Corporate Insurance Needs Analysis | LCL Financial & Insurance Services

Module 01

Key Person Insurance

Quantifies the financial impact to the business if a key employee or owner died or became critically ill. Uses an income-replacement and cost-of-replacement blended approach, the standard model for valuing key person exposure.

Key Person Profile

Annual compensation to key person salary + bonus + benefits

$

Multiple of compensation 5–10x is common for revenue-generating roles

Estimated cost to recruit & train replacement

$

Revenue directly attributable to key person annual, if applicable

$

Existing Coverage

Current key person life insurance in force

$

Critical illness coverage in force

$

Tip: where the key person is also a shareholder, cross-check this exposure doesn't double-count with the Buy-Sell module — key person value typically reflects business continuity loss, while buy-sell reflects share redemption cost.

Calculated Exposure

Income replacement value (comp × multiple)$0

Recruitment & training cost$0

Total Key Person Exposure$0

Coverage currently in force$0

Coverage Gap Shortfall$0

Methodology: Exposure = (annual compensation × selected multiple) + replacement & training costs. This is a planning estimate — insurability and underwriting will confirm final placement.

Module 02

Buy-Sell Agreement Funding

Determines the life insurance required to fund a shareholder buy-sell agreement so that surviving owners — or the corporation — can redeem a deceased or disabled shareholder's interest without disrupting operations or forcing a fire-sale of assets.

Business Valuation

Total fair market value of business

$

Number of shareholders

Shareholder being valued — ownership %

Funding structure

Existing Funding

Life insurance currently funding this agreement

$

Other liquid funds earmarked for buyout

$

Confirm a written, funded shareholder agreement exists. Unfunded agreements are the single most common gap found in this module — verbal or undocumented buy-sell terms typically can't be enforced cleanly through an estate.

Calculated Exposure

Value of shareholder's interest$0

Funding required (per structure selected)$0

Total Buy-Sell Funding Required$0

Coverage + liquid funds available$0

Coverage Gap Shortfall$0

Corporate redemption structures can often use the Capital Dividend Account (CDA) to pay out tax-free, reducing the gross insurance need — see CDA/COLI module for detail.

Module 03

Business Debt & Loan Coverage

Covers outstanding business debt that may be called or accelerated on the death of an owner or guarantor — including bank operating lines, mortgages, equipment financing, and personally guaranteed obligations.

Outstanding Obligations

Bank operating line / term loan balance

$

Commercial mortgage balance

$

Equipment / leasehold financing balance

$

Personally guaranteed debt by the insured owner

$

Existing Coverage

Creditor / collateral life insurance in force

$

Lenders frequently require this as a covenant condition — confirm whether existing policies are collaterally assigned and whether beneficiary designations are current.

Calculated Exposure

Total Business Debt Exposure$0

Coverage currently in force$0

Coverage Gap Shortfall$0

Module 04

Business Overhead Expense (Disability)

Keeps the business running if an owner is disabled — covers fixed monthly operating expenses for a defined benefit period, distinct from personal disability income coverage.

Monthly Fixed Overhead

Rent / facility costs

$

Employee salaries (non-owner, fixed)

$

Utilities, insurance, leases & other fixed costs

$

Benefit period

Existing Coverage

Overhead expense coverage currently in force monthly benefit

$

Benefit period should reasonably reflect time to find a replacement, sell the business, or wind down operations.

Calculated Exposure

Total monthly fixed overhead$0

Total Overhead Exposure (full benefit period)$0

Coverage in force (over benefit period)$0

Coverage Gap Shortfall$0

Module 05

Capital Dividend Account & Corporate-Owned Life Insurance

Models the tax-efficient value created when a corporation owns life insurance: death benefit proceeds in excess of adjusted cost basis (ACB) credit to the Capital Dividend Account, allowing tax-free distribution to shareholders' estates.

Policy & Estate Inputs

Proposed / in-force death benefit

$

Adjusted cost basis (ACB) at death estimate, declines over time

$

Shareholder's marginal tax rate on dividends if paid as taxable, for comparison

Strategic Context

CDA credit creates a tax-free capital dividend to shareholders or their estate — one of the most efficient corporate wealth-transfer tools available, and a core reason to hold permanent life insurance inside a corporation rather than personally.

Also consider as part of this module: leveraged insurance strategies (collateral lending against cash value), and strategic philanthropy using corporate-owned policies to fund a future charitable gift at a fraction of the eventual donation's after-tax cost.

Capital Dividend Account Credit

Death benefit$0

Less: adjusted cost basis$0

CDA Credit (tax-free capital dividend capacity)$0

Tax saved vs. taxable dividend at marginal rate$0

Summary

Corporate Insurance Audit — Summary Report

Consolidated view across all modules. Use this as the leave-behind discussion document.

Company Name Prepared on —

Module	Exposure	Coverage / Funding	Gap	Status

Overall Position

Total Identified Exposure$0

Total Coverage In Force$0

Net Coverage Gap$0