Critical Illness Insurance: Shared Ownership

Posted on August 1, 2012 and updated August 1, 2012 in Critical Illness, Insurance Types, Life Insurance Canada News 2 min read
Luciano Meirelles  Vov e Vov copy

Critical illness insurance shared ownership plans are designed for business people who want to obtain critical illness coverage and maximize any potential tax benefits.

The company must be a corporation with one or more shareholders and the company must have surplus cash that is not required to operate the business.

The plan is essentially set up as follows:

  1. The corporation pays the premiums for the critical illness coverage.
  2. The key person pays the premiums for the flexible return-of-premium rider and the return-of-premium upon death rider.

However, the corporation must be designated as a beneficiary of the critical illness insurance and the key person must be designated as the beneficiary of the flexible return-of-premium benefit and the return-of-premium upon death benefit

The tax benefit to the key person is that, if he or she remains healthy, the return-of-premium benefit is paid out tax-free to the individual once it expires. If the person develops a Critical Illness, the benefit is paid out to the company.

This is a pretty advance concept and tax rules can change, so it’s important to check with a licensed insurance broker for more details. You may also want to consult your tax advisor.

For more details on critical illness Insurance in Canada, please contact us at 1.866.899.4849 or visit our Critical Illness Insurance Quote Page.

avatar