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Underhill Geomatics Ltd.

Industry: Land Surveyors and Geomatic Engineers
Client Since: 2000
Services Provided: Key Person and Shareholder Protection

The Challenge

Underhill has operated continuously since 1913. One of the reasons for its longevity is a well thought out succession plan. Potential successors are identified early with ownership interests transferred to a new generation whenever a current partner retires. To ensure that there is sufficient cash on hand and that the purchase takes place in a tax efficient manner, Underhill purchases life insurance on each shareholder. 

However, the previous solutions had all been temporary in nature. The product chosen to date had been term insurance which renewed at increasingly expensive premiums with the partners choosing to continue working into their sixties and sometimes seventies.

Our Approach

We conducted a thorough review of the needs of the corporation including identifying anticipated retirement dates and post-retirement buy-out periods for the shares. Once we determined the time frame under consideration for each current shareholder, we made recommendations based on expected tenure, current shareholdings and current health. 

At the conclusion of our analysis, we:

  • Retained an existing ten-year term insurance for one shareholder and accepted the higher renewal premium due to the fact he was uninsurable. 
  • Applied for a new ten year term insurance policy which offered a lower premium than accepting the renewal of the existing coverage despite the fact that there were some health concerns
  • Converted an existing ten year term policy into level term to age 100 coverage to avoid two anticipated future renewal increases
  • Purchased new level premium to age 100 insurance for all remaining shareholders which offer the flexibility to take future premium holidays

The Results

  • The result was that based on expected retirement ages and share purchase timelines, Underhill will not experience any large life insurance premium increases in the future on existing policies.
  • The new policies on the younger shareholders will increase in value over time to help address future growth in share value.
  • The permanent nature of the policies on the younger shareholders allows Underhill to take premium holidays.
  • Underhill now has a policy of applying for permanent, level premium coverage for all new shareholders to avoid future issues with poor health and insurability as well as to avoid large premium renewal increases associated with term coverage.

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Each business is unique with its own culture and priorities. Its health and wellness programs should reflect the diverse needs of the business and its people. We help employers to create a comprehensive benefits strategy that allows them to cater for their peoples’ needs, attract and retain top talent, and create a sustainable environment in which their organization and employees can flourish.

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As an employer, you want to ensure your employees are happy in both their professional and personal lives. That’s why you need a strategic, data driven approach that encompasses this objective whilst also remaining within your budget constraints.

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Protecting your business, your people, and their families when the unexpected happens is key to ensuring financial stability to your organization, and all its team members.