Critical illness insurance (CII) is often seen as a health solution for individual clients. If someone experiences an illness covered by their CII policy and survives the waiting period, they receive a lump sum payment to put toward their medical and other bills.

But CII also has a business purpose.

In some organizations, certain people — a business owner or a long-time employee — are vital to success. A serious illness on their part could mean serious trouble for a business. That’s where CII comes in. CII helps protect businesses from the financial impact of a key employee’s major health event. And if a policy includes a return of premium on cancellation or expiry (ROPc/e) benefit, after 15 years, as long as the employee hasn’t experienced a covered critical illness, the policy owner can cancel coverage for a return of all returnable premiums paid to that date.

Shared ownership of critical illness insurance is the newest case study in Sun Life Financial’s Canadian Health Insurance Tax Guide. It compares the tax consequences associated with:

  • three ways of owning a CII policy with ROPc/e (personal, corporate and shared), and
  • putting the ROPc/e benefit in the business owner’s hands shortly before the business owner’s anticipated retirement date.

Could a business owner use the ROPc/e benefit for personal purposes such as helping to fund their retirement? If so, how would each ownership arrangement affect the business owner’s tax position? Find out all this and more in the newest case study or talk with your Sun Life Sales Director.

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