Grouped Critical Illness insurance

Grouped Critical Illness Insurance

“Grouped” Critical illness insurance

There are many advantages available to both you, the employer, and your employees in setting up individual critical illness insurance policies under a “grouped” arrangement. In addition to providing your employees with individual critical illness insurance, the premium paid by you is treated as a tax-deductible business expense*.
Take a look at how a “grouped” arrangement can help you save money and offer your employees quality individual critical illness insurance coverage!

Benefits to you, as the employer

Employer-paid premium is treated as a tax-deductible business expense*
Stable and predictable business expense
May help attract and retain key employees
Provides funds to employees at a critical time in their lives
A group premium reduction may be available if three or more employees apply together

Benefits to the employee

Quality individual non-cancellable coverage
No premium payment while covered under the “grouped” individual critical illness insurance arrangement
Critical illness benefit may be tax-free**
Premium is not a taxable employer benefit to the employee (except for policies on residents of Quebec where Quebec provincial tax law applies)**
Coverage may be portable if the employee leaves the company

*The Canada Revenue Agency (CRA) has stated in some technical interpretations that “grouped” individual critical illness insurance (CI) policies would be viewed as a group sickness or accident plan where the policies only provide for CI protection and do not include any return of premium (ROP) benefits. This tax treatment will arise if the coverage is considered “accident and sickness” insurance. The CRA generally accepts that CI policies providing no ROP benefits are accident and sickness policies. The CRA has not provided its view regarding the tax treatment of CI policies outside Quebec which include ROP benefits. Technical interpretations are not law and are not binding upon the CRA.
**Provided the policy is “accident and sickness” insurance for income tax purposes.

Eligibility

A “grouped” individual critical illness insurance arrangement must include at least two employees
Owners/shareholders may be eligible for coverage, in reference to the salary payments they receive from the corporation
It can be set up for all employees or a class of employees
If offered to a class of employees, coverage must be offered to all the employees within the selected class (e.g. administrative staff, senior executives)
The tax information provided in this document is of a general nature only and should not be relied upon as providing legal or tax advice. Please consult with your independent tax and legal advisor about your particular circumstances.

The cost savings!
It is generally less expensive for you, as the employer, to pay the premium under a “grouped” individual critical illness insurance arrangement than it would be to increase your employees’ income to allow them to purchase the individual coverage on their own.