyer, then review the coverage regularly as your business value changes.
The corporation owns and pays for the policy. At death, the tax-free benefit is paid to the corporation, which can use it to pay estate tax, fund a buy-sell and pay a tax-free capital dividend to the estate through the capital dividend account.
At least every few years, and whenever business value grows significantly, a holding company is added, an estate freeze is done or shareholders change.
We work best with owners whose estate would face a tax bill of $200,000 or more at death. If you are unsure, the 3-minute Quick Scan is a good starting point.
Book a free 30-minute call. We will compare your coverage with today’s business value and estate tax. No obligation.
General educational information. Legal, tax and insurance decisions require advice appropriate to your circumstances.
Eagle Wealth Partners
Preserve Wealth. Protect Legacy.
Serving families and business owners across Ontario. Markham, in person and online.
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Sami Majdalani is a licensed life and accident and sickness insurance agent in Ontario. Verify my licence on FSRA’s website. Insurance and segregated fund contracts are placed through HUB Financial, a managing general agency. Eagle Wealth Partners is paid by commission from the insurers whose products clients buy, and may also receive bonuses or other incentives from insurers. A full disclosure of the insurers we represent, how we are paid and any conflicts of interest is available on request.
Segregated fund contracts are individual variable insurance contracts issued by insurance companies. Any amount allocated to a segregated fund is invested at the risk of the contract holder and may increase or decrease in value.
Information on this site is general and is not legal, tax or insurance advice for your situation. Planning is implemented with your legal and tax professionals. © 2026 Eagle Wealth Partners Inc.