Business solution
Keep your best people, without a salary bidding war
A key executive who leaves costs 6 to 12 months of salary to replace. Company-funded personal protection — critical illness, disability, life insurance — is a tangible benefit, often more valued than a raise taxed at 50%, and a clear signal: we care about you.
- Concrete benefit, highly visible to the employee
- Controlled, predictable cost for the company
- Combines with key person coverage for the company
Connect with a partner financial security advisor.
SMEs struggle to compete with large companies on salary and full group plans. Yet what keeps a 40-year-old executive is often family security: what happens if they get sick? Many have no individual protection and know it.

The solution
- 1
Target the essential people
Two to five people whose departure would hurt: operations director, head of sales, lead engineer.
- 2
Offer individual protection
Critical illness with return of premium, supplemental disability, permanent life insurance: owned by the employee (taxable benefit) or by the company under an agreement.
- 3
Tie protection to loyalty
Policy ownership transfers to the employee after an agreed number of years, or the premium refund goes to them at maturity: a simple, legal 'golden handcuff'.
- 4
Protect the company in parallel
The same medical underwriting serves key person coverage for the company: two goals, one process.
A 35-employee engineering firm wants to retain three directors. The company buys each a $150,000 critical illness policy with return of premium at 15 years and supplements their group disability with an individual policy. Total cost: about $18,000 a year — less than the cost of a single departure. Policy ownership passes to the directors after 10 years of service.
Illustrative: tax treatment (taxable benefit, deductibility) depends on the chosen structure. Validate with your accountant.
Who it is for
- SMEs with 10 to 200 employees and a few irreplaceable people
- Companies without a full group plan, or wanting to top it up for executives
- Professional practices wanting to retain future partners
- Family businesses with non-family executives to retain
Who at your company is irreplaceable?
A partner advisor builds a protection offer for your key people and quantifies the real cost, tax included.
Salary increase vs company-funded protection
Common mistakes
- 01
Offering the same thing to everyone
Retention targets; the group plan covers everyone. They are two different tools.
- 02
Forgetting the taxable benefit
Without planning, the employee may be surprised by their tax slip. Explain and adjust in advance.
Points to consider
- Premiums paid by the company for an employee are generally a taxable benefit for them, but deductible for the company.
- The ownership transfer agreement must be written and clear.
- A plan reserved for a few employees must respect rules on discriminatory group benefits (here, individual policies).
- Plan for voluntary departure: what happens to the policy?
The solutions presented are for information only and rely on current Canadian and Quebec tax legislation, which may change. Sommet Protection gives no financial, tax or legal advice: the analysis is done by a partner financial security advisor, together with your accountant and legal advisors.
Frequently asked questions
Is it really more effective than a raise?
A $10,000 raise leaves about $5,000 net to an executive at a high marginal rate. $150,000 of protection in case of critical illness, which they would not have bought themselves, makes a bigger mark — and does not index every year.
What if the employee leaves before maturity?
Per the agreement: the company keeps the policy and can reassign it, surrender it, or transfer it to the employee for payment. Everything is set at signing.
Protecting the business you built: the insurance guide for owners and the self-employed
The five risks that close profitable SMEs, and how to fund them for a fraction of their cost.
Read the guide- 8 chapters
- 1. You are the most important asset — and the least insured
- 2. A partner's death: the scenario that divides families
- 3. Disability: three protections, three different roles
- 4. The key person worth 30% of revenue
- 5. Debts, guarantees and lenders
- 6. Tax at death on shares: the founders' file
- 7. A health plan for your incorporated company
- 8. Where to start
The solutions
Key person insurance
Protect the business from losing the person it depends on.
Learn more →Shareholders' agreement
Fund the buyout of a deceased or disabled partner's shares.
Learn more →Self-employed disability
Replace your income when you can no longer work.
Learn more →Business overhead expense
Pay rent, salaries and loans during your disability.
Learn more →Business critical illness
A lump sum for the company or owner at diagnosis.
Learn more →Tax at death on your shares
Fund the tax on your company's value so the successors don't have to sell.
Learn more →Business succession and transfer
Secure the transfer to family or executives, whatever happens to the founder.
Learn more →Loans and personal guarantees
So the business's debt never becomes your family's.
Learn more →
Let's talk about your business
A partner SME specialist advisor calls you back for a no-fee diagnosis. Bring your shareholders' agreement and financial statements: the advisor quantifies with you.
