There is much we can learn from listening to other people’s stories, exploring professions and paths different than our own. This post is the next in a series of spotlights on entrepreneurship and small businesses. This month we spoke with David Miklas, an Insurance Advisor at  Stewart Financial, and learned the importance of proper financial and insurance planning.  


David completed an engineering degree at the University of Toronto before pursuing a Master’s of Business Administration at McMaster University. Through the co-op program, he was able to gain first hand experience on the trading floor of Scotiabank. There he gained a wealth of knowledge about the financial industry, but also learned that he desired more flexibility than the desk job could offer. David then began working at Stewart Financial, a boutique financial planning and investment firm, where he found his niche working in the insurance side of financial planning. 


Why should someone care about insurance planning? How is insurance tied to financial planning? 

Insurance is a part of your financial planning that can be used to help mitigate your risk exposure. Think of it as a ‘defensive’ play rather than an ‘offensive” play like traditional financial planning.  

Three major types of insurance that can be important for financial planning include: 

  1. Life Insurance – can be used to cover a liquidity need in the event of a spouse or business partner’s death;
  2. Disability Insurance – can be used as an income replacement vehicle in the event you become disabled and cannot work; 
  3. Critical Illness Insurance – can be used if you get sick with a critical illness such as cancer or a stroke; 

Essentially, insurance can be a means of ensuring your financial plan stays the course in the event of a circumstance you can’t foresee!


How can small business owners particularly benefit from proper insurance planning?         

Most people are aware of the benefits for an individual purchasing the insurance options listed above. Being a business owner brings its own considerations as to what the right approach could be. 

  • Tax Planning: If you have a large amount of retained earnings in your business, when you pass away, your beneficiaries would need to pay a sizeable tax bill in order to extract these funds from the corporation. A properly planned life insurance strategy can help address these tax concerns. 
  • Joint Ownership: If your business partner passes away, you may be put in a position where you need to buy that partner’s share from their beneficiary. If you don’t have the cash or want to take out a costly loan, it can be a popular decision for business owners to take out life insurance policies on each other so that they can buy out the other person’s beneficiary if the time comes. 
  • Key Person Life Insurance:  If you have employees in your business who are vital to the success of your business you may wish to obtain Key Person Life Insurance. For example, let’s say you have an employee who generates 50% of the sales in your company , if this person were to pass away it would have a huge effect on the bottom line of your business. So many business owners will purchase a life insurance policy on that employee to allow time for the company to adjust without experiencing a major financial loss.  


Working closely with other Professionals 

If you are working with an insurance advisor, you should ensure their advice is integrated with other key professionals you may have including your lawyer, accountant, or financial advisor. This is one piece of the puzzle that can help ensure your business is at its strongest financial health.