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Fair Market Valuation (FMV)

Fair Market Valuation (FMV)

for Business Owners

Fair Market Valuation

The Fair Market Valuation (FMV) of a life insurance policy can be used for the purposes of valuing policies transferred to a corporation prior to March 22, 2016, for valuing a corporation’s shares, for divorce calculations for marital property, for transfers from corporately owned to personal, for US Citizens owning Canadian policies residing in Canada and vice versa, and for charitable giving.

GBL is a recognized leader in FMV.

Are you a good candidate for FMV?

An actuarial calculation and certification is recommended to determine the FMV on your life insurance policy in the following situations:

  • A business owner or incorporated professional wishes to transfer a personally owned policy to the corporation so that future premiums can be paid with corporate dollars;
  • In circumstances where there is gifting of insurance policies to registered charities, a Fair Market Valuation ensures that a tax receipt is issued for the maximum allowable amount;
  • A corporation freezes or transfers assets from an operating company to a holding or sister company;
  • The sale of a business where the business owns insurance policies;
  • A marriage breakdown.

Business owners considering FMV as a valuation strategy should consult their financial planner.

Key Takeaways

  • The policy becomes an asset of the corporation and is therefore exposed to creditors, so it does not enjoy the same level of creditor protection as many personally owned policies do.
  • The CSV of the policy is considered a passive asset of the corporation. Care should be taken that the policy does not impede the owner’s use of their capital gains exemption on the sale of their company.
  • If the shares of the company are subsequently sold, the business owner may wish to transfer the policy to personal ownership, with potential income tax consequences.
    Holding companies are preferred vehicles for owning life insurance policies rather than operating companies.
  • It is recommended that a policy transferred to a corporation for the FMV should not be cancelled within a short timeframe following the transaction.


My overall experience dealing with GBL has been "exceptional." I have and will continue to refer you to anyone in need of Actuarial Services.

Yves Bergeron, FSA, FCIA
Sorrell Financial

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