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As mentioned in previous article, critical illness insurance is a type of insurance that pays a tax free lump sum benefit if the insured diagnosis of critical illnesses covered under the policy. The benefit is intended to help insured persons maintain their quality of life and economic independence after suffering a potentially fatal disease. In this article we will discuss the taxation of critical illness insurance.

Disease Policy Graves is considered an accident and sickness policy.

a) If the policyholder, the insured, the premium payer and beneficiary are the same person, premiums are not tax deductible and earnings are tax free.

b) A key person

If premiums are not deducted as business expenses, the benefit is tax free if the insured person is appointed as a key beneficiary. If the business is benefiting from the premium then the policy is tax deductible and benefits is taxable.

c) small business owners insurance against critical illness on themselves.

Setting the property of a private company Corporation, a major concern is that there is a mechanism similar to the capital dividend account to permit the benefits to be paid in a tax-free basis to shareholders. As a result, critical illness benefit payable to a private company can only be paid either as income from work or dividends taxable persons.

Therefore, could have important implications where critical illness benefit intended to be used by shareholders as part of a purchase / sale agreement or to fund personal expenses arising from critical illness.

4. Corporation illness insurance critical

Some employers have incorporated coverage of serious illness in a plan to replace the loss of pay if premiums for coverage of these are deductible as business expenses for the employer that the benefit is not taxable to the employee because they are not paid regularly. If the worker suffers a serious illness, benefits will be paid directly to the employee under the critical illness policy.

Some insurance companies are now offering a policy that includes coverage of serious illness and life insurance. The application is for both insured benefits in the time of sale. A premium is paid and funds of all policy benefits and made even more complicated in the imposition of the policy.

I hope this information will help. For more information, please visit my homepage at:

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I have been studying natural remedies for disease prevention for over 20 years and working as a financial consultant since 1990

Article Source: ArticlesBase.com – Critical Illness Insurance 07 – Taxation of Critical Illness Policies