FAQ

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Travel Insurance

What are the characteristics of a Good Travel Insurance Policy?

  • Easy to purchase.
  • Flexible and adjustable to fit your changing plans.
  • Tailored to your needs, age, health condition, and trip duration.
  • Offered by a reputable and trustworthy provider
  • Provides 24/7 medical assistance, so you can rely on it in emergencies
  • Often purchasable as a family plan, although travel insurance is calculated based on individual details.

Is medical travel insurance necessary when traveling within Canada?

Government health insurance plans may have limits on the reimbursement of the emergency medical expenses incurred while in another province or territory. For example, air and ground ambulance costs, emergency dental treatment and prescription drugs might not be covered outside your province or territory of residence. For maximum protection, you can purchase additional medical coverage even while travelling within Canada.

Travel insurance helps protect you from unexpected costs while travelling. This can include emergency medical expenses, trip cancellation and trip interruption costs, delayed or lost baggage, and flight and travel accidents.

Can non-medical incidents also be covered by travel insurance?

Yes, many travel insurance providers offer the option to add non-medical coverage to your policy. These types of coverage are designed for situations that don’t directly affect your physical health but can disrupt your travel plans, such as:

  • Trip cancellation or flight delays
  • Lost or damaged baggage
  • Trip cancellation due to natural disasters or work-related reasons
  • Visa denial
  • Travel bans issued by the Government of Canada

By adding this type of coverage, you can protect yourself financially against additional costs and potential losses caused by non-medical issues.

If my trip is canceled due to visa denial, will non-medical insurance cover the loss?

In many non-medical travel insurance plans, visa denial is considered a valid reason for reimbursement under the Trip Cancellation section, provided that:

  • You applied for your visa on time
  • The reason for denial was beyond your control
  • You can provide official documentation from the embassy or consulate

With this type of coverage, you may be reimbursed for non-refundable travel expenses, such as airline tickets or hotel prepayments, up to the policy’s specified limit.

When is the best time to purchase travel insurance?

Many insurance plans may be purchased right up until the date of departure, however, if you are considering coverage for trip cancellation it is recommended to purchase insurance on the day your trip is booked.

What does travel insurance cover?

Travel insurance can include coverage for hospital and physician services, paramedical services, ambulance and emergency medical return home, and more. In addition, travel insurance can also help with unexpected costs from delayed or lost baggage, trip cancellation and trip interruption, and flight and travel accidents.

What is an insurance waiting period?

Every insurance policy has a waiting period during which the coverage is not yet active and has no value. For visitor insurance to Canada, this waiting period typically ranges from 48 hours, one week, two weeks, or a few months depending on the policy type, age, start date, and the time of purchase. It is important to pay close attention to the timing of your insurance purchase and ensure that the coverage duration and amount are suitable for your needs. It is strongly recommended to purchase insurance as soon as your travel plans are confirmed. This way, you can be covered for both accidents and illnesses without worry or delay. There have been many cases where individuals faced unfortunate incidents during the waiting period and, despite having insurance, were not covered because the policy had not yet become active. The saying “Don’t put off until tomorrow what you can do today” truly applies here.

Does my provincial health insurance cover my medical expenses in abroad?

Provincial or territorial government health insurance plans may pay only a small portion of medical expenses incurred abroad. They might not pay for ambulance services, prescription drugs, fees charged by private hospitals or facilities or emergency dental treatment. In addition, many hospitals abroad may require immediate cash payment or proof of insurance, which our assistance center would help coordinate.

Does my provincial health insurance cover my medical expenses outside my home province?

Provincial health insurance typically covers medical expenses only within your home province and may provide limited or no coverage when you travel to other provinces. Therefore, to ensure full protection while traveling within Canada, it is recommended to purchase interprovincial travel insurance to cover unexpected medical expenses outside your home province.

Should Canadians get travel insurance for trips to other provinces/territories, or only for trips outside Canada?

For maximum protection, Canadians should have travel insurance whenever they leave their home province/territory – even if they’re staying in Canada.

Provincial/territorial health insurance plans limit reimbursement of emergency medical expenses incurred in another province/territory and may not cover costs such as air and ground ambulance transportation, emergency dental treatment and prescription drugs. In addition, most do not provide emergency return home benefits.

How to Get Covered by Hazardous sports insurance?

  • 1. Complete the online assessment form with your travel details and activity types
  • 2. Select the hazardous sports you wish to include in your policy
  • 3. Receive a quote and get your insurance policy instantly upon payment

Is medical travel insurance necessary when travelling within Canada?

Government health insurance plans do have limits on the reimbursement of the emergency medical expenses incurred while in another province.

For example, air and ground ambulance costs, emergency dental treatment and prescription drugs might not be covered outside your province of residence.

For maximum protection, purchase additional medical coverage even while travelling within Canada.

Can I purchase one insurance policy that covers both interprovincial and international travel?

Yes, you can. Here’s an example to clarify:

Mr. Keshvari plans to travel to Toronto next month to visit his first child. From there, he will travel to Quebec to see his second child. After a few days, they will all head to Alberta, then continue on to Vancouver to visit the Rocky Mountains. His final destination is Cuba, where he will stay for a week before returning to Canada and eventually flying back to Iran.

After filling out the insurance form at the top of this page, Mr. Keshvari will receive comprehensive coverage from us. This policy will begin at the airport in Iran and cover all provinces in Canada he visits with his children, plus Cuba and the return trip to Iran.
Throughout his travels, he will be covered for COVID-19 in Canada, as well as full accident and illness coverage both within Canada and in Cuba.

What happens if I’ve booked a trip and one of my family members becomes ill or passes away?

Trip Cancellation and Interruption insurance benefits may be payable in the event that any member of your immediate family develops a medical condition unexpectedly or passes away and you can no longer travel or you need to end your trip early.

Do you need travel insurance while travelling to the USA from Canada?

Although we share a border with the States, your provincial or territorial health plan may not cover your medical fees or may only cover a small portion when travelling outside of Canada. Whether you are planning a shorter trip or a longer stay, medical costs in the US can be very expensive and can add up quickly depending on the medical care required.

Do your travel insurance plans cover personal belongings?

All Inclusive plan contains Baggage Loss, Damage & Delay insurance. There are benefits available in the event that any item or set of items contained in your baggage is lost or damaged. Conditions, limitations, exclusions apply, please see the policy for full details.

Do your travel insurance plans cover theft of baggage?

All Inclusive plan contains Baggage Loss, Damage & Delay insurance. There are benefits available in the event of baggage theft or lost/stolen travel documentation (passport, driver’s license, visa). It is important in these instances to be prudent and report any losses to the authorities so full documentation of the situation is recorded. Conditions, limitations, exclusions apply, please see the policy for full details.

Do your travel insurance plans cover flight changes?

Any plan containing Trip Cancellation and Interruption insurance contains benefits for misconnection and travel disruptions resulting from common carrier schedule changes.

Do your travel insurance plans cover the cost if I need to cancel my accommodation?

If your hotel or accommodation needs to be cancelled due to a covered event, Trip Cancellation and Interruption insurance may pay up to the covered amount for the prepaid unused portion, that is non-refundable and non-transferable to another travel date.

Is travel insurance necessary for Europe?

When you travel to Europe, your government health insurance plan may only provide limited coverage, which can leave you with unexpected out-of-pocket expenses. Purchasing travel insurance can help ensure you have proper coverage in case of a medical emergency, trip cancellation or interruption.

Can I purchase travel insurance for an unaccompanied minor?

Travel insurance can be purchased for unaccompanied minors, given they meet the standard eligibility requirements. Please see the policy for full details.

How far in advance before my trip can I buy your travel insurance plans?

Any plan containing emergency medical insurance may be purchased 180 days prior to your departure date. Plans containing any other type of insurance may be purchased up to 365 days prior to departure.

Can I purchase your travel insurance plans after booking my trip?

Yes, most plans may be purchased up to and including the date of departure. For Trip Cancellation and Interruption protection, we recommend maximizing your length of coverage and purchasing as soon as possible, in the event you need to cancel your trip.

What is COVID-19 travel insurance?

COVID-19 travel insurance provides coverage in the event you experience unexpected costs in relation to the Coronavirus.

What does the COVID-19 Pandemic Travel Insurance plan cover?

The COVID-19 Pandemic Travel Insurance plan covers COVID-19 related emergency medical expenses, non COVID-19 related emergency medical benefits, and trip interruption coverage in the event you need to self-isolate or quarantine during your trip.

How can I purchase cheaper travel insurance?

By adjusting the deductible amount, you can reduce the cost of your insurance. This means if the policyholder is willing to pay a lower premium in exchange for assuming part of the risk, a deductible can be an effective solution.
Accepting a deductible means buying insurance at a lower cost, but in case of a claim, the insured is responsible for paying costs up to the deductible amount, and the insurance company covers the excess.

However, this decision should always be made in consultation with an insurance specialist, because lack of attention may lead to dissatisfaction at the time of a claim.
It’s also important to note that for travel insurance outside of Canada, the deductible amount is usually stated in USD.

What if I change my mind after I apply?

10-Day Free Look – If you notify us within 10 days of your purchase date, as indicated on your confirmation, that you are not completely satisfied with your policy, we will provide a full refund if you have not already departed on your trip and there is no claim in progress. Refunds are only available when receives your request for a refund before your departure date.

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Pregnancy Insurance

Does visitor insurance cover childbirth?

No. Only emergency pregnancy events are included

Can I get maternity insurance while pregnant?

If you are a pregnant visitor to Canada and not eligible for government health insurance, you can apply for private insurance. Your policy will cover emergency pregnancy-related issues—such as bleeding, abdominal pain, or miscarriage—up to the 32nd week of pregnancy. However, it does not cover the cost of childbirth.

When should I buy?

Ideally before pregnancy or early in pregnancy—some plans have waiting periods.

Is vaginal or C-section delivery free for visitors to Canada?

No. Pregnant visitors to Canada are not covered for delivery or prenatal care unless they have private insurance that includes such benefits—which is rare.

Are private postpartum benefits available?

Residential mothers need complimentary insurance for private rooms or extras not covered by GHIP.

Is pregnancy considered a pre-existing medical condition for insurance purposes?

According to Canadian travel insurance providers, emergency pregnancy-related issues are not considered pre-existing conditions.

Is initial insurance available for newborn babies?

Yes, some insurance companies provide newborn coverage under specific conditions.

Does my regular travel insurance cover childbirth and newborn delivery?

No, regular travel insurance does not include coverage for childbirth or newborn-related costs.

What is the waiting period for pregnancy coverage under student insurance?

If you’re traveling to Canada and not yet pregnant, your insurance will have a two-month waiting period. If you become pregnant during this time, the policy will not cover any pregnancy-related emergencies.

Does maternity insurance also cover newborns?

Coverage for newborns depends on the type of insurance plan purchased by the insured individual.

Can a pregnant visitor to Canada get additional maternity insurance for prenatal care?

Yes. If you’re a pregnant visitor or student and not covered by Canadian government insurance (GHIP), your private maternity plan typically includes emergency medical situations up to the 31st week—such as bleeding, premature labor, miscarriage, or abdominal pain.

I’m visiting Canada and planning to give birth here. I’m not yet pregnant. Is there maternity insurance available that covers delivery and related expenses?

Yes, some plans may cover eligible pregnant women, but policies must be purchased before pregnancy begins, and delivery is typically not included unless specifically stated.

I’m a newly arrived pregnant immigrant in Canada. My provincial health coverage has a 90-day waiting period. Are there any options for pregnancy insurance?

Yes. You are eligible for this type of insurance. It’s recommended to purchase short-term health insurance to cover your pregnancy and other emergencies during the waiting period for your provincial coverage to begin.

I’m a newly arrived immigrant in Canada with a work permit. Are there maternity insurance options for me?

Yes, you are eligible. It’s recommended to purchase short-term health insurance during the waiting period for your GHIP to begin. This will protect you against both pregnancy-related and other unexpected medical costs.

Can I get pregnancy coverage with a Work or Study Permit?

Yes—if you’re uninsured under GHIP, you’re eligible for emergency pregnancy coverage.

If you are a pregnant Canadian resident or citizen…

Have you considered how you could access private hospital facilities or a semi-private room when your baby is born?

In Canada, all expectant mothers with government health coverage (GHIP or OHIP in Ontario) are entitled to use a standard public hospital room for childbirth.

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International Student Health Insurance

Is insurance mandatory for obtaining a study permit?

It may not be mandatory for your study permit, but it is required by most schools and provinces.

Are pre-existing conditions covered?

Yes, if the condition is stable (no changes in symptoms, treatment, or medication) for at least 90 days prior to coverage start.

Can I travel during my studies?

Yes. Most plans allow limited travel within Canada and internationally (e.g., 15–30 days abroad).

Does it include mental health support?

Yes. Many plans include access to licensed counseling and telemedicine platforms.

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Complementary Health Insurance

Who Can Apply for a Valid complementary Health Insurance in Canada?

In Canada, supplementary health insurance is not universally available and coverage varies from person to person. Individuals who can typically apply for valid supplementary health insurance generally fall into one of the following categories:

  1. Individuals with Provincial Health Insurance: Supplementary health insurance is usually offered as an additional option for those who already have basic provincial health coverage. These individuals can choose add-on benefits to enhance their medical coverage through a supplementary insurance plan.
  2. Employers and Work Groups: Some employers and professional groups may offer supplementary health insurance to their members. These types of insurance are usually provided on a group basis within a company or organization, and insurance providers may offer discounts and special coverage options.

New immigrants to Canada may also require supplementary health insurance, but they typically need to first obtain provincial health insurance. For more detailed information and to choose the best supplementary health insurance option, we recommend contacting us. We’ll assess your personal and financial needs to help you select the most suitable plan.

What doesn’t my government plan cover?

  • Every province and territory have a different health plan. However, the following are usually not covered by government health insurance plans:
  • Prescription drugs*
  • Dental check-ups and treatment
  • Hospital stays
  • Specialized care, including speech therapists or pathologists, physical therapists, chiropractors, and many more
  • Homecare and nursing
  • Medical supplies and equipment
  • Emergency medical health treatment for travelers
  • Personal emergency response
  • Hearing aids
  • Accidental death and dismemberment
  • Catastrophic coverage

What additional services does complementary health insurance offer compared to provincial health insurance?

In Canada, complementary health insurance provides additional coverage beyond what is offered by the government health insurance plan (GHIP). These services may vary depending on the specific plan, but generally include the following:

  • Dental Care: Complementary health insurance typically covers dental services such as check-ups, fillings, restorations, and oral surgery.
  • Vision Care: Some complementary plans include coverage for eye exams, prescription glasses, or contact lenses.
  • Prescription Drugs: Certain complementary insurance plans cover prescribed medications, helping to reduce out-of-pocket drug expenses.
  • Medical Equipment and Devices: Some plans may cover medical aids such as electric scooters or other assistive equipment.
  • Specialist and Physician Services: Complementary insurance may allow access to a wider range of healthcare professionals, including psychologists, and may cover necessary screenings such as prostate exams for men.
  • Additional Hospital Services: Some plans offer access to private hospital rooms or additional in-hospital services not covered by provincial insurance.

What should I get health insurance if I am healthful?

No one likes to think about the possibility of having serious health issues. Unfortunately, if an accident or illness were to happen to you or a member of your family, the cost of medication, treatment and other expenses could add up to a considerable amount. Even treatment for common illnesses, like medication for back pain or therapy for a sprain, can be costly. Supplemental health insurance can help cover medical costs that may not be covered by your provincial health plan.

While critical illnesses such as cancer1, stroke and heart attacks2 are the serious causes of death in Canada, there are many common illnesses such as back problems, diabetes, epilepsy or high cholesterol that may also have significant financial consequences.

I have other financial priorities. Why should I get complemental Health insurance?

Every year, you could pay thousands of dollars in unexpected medical and dental expenses if you don’t have a health plan. You could also be especially financially vulnerable in the event you suffer a serious illness or injury. Or you could end up having to use up your savings on private care, because your government health insurance plan, unfortunately, may only offer limited coverage for home nursing care and in-home assistance.

From just dollars a day, you can have comprehensive coverage that you and your family simply shouldn’t be without. And, if you’re self-employed or are an employee of your own business, health and dental premiums may be a non-taxable benefit and a tax-deductible expense. For others, the premiums may qualify as a medical expense and create a tax credit.

Are there other types of health insurance I may need?
There are four types of health insurance to consider:

  1. Personal health insurance, which covers eligible medical, dental and other healthcare expenses.
  2. Disability insurance, which replaces part of your income if you can’t work.
  3. Critical illness insurance, which covers eligible expenses related to a covered critical illness.
  4. Long-term care insurance, which covers the cost of your care when you can’t perform two or more activities of daily living. Or, when you need ongoing supervision because your mental abilities have weakened. 

Should I really have complementary health insurance when I’d only make a few claim a year?
Although the dental, drug and vision components of a health plan are typically the most used benefits, the long-term value lies in the comfort of knowing that you have supplemental health insurance that may help beyond what the government health system provides.

Do the Dental plans cover wisdom teeth removal?

Wisdom teeth removal falls under oral surgery (extensive services). Procedures related to oral surgery require x-rays and a treatment plan to be submitted to Manulife for assessment by your dentist before any work or treatment begins. You will then be advised of the eligibility of the treatment.

Do I have to answer a medical questionnaire?

Five of the eight plans require no medical questionnaire at the time of application. These plans include the Base Health and Dental Plan and the four Dental (with basic health) Plans. When you apply, your acceptance is guaranteed provided that you meet the eligibility criteria.

How do I make a health and dental insurance claim?

First, check to see if your provider has already submitted your claim. Often, you don’t have to submit a claim because many hospitals, pharmacies and dentists can submit your claim directly to us. There’s no online form or paperwork for you, and you only pay the amount your plan doesn’t cover.

If your provider hasn’t already submitted your claim, you can submit your claim on paper by mail.

How long do I have to make a health and dental insurance claim?

You have 12 months from the date you were charged for a health and dental service to submit your claim for reimbursement.

How quickly will my health and dental insurance claim be paid?

If your claim form is complete and accurate, you will generally receive payment within six business days. When information is missing, we may have to return the claim form to you. This delays processing and payment.

How do I submit my health and dental claims?
You can claim on paper by mail:

  • Specify the currency if your claim is for services outside Canada
  • Include original receipts and applicable supporting documentation
  • Make sure you’ve signed your claim form
  • Use the extended health claim form for all covered expenses except dental expenses
  • Use the dental benefit claim form – must be completed by your dentist or dental specialist

How do I start homecare and nursing services?

If you are qualify for claim, Call to speak to a customer service professional. You must complete nursing approval forms before starting homecare and nursing services.

what information do my prescription drug receipts have to show?

Prescription drug receipts must be original receipts (not statements) and show:

  • Name of drug
  • Drug identification number (DIN)
  • Date of service
  • Prescription number
  • Prescription strength and quantity
  • Drug cost
  • Dispensing fee (if applicable)

All other receipts must be original receipts on the printed letterhead of the person or company providing the service and show:

  • Name of patient
  • Date(s) of service
  • Description of service
  • Cost of each service

when do I need an estimate for other health and dental insurance services?

Get an estimate and send it to us before any major dental work. Ask your dentist to outline the proposed treatment plan and to include x-rays if available. We will let you know how much we will pay.

What information do my prescription drug receipts have to show?

Patients will need to complete the Medical Marijuana Prior Authorization form with their doctor and submit it to Manulife for assessment. Please follow the instructions on the form carefully. If approved, the patient will receive a welcome call from the Shoppers Drug Mart Cannabis Care Centre. The pharmacist will review the patient’s needs, advising them on the different strains of medical marijuana and the different ways to take it. Based on this support, patients can choose the treatment that best meets their needs and is covered under their plan.

How is Manulife’s medical marijuana program unique?
Our program is the only one in the industry to offer:

  • member referral to specially trained pharmacists at the Shoppers Drug Mart Cannabis Care Centre
  • coverage guidance based on the approved formulary
  • help with the coordination of medical marijuana distribution
  • case management, which includes patient oversight and outreach for follow-up
  • a support line that is available for continuous guidance throughout the process

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Life Insurance

What is life insurance?

Life insurance is a financial agreement in which, by paying premiums to the insurance company, your designated beneficiaries receive financial support in case of death or a critical illness. It is generally used to provide financial stability to families, cover debts, fund children’s education, or secure retirement. Unlike other types of insurance that focus on protection against immediate financial loss due to accidents, life insurance offers long-term financial security and peace of mind.

Can changes be made to the insurance policy after it has been issued?

Yes. Your insurance coverage can be adjusted according to your new needs. If your personal circumstances change, contact us and we will ensure that your insurance coverage remains appropriate.

When is the best time to buy life insurance?

The best time to purchase life insurance in Canada depends on your age, financial situation, and personal needs. Here are several general guidelines:

  • Based on age : The younger you are when you buy life insurance, the lower your premiums will be. Insurance premiums increase as you age.
  • Based on life events : If you’re newly married, have a family, or are starting a business, life insurance can provide future financial protection.
  • Based on financial obligations : If you have loans or debts, life insurance can ensure they are paid in the event of your death.
  • Based on life goals : If you have long-term goals such as saving for children’s education or buying a home, life insurance can support these plans.

Is life insurance suitable for everyone?

Life insurance may or may not be suitable depending on your personal and family situation. It is particularly beneficial for:

  • Family protection : If you are the primary provider, life insurance can help your family manage daily expenses after your death.
  • Financial planning : It can be used to fund education, repay debts, or build retirement savings.
  • Business protection : For business owners, it offers financial security to the company.
  • Peace of mind : Knowing your loved ones are protected can bring emotional relief.

What is the difference between permanent and term life insurance?

Permanent Life Insurance (Whole Life Insurance):

  • Duration : Covers you for your entire lifetime.
  • Benefits : Pays a death benefit to beneficiaries, usually tax-free.
  • Premiums : Fixed and generally higher than term life insurance.

Term Life Insurance:

  • Duration: Provides coverage for a set period (e.g., 10, 20, or 30 years). If the policyholder doesn’t die during this period, no benefit is paid.
  • Benefits: Pays a death benefit only if death occurs during the term.
  • Premiums: Lower than permanent life insurance but with no cash value after expiry.

How do I determine the amount of life insurance I need?

  • Financial needs: Daily living costs, children’s education, retirement savings, etc.
  • Debt obligations: Loans, mortgages, credit card balances.
  • Specific goals: Long-term goals like college funds or buying property.
  • Cost of living: Estimate the cost of living for your dependents.
  • Age and health: Younger and healthier applicants generally get lower premiums.
  • Consult an expert: Financial advisors can provide tailored recommendations.

Is the life insurance payout subject to tax?

In most countries, life insurance death benefits are tax-free for beneficiaries. However, tax rules vary, so consult a financial advisor to confirm specific regulations in your area.

Can people with pre-existing medical conditions get life insurance?
Yes, though terms may vary:

  • Limited coverage: Some insurers may deny or limit coverage based on risk.
  • Higher premiums: Those with health conditions often pay more.
  • Medical exams: Required to assess risk.
  • Specialized policies: Some companies offer plans tailored for people with specific conditions.

Can I modify my life insurance policy in the future?
Yes. Possible modifications include:

  • Increasing or decreasing coverage
  • Changing the policy term
  • Adjusting payment schedules
  • Adding or removing optional riders
  • Switching insurers

Can I increase my life insurance coverage if needed?
Yes, you can increase coverage by:

  • Amending your existing policy during renewal.
  • Purchasing a new policy if adjustments to the existing one aren’t possible.
  • Switching policy types, such as from term to whole life insurance.

Can I take a “premium holiday?”

Yes! If your company’s financial situation changes, you can take a 1-year “premium holiday” any time after the 5th policy year. Once you’re ready to start paying your premiums again, you’ll have to immediately catch up on the year’s worth of premium payments you missed—interest-free.

If you are a non-shareholder key employee, you need to discuss the “premium holiday” with the company to make sure that you will be able to pay your portion of the year’s worth of premiums once the “premium holiday” has ended.

Is life insurance financially sustainable?

Life insurance can provide long-term financial stability if managed correctly:

  • Death benefit: Helps beneficiaries cover living costs after your death.
  • Cash value (in permanent policies): Grows over time and can be used for other expenses like education or emergencies.
  • Discipline required: Missed payments can lead to policy cancellation and loss of coverage.

What is the difference between life insurance and accidental death insurance?

Life insurance covers the death of the insured for any reason, including illness, accident, or old age, and the specified insurance benefit is paid to the beneficiaries. In contrast, accidental death insurance only pays a benefit if death or disability results directly from a sudden and unforeseeable accident. Therefore, life insurance provides more comprehensive coverage, while accident insurance, at a lower cost, covers only specific risks.

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Life Insurance & Investment

What is life and investment insurance?

It is a permanent life insurance policy that not only provides death coverage but also builds cash value over time. This cash value can be used for retirement, children’s education, or other financial goals.

What are the main types of life and investment insurance?

  • Participating Life Insurance: Offers guaranteed lifetime coverage and pays dividends that can be received as cash, used to reduce premiums, or increase the policy value.
  • Universal Life Insurance: Flexible premium and investment options, with adjustable death benefit and cash value that grows based on investment performance.

How does cash value grow?

  • In Participating Life Insurance, cash value grows through guaranteed interest and annual dividends.
  • In Universal Life Insurance, growth depends on the performance of the chosen investment options.

Can I access the cash value during my lifetime?
Yes, policyholders can take loans or withdrawals from the cash value, subject to eligibility and policy terms.

Are the cash value gains taxed?
Generally, cash value grows tax-deferred, meaning you won’t pay taxes until you withdraw funds.

Can I adjust my premium or coverage?

  • Participating Life Insurance usually has fixed premiums.
  • Universal Life Insurance offers flexible premiums and adjustable death benefit to meet changing financial needs.

Who is this insurance suitable for?

  • Individuals seeking permanent life coverage.
  • Those who want to combine insurance with long-term investment or wealth accumulation.
  • People planning for retirement, education funding, or estate protection.

What factors affect the premium?
Age, gender, health, lifestyle, coverage amount, type of insurance, payment schedule, investment risk, and expected cash value growth.

Immediate Financing Arrangement (IFA) Strategy

What is an IFA?

The IFA is a financial planning strategy designed for affluent clients and incorporated business owners who need both immediate and long-term life insurance protection, while also seeking access to funds for investment purposes. In this strategy, clients use their life insurance policy as collateral to secure a loan. The borrowed funds can then be reinvested into ventures such as businesses, real estate, or other income generating assets to meet their investment goals. When structured correctly, an IFA can provide tax advantages, including deductions for loan interest costs and a portion of the insurance premium. These tax savings can effectively reduce borrowing expenses. The combination of life insurance protection, access to investment capital, and tax benefits makes this strategy particularly attractive to affluent individuals and business owners.

Why does it work?

The IFA strategy primarily works by generating tax deductions that lower taxable income. These deductions create annual tax savings that reduce cash outflows. These reductions have a positive impact on the benefits available under the strategy. IFA also benefits from the tax-deferred growth of cash values within a life insurance policy, which increases the death benefit. The increased death benefit ensures that there is a benefit available for the named beneficiary after the outstanding loan balance has been repaid. Upon the insured person’s death, the insurance proceeds are used to repay the loan, preventing the debt from burdening the estate. Any remaining proceeds can then be utilized to fulfill the client’s estate planning objectives, providing additional financial security for their beneficiaries. This combination of immediate access to funds, tax efficiency, and estate planning advantages can make the IFA an attractive option for affluent individuals and business owners.

How to set up an IFA?

The IFA strategy can be structured with personal or corporate ownership. Therefore, any reference to “the client” includes an individual or a corporation.

1. Setting up the policy and building cash value: The client purchases a life insurance policy and deposits the maximum amount available. This approach increases the cash surrender value (CSV) significantly in the early years.

2. Securing the loan: The client applies for a loan from a bank, typically structured as a line of credit secured by the life insurance policy.

3. Borrowing against the policy: When borrowing against a life insurance policy, the policy is used as collateral for a loan from a bank. The funds borrowed must be used for investment purposes, such as funding a business, purchasing real estate, or investing in a non-registered portfolio. Depending on the loan amount, there may be a need to provide additional assets to further secure the loan. It is important to note that interest on the loan must be paid to the bank on a regular monthly basis.

4. Determining the Borrowed Amount: The amount borrowed is generally structured in one of two ways: either equal to the annual premium paid or linked to the annual increase in the policy’s cash value.

5. Annual Repetition: Each year, a new loan can be secured when the policy premium is paid.

6. Repayment Upon Death:

  • Personal IFA: Upon the insured person’s death, the outstanding loan balance is repaid from the policy’s death benefit. The remaining amount is then distributed to the named beneficiary.
  • Corporate IFA: Upon the insured person’s death, the outstanding loan balance is deducted from the policy’s death benefit. Any remaining amount is paid to the corporation, which is the named beneficiary. The corporation also receives a credit to its Capital Dividend Account (CDA), equal to the death benefit minus the policy’s adjusted cost basis (ACB). The CDA can then be used to pay tax- free capital dividends to the deceased shareholder’s estate or to other shareholders.

What are the different types of IFA structures?

This section explores various IFA structures, helping you customize strategies to meet specific financial goals and circumstances.

  • Borrowing 100% of Cash Surrender Value (CSV)

With this structure, the client pays the annual premium and borrows up to 100% of the life insurance policy’s cash surrender value (CSV) each year. In the early years, this amount will be less than the premium payment, but no additional collateral is required. The borrowed funds are used for investment purposes, making the loan interest deductible. The client will be required to pay the loan interest on a regular basis. The advantage of this structure is that the CSV increases over time, enhancing borrowing capacity. However, the drawback is a net funding requirement in the early years, as the loan amount is less than the premium paid.

  • Borrowing 100% of premium

With this structure the client pays the annual premium and borrows 100% of the premium paid each year. In the early years of the strategy the CSV of the policy will not be enough to secure the loan requiring additional collateral security. The borrowed funds will be used for investment purposes so that the loan interest is deductible. The client will be required to pay the loan interest on a regular basis. Under this structure the client will experience a cash outflow each year equal to the after-tax interest cost. The advantage of this structure is that the loan balance does not increase after the premium payment period, which helps control lending costs. However, a drawback is the need for additional collateral in the early years to secure the loan.

  • Borrowing 100% of premium, year-end loans

With this structure the client pays the annual premium and borrows 100% of the premium paid each year. The CSV of the policy will not be enough to fully secure the loan requiring additional collateral security. The borrowed funds will be used for investment purposes so that the loan interest is deductible. The client will be required to pay the loan interest on a regular basis. To eliminate the cash outflow described with the 100% borrowing of premium structure described above, the client borrows back the after-tax interest cost at the end of each year. Funds borrowed at the end of the year must also be used for investment purposes so that 100% of the loan interest is deductible. The advantage of this structure is that the year-end loan results in a zero cash outlay at the end of each year. A drawback of the structure is that year-end loans cause the loan balance to increase each year resulting in higher payments of the loan interest.

Does IFA strategy work for you?

To determine if the IFA strategy is suitable for you, it is crucial to conduct a comprehensive evaluation of various factors and assess whether the strategy aligns with their financial situation and long-term objectives.

  • Health and Insurability: IFA is a life insurance-based planning strategy, so the individual must be in good health. The strategy works best with non-smokers who are not rated and often has the greatest appeal to clients age 50+.
  • Financial Situation: This strategy is suited for affluent individuals or businesses with a stable cash flow that exceeds lifestyle/business needs. It is important to have substantial taxable income and be paying tax at the highest rates, as the IFA is structured to provide tax benefits. The strategy is not suited for individuals or businesses with limited cash flow that only meets their lifestyle, or operational expenses. It requires a stable cash flow to cover insurance premiums and loan interest payments. It is not beneficial to those needing immediate liquidity or flexibility, due to its structured financial commitments. Furthermore, individuals or businesses not in the highest tax brackets may not experience significant tax advantages, as the strategy is most effective when reducing substantial tax liabilities.
  • Need for Permanent Life Insurance: The strategy is best suited for individuals or businesses that require permanent life insurance for purposes like estate planning, business succession, or wealth preservation.
  • Comfort with Debt: The strategy is best suited for individuals or businesses comfortable with long-term debt, as the loan might remain outstanding for an extended period. Since the IFA involves a bank loan secured by the life insurance policy, clients should be prepared for this long-term commitment.
  • Long-term Planning: The IFA is a long-term strategy, so the individuals or businesses must be open to engaging in long-term financial and investment planning.
  • Additional Assets: In some cases, additional assets may be needed to secure the bank loan. Individuals or businesses must evaluate if they have sufficient assets beyond the life insurance policy to meet this requirement.
  • Professional Guidance: Consulting with a tax professional is crucial. They can provide personalized advice and help determine if the IFA strategy is suitable for you.
  • Risk Tolerance: It’s essential to understand the risks involved, such as interest rate changes or fluctuations in the performance of the life insurance policy. The client’s risk tolerance should align with the potential volatility of the strategy.

What are the benefits of IFA?

The IFA strategy is typically recommended for high-net-worth individuals or businesses for several reasons:

  • Internal Rate of Return (IRR): It can enhance the IRR on an estate planning strategy that includes permanent life insurance. This allows individuals or businesses to adequately insure themselves while maintaining cash flow to continue investing in their portfolio or business.
  • Cash Surrender Value (CSV): The cash value in a life insurance policy grows tax-deferred and, if structured correctly, may never be subject to tax.
  • Tax Deductions: Properly structuring an IFA creates valuable tax deductions, positively impacting cash flow through the loan interest deduction and collateral insurance deduction.
  • Capital Dividend Account (CDA): For corporate clients, an IFA can enhance the CDA balance, which is established upon the insured individual’s death. This enhancement enables the corporation to distribute tax-free capital dividends to its shareholders up to the available CDA. When a business receives a life insurance death benefit, it receives a CDA credit equal to the total death benefit minus the adjusted cost base (ACB) of the policy. Depending on how the policy was funded, at life expectancy, the policy might have no ACB, providing the potential to distribute an amount equal to the entire death benefit tax-free to shareholders.
  • Alternative to Policy Loans: The IFA strategy offers individuals or businesses a tax-efficient way to access the cash value of their insurance policy through collateral loans. Unlike policy loans, which can result in a taxable gain, collateral loans do not trigger a taxable gain and are tax-free to the borrower. Additionally, individuals or businesses have the flexibility to repay the IFA loan balance at any time without penalty, with repayment not required until death.

Using a Life Insurance Policy as Collateral for a Loan

How is the life insurance policy used to obtain the collateral loan?

A life insurance policy can be pledged as collateral for a loan, like any other asset. If the insured dies, the policy death benefit is used to repay the loan, with any remaining amount distributed to the beneficiary. Certain life insurance policies allow for the accumulation of cash value, when the policyholder makes deposits exceeding the necessary insurance charges. The cash value grows on a tax- deferred basis within an exempt policy, subject to the limits set by the “Act”. If a life insurance policy has cash value, it can serve as collateral for a loan. Many lenders offer collateral loans secured by a life insurance policy. Loan margins typically range from 50% to 100% of the policy’s cash value. In some cases, a combination of the insurance policy and other assets may be used as collateral for the loan. The borrower can use the loan proceeds for various purposes, such as investing in a business, purchasing property, or acquiring other assets. In these situations, the interest on the loan and a portion of the insurance premiums may be tax-deductible, potentially reducing the overall cost of borrowing through tax savings.

Who is the policy owner, borrower, and the life insured?

In the context of a life insurance policy used for a collateral loan, the roles of the policy owner, borrower, and life insured can vary based on who owns the policy:

  • Policy Owner: The owner of the life insurance policy can be either an individual or a corporation. The policy owner has the rights to the policy and can make decisions regarding it.
  • Life Insured: The life insured is the person whose life the policy covers. This individual can be the same as the policy owner or a different person, depending on the arrangement.
  • Borrower: If the policy is owned by an individual, that individual typically serves as both the life insured and the borrower. In this scenario, the individual uses their own policy as collateral for the loan.

Note: If the policy is owned by a corporation, the life insured is usually an owner-manager or a significant shareholder of the corporation. In this case, the corporation itself acts as the borrower, using the life insurance policy as collateral for the loan.

Does the lender take ownership of the life insurance policy?

No, the lender does not become the owner of the life insurance policy. The policy owner, whether an individual or a corporation, retains ownership throughout the duration of the loan arrangement. The policy is assigned as collateral to the lender, granting the lender specific rights. These rights can be exercised if the borrower defaults on the loan or if the insured individual dies. Assigning the policy as collateral provides security for the lender while allowing the policyholder to maintain ownership of the policy.

How much can the client borrow?

IFA loans are based on the annual premium paid or the annual increase in the CSV of the policy. Clients have the potential to borrow up to 100% of the annual premium paid or 100% of the increase in CSV. However, the actual loan amount available for borrowing depends on the lender and the borrower’s individual circumstances. Each lender assesses these loans using specific criteria to determine how much a client may qualify to borrow.

What loan margin will the banks apply to the CSV of the policy?

Banks typically assign a loan margin ranging from 50% to 100% of a policy’s cash surrender value (CSV). This margin is influenced by factors such as the type of life insurance policy and the investment of funds within the policy. For participating whole life policies, which are commonly used in IFA strategies, banks generally apply a loan margin between 90% and 100%. In rare cases where a Universal Life policy supports the IFA, the loan margin generally ranges from 50% to 90%, depending on the investment of funds within the policy. Higher volatility in returns usually results in a lower lending margin.

Are there other factors impacting the need for additional collateral?

Under the lending arrangement, the borrower must meet the lender’s loan-margin requirements. IFA illustrations are based on various assumptions, including future loan interest rates and the expected growth of policy cash values. If actual loan interest rates are higher than forecasted, or if policy cash values do not meet projections, the borrower might inadvertently exceed the loan margins. In such instances, the lender will require the borrower to comply with these requirements. If the loan balance exceeds, the loan margin limit, the borrower typically needs to provide additional collateral or repay a portion of the outstanding loan balance. This often requires access to additional capital, and selling assets to obtain this capital may have tax implications. If the borrower fails to comply, the lender can exercise their rights under the collateral assignment agreement, potentially leading to a partial or full surrender of the life insurance policy. This could result in several issues, including: • Loss or reduction of insurance coverage, which affects the original purpose of acquiring the insurance. • Difficulties in obtaining new coverage if the borrower’s health has deteriorated. • Potential taxable gains on the policy, as a surrender is considered a disposition for tax purposes.

Does the interest on the loan need to be paid or can it be added to the loan?

Banks require the borrower to pay the loan interest on a regular basis, using their own money. This is important because it supports the borrower deducting all of the loan interest each year. Paying the interest on an annual basis prevents interest from being added to the loan balance, which is called “capitalizing” and is considered compound interest from a tax perspective. From a tax perspective, compound interest is only deductible when it is paid, and this can defer the interest deduction until the loan is repaid.

If the loan advances are equal to the premium payments, is this “Free Insurance”?

The idea of “free insurance” is misleading. In certain IFA solutions, loan advances are structured to match the annual premiums each year. Although these arrangements may appear cash-neutral, with inflows equaling outflows, the insurance is not free. Insurance premiums must be paid and the interest on the loan must be paid. Furthermore, additional collateral may be required to secure the loan, which can place restrictions on those assets.

When is the loan repaid?

A significant benefit of the IFA strategy is that the loan balance does not need to be repaid until the life insured dies. Despite this benefit clients can choose to repay the loan at any time without facing penalties.

How do tax deductions impact the leverage strategy?

In all IFA situations, the ability to deduct loan interest expenses and utilize the collateral insurance deduction is essential for the strategy to provide value. The tax savings generated by these deductions positively impact cash flow by reducing outflows, resulting in higher yields from the strategy. It is important to understand how these deductions affect illustrated values and the steps necessary for clients to achieve the level of benefits shown in the illustration.

How much income is needed to support the deductions?

A tax deduction is only valuable if the taxpayer’s taxable income is greater than the deduction amount. This means that for the deduction to be beneficial, the borrower’s taxable income must be greater than the combined total of the interest expense and the collateral insurance deduction each year that the loan remains outstanding.

In personal IFA scenarios, the amount and type of income earned directly affect tax liability. In Canada, individuals are taxed at the highest rate when their income surpasses a specific threshold, which varies by province. For instance, in Ontario, this threshold is approximately $254,000. This means that individuals only pay the highest tax rate on income that exceeds this amount.

The kind of income you earn is important because not all income is taxed the same way. Some types of income are “fully taxable,” meaning they do not receive any special tax treatment. Fully taxable income includes salary, rental income, interest, pension income, income from a Registered Retirement Savings Plan (RRSP) or Registered Retirement Income Fund (RRIF), and income from a Retirement Compensation Arrangement (RCA).

On the other hand, Canadian dividend income, whether eligible or ineligible, benefits from a preferential dividend tax credit. This credit reduces the effective tax rate on dividends compared to the highest marginal tax rate. As a result, if a client earns only dividend income above the $254,000 threshold, their effective tax rate would be lower than it would be for salary or interest income.

In corporate scenarios, marginal tax rates do not apply. The highest corporate tax rate is determined only by the type of income. For example, interest, rental income, and royalties are taxed at the highest rate, while active business income is taxed at a lower rate. Since income thresholds are not a factor at the highest corporate rate, a corporation simply needs enough qualifying income to balance out any deductions.

What happens if the IFA is terminated by the client before death?

A client might consider terminating their IFA strategy for several reasons, such as changes in personal circumstances, fluctuations in investment or policy returns, rising loan interest rates, or not achieving the expected tax benefits.

The first step in terminating the arrangement is to repay the loan. If the borrowed funds were used to invest in an asset that has appreciated enough to cover the loan balance, the client can sell the asset and use the proceeds to pay off the loan. It is important to be aware that selling the asset might have tax consequences, depending on what kind of asset it is.

If the invested funds are locked in an asset that can’t be easily sold, and no other funds are available to repay the loan, the client may be forced to surrender the life insurance policy to access the necessary funds. This should be considered a last resort, as it can have significant financial consequences. If a client chooses to terminate the IFA strategy and use their cash surrender value to repay their loan, the policy is surrendered, and all insurance coverage is lost. The surrender of the policy could also trigger a taxable policy gain. The cash surrender value is used to repay the loan with any remaining balance paid to the policy owner. Depending on the circumstances, the funds received by the policy owner may be less than the amount needed to pay the tax liability linked to the gain. In this situation the cash surrender value would not be enough to repay the loan and pay the tax, potentially putting an unexpected burden on the client’s financial situation.

Interest Deductibility

What are the requirements for interest on the loan to be deductible?

To qualify for an interest deduction on a loan, the following requirements must be met, as outlined by the “Act”:

Paid or Payable: The interest must be either paid or payable for the taxation year in question.

Legal Obligation: The interest payment must arise from a legal obligation.

Purpose Test: The borrowed funds must be used for the purpose of earning income, such as generating income from a business or property, or acquiring property intended to produce such income.

Linking Test: There must be clear evidence, such as a paper trail, demonstrating that the borrowed funds are used for an income-earning purpose. This involves “linking” the borrowed money to its eligible use. If the loan proceeds are directed towards personal or other non-qualifying uses, this condition is not satisfied.

All these conditions must be fulfilled for the interest to be deductible. Additionally, the deduction is subject to a general reasonableness limitation, meaning the amount of interest claimed must be reasonable.

Will the interest be deductible if the borrowed funds are used for personal expenses or to acquire a vacation property?

To qualify for an income tax deduction for interest, the borrowed funds must be used to generate income from a business or property, or to purchase property for that purpose. Interest on loans used for personal expenses, like retirement income or buying a vacation home, does not qualify for this deduction.

Will the interest be deductible if the borrowed funds are used to acquire investments or contribute capital to a corporation?

The Act’s purpose test requires that any acquired property must generate income, such as interest, rents, royalties, business income, or trading gains, but not capital gains. Therefore, if you borrow funds to invest in mutual funds that only produce capital gains, the interest on those borrowed funds will not be deductible. However, if the investment generates at least some income, the purpose test is likely satisfied. An exception to this rule applies when funds are contributed to a closely held corporation by its shareholder(s). Typically, a deduction for interest is allowed if a shareholder (or shareholders, in proportion to their shareholdings) uses borrowed money to make an interest-free loan or a capital contribution to a closely held corporation. This exception is applicable as long as the loan enhances the corporation’s ability to earn income, thereby increasing the potential for dividends to be received.

Will the interest be deductible if the borrowed funds are used to make deposits into a life insurance policy?

The Act explicitly prohibits deducting interest on borrowed money used to purchase a life insurance policy, including annuities but excluding segregated funds. Therefore, if borrowed money is used to fund a life insurance policy, the interest on that loan is not deductible. However, you can sell an investment portfolio to fund the life insurance policy and then repurchase the investments using borrowed funds secured by the life insurance policy. Since these borrowed funds are used to acquire income generating property, the Act’s linking and purpose tests are satisfied, allowing the interest to be deductible. It is important to note that these transactions must involve actual sales and purchases, not just paper entries. Depending on the nature of the investments, tax consequences may arise from these transactions.

Collateral insurance deduction

What are the requirements for the collateral insurance deduction?

Generally, life insurance premiums are not deductible for income tax purposes. However, there is a provision in the “Act” that allows for the deduction of life insurance premiums if the policy is assigned as collateral to a lender as part of a loan agreement. This is known as the “collateral insurance deduction.” It does not apply to policy loans. To qualify for this deduction, the lender must be a “restricted financial institution” as defined by the “Act”, and the interest on the borrowed funds must be deductible from the borrower’s income. Additionally, the policy owner must also be the borrower. If a policy owned by one individual or corporation is used as collateral for a loan to a different individual or corporation, the collateral insurance deduction cannot be claimed.

What portion of the life insurance premiums is eligible for deduction?

For any given tax year, the deductible amount for premiums paid on a life insurance policy used as collateral for a loan is limited to the lesser of the premiums payable and the Net Cost of Pure Insurance (NCPI) for that year. The NCPI increases annually after a policy is issued, primarily because the cost basis rises as the insured individual ages. Additionally, the deductible amount must be proportional to the amount owed on the loan for which the life insurance policy has been assigned as collateral. For example, if the death benefit of the policy is $1,000,000 and the average loan amount for the year is $600,000, the deductible amount would be limited to 60% of the lesser of the premiums payable and the NCPI for that year.

Can the collateral insurance deduction be claimed in years when the client does not make deposits into the life insurance policy?

This question depends on the type of policy securing the IFA loan. For policies with specified premiums under the contract, such as participating policies, these specific premiums can be considered “premiums payable” for the purpose of this deduction, even if they are paid from the policy’s internal values. As a result, a deduction can be claimed. In contrast, the Canada Revenue Agency (CRA) states that for a universal life contract, “premiums payable” do not include insurance costs paid from the policy values. Only deposits made into the policy are considered premiums. Therefore, if no deposits are made into a universal life policy during the year, a collateral insurance deduction cannot be claimed.

If all the requirements in the Income Tax Act are met, will the tax benefits of the IFA strategy continue in the future?

Tax benefits linked to any strategy depend on current tax laws, which can change. If tax laws are amended, some expected benefits may no longer apply. Although legislative changes are typically not applied retroactively, they can affect future deductions and benefits. Therefore, when evaluating any leveraged life insurance strategy, it is important to consider the risk of losing potential tax benefits.

Does the General Anti-Avoidance Rules (GAAR) apply?

When considering an IFA leveraging strategy, it is important to be aware of the potential application of the General Anti-Avoidance Rules (GAAR) outlined in the “Act”. GAAR is designed to differentiate between legitimate tax planning and abusive tax avoidance, aiming to balance protecting the tax base with taxpayers’ need for certainty in planning their affairs. GAAR may apply to any transaction or series of transactions intended to avoid taxes and gain a tax benefit. While the CRA may choose to invoke GAAR in certain cases, it generally should not interfere with the established legal principle that taxpayers are entitled to arrange their affairs in a tax-efficient manner. GAAR could potentially apply to any planning strategy, including those involving life insurance and leveraging. A specific risk in leveraged life insurance strategies with collateral loans is that GAAR might recharacterize a collateral loan as a policy loan. This risk is reduced if the loan is separately underwritten and issued by a lender other than the insurer.

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Critical illness Insurance

Who should purchase the critical Illness insurance plan?

The Critical Illness Insurance plan was designed for healthy individuals who want a basic amount of affordable critical illness coverage that can be obtained quickly, easily and without completing a medical questionnaire.

Can critical illness insurance be purchased after diagnosis or before illness?

Critical illness insurance must be purchased before contracting the illness. These policies act as compensatory insurance designed to provide financial support in the event of serious and critical diseases. Therefore, you need to buy the insurance before any illness occurs.

When you purchase critical illness insurance, the insurance company typically sets specific conditions that must be met to receive coverage. These conditions may include a doctor’s diagnosis, medical confirmation, and detailed information about the illness and its diagnosis date.

For better protection against critical illnesses, the best time to buy insurance is when you are in good health and have not yet been diagnosed with any serious condition. Critical illness insurance may cover treatment and care costs and allow you to access the best medical care if illness occurs.

We recommend obtaining this insurance for your entire lifetime. However, you may also choose policies for 10, 20, or 30 years or until retirement. In more comprehensive plans, if you do not use the coverage, you may receive a full refund of all premiums paid to the insurance company.

Does this Critical Illness coverage offer a “return of premium”?

We will pay a return of premium on the death benefit if you die while your policy is in force, and have not received, or are not eligible for, a Critical Illness Benefit payment, and provided that we receive the following at our office:

  • A written request for the return of premium on the death benefit;
  • proof, satisfactory to us, of your cause of death; and
  • proof, satisfactory to us, of your birth date.

We may require additional medical information which must be provided, at no cost to us. We reserve the right to make the final decision on whether the above conditions have been met.

What are the definitions of the covered conditions?

Life-threatening cancer: A tumor characterized by the uncontrolled growth and spread of malignant cells and the invasion of tissue as confirmed by histological examination of tissue samples.

Heart attack (myocardial infarction): The death of a portion of the heart muscle due to atherosclerotic heart disease. The diagnosis must be based on all of the following criteria occurring at the same time:

  • New episode of typical chest pain or equivalent symptoms; and resulting from the blockage of one or more coronary arteries; and
  • New electrocardiographic changes indicative of myocardial infarction; and
  • Biochemical evidence of myocardial necrosis including elevated cardiac enzymes and/or troponin.

Stroke: A cerebrovascular incident causing infarction of your brain tissue, due to intracranial hemorrhage, thrombosis or embolism, producing a new measurable permanent clinical neurological deficit persisting for at least thirty (30) days following the occurrence of the stroke.

Coronary artery bypass surgery: You have undergone heart surgery to correct the narrowing or blockage of one or more coronary arteries with bypass grafts.

Kidney failure: End stage renal disease, due to whatever cause or causes, as a result of which you are undergoing peritoneal dialysis or hemodialysis on a regular basis or have received a transplanted human kidney.

Major organ transplant: You have received a transplant of a human heart, liver, lung or human bone marrow, due to irreversible failure of such organ.

How do you define Signs and or symptoms of critical illness?

In the Critical Illness Insurance Health Declaration, “signs and/or symptoms” means any indication that a named condition may exist – for example:

  • Presence of an undiagnosed breast lump
  • Chronic cough
  • Blood in urine
  • Unexplained weight loss
  • Chest pain
  • Shortness of breath
  • Difficulty speaking
  • Numbness
  • Paralysis
  • Severe headache
  • Sudden onset of blurred vision

If you have had any unusual signs or symptoms that have not yet been diagnosed by a doctor or if you have been diagnosed with a condition named in the Health Declaration, you are not eligible for Critical Illness Insurance coverage.

What are the definitions of the covered conditions?

How do you define “signs and/or symptoms” of critical illness?

How do you define “signs and/or symptoms” of heart disease?

How do you define “medical consultations” related to critical illness?

How do you define “abnormal tests” related to critical illness?

Am I eligible for Critical Illness Insurance if I have a history of high blood pressure?

Am I eligible for Critical Illness Insurance if I have a history of elevated cholesterol or triglycerides?

What is meant by “signs and/or symptoms” in the Health Declaration? What’s a pre-existing condition for Critical Illness Insurance?

Does Critical Illness Insurance cover all cancers?

I quit smoking but still use a patch, can I apply for non-smoker rates?

What happens if I change my mind after completing the application?

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Disability Insurance

What is disability insurance?

Disability Income provides a monthly amount to replace income when the person is unable to work following a disability due to an accident or illness. The monthly amount is based on their monthly income. It is paid as long as the person meets the definition of disability and up to the selected benefit period

It will help you in difficult times if you are sick or hurt and not able to work. Disability insurance can replace a portion of your income when you are unable to work.

It is the most difficult time to go through, to maintain a certain standard of life, to pay your bills, look after your children and all of your other financial necessities. This is when disability insurance is most needed.

Is it possible to renew disability insurance?

Yes, one of the most important aspects of a disability insurance policy is the renew ability provision, and there are two types:

  • Guaranteed Renewable: A guaranteed renewable policy can not be canceled by the insurance company even if a change in your circumstances would put you at greater risk.
  • Non Cancellable: There is a type of individual disability insurance available which offers an insured a guaranteed future premium.

Why Is Disability Insurance Important?

Disability can happen to anyone—whether it’s from illness, injury, or unexpected life changes. Without proper protection, your income and financial stability could be at risk. That’s why understanding your options is essential.

What Is Short-Term Disability Insurance?

Short-term disability insurance (STD) provides income replacement for temporary illnesses or injuries. It usually covers 60–70% of your income and lasts from a few weeks up to 6 months.

What Is Long-Term Disability Insurance?

Long-term disability insurance (LTD) kicks in after short-term coverage ends or after a waiting period. It can last for years—or even until retirement—depending on your policy. It’s meant for serious and ongoing conditions.

What Is “Own Occupation”?

An ‘own occupation’ policy pays benefits if you can’t perform the duties of the specific job you were doing before your disability—even if you could work in another job. It provides more flexibility and better protection.

What Is “Any Occupation”?

An ‘any occupation’ policy only pays benefits if you are unable to work in **any job** that you’re reasonably qualified for based on your education, training, and experience. It’s harder to qualify under this definition.

Which One Is Right for You?

If you have no emergency savings, short-term might help bridge the gap. But for real protection, long-term disability is crucial—especially if you’re self-employed or your employer doesn’t offer coverage.

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Children and Teens Insurance

What are different types of insurance for children and teens?

Insurance TypeDetails & Benefits
Accident InsuranceCovers injuries, fractures, hospitalization, and recovery due to accidents. Helps pay for treatment, transportation, or home adjustments.
Critical Illness InsuranceProvides a lump-sum benefit if the child is diagnosed with a covered condition (e.g., cancer, leukemia, organ transplant). Helps with medical or family expenses during treatment.
Child Life InsurancePermanent coverage with cash value growth. Can be transferred to the child in adulthood. Also provides peace of mind in case of worst-case scenarios.
Medical Complementary PlansCovers items and services not paid by government plans: prescriptions, dental, vision, paramedical, and more.
Hospital Cash BenefitDaily or weekly payments during hospitalization regardless of actual medical costs. Helps parents cover additional non-medical expenses.

Who Should Consider It?

  • Parents with young children or teens
  • Families with a history of hereditary illness
  • New immigrants without full provincial health access
  • Self-employed parents or those without group insurance coverage

Why Insure Your Child?

  • Ensure your child has access to private medical or critical care if needed.
  • Lock in low premiums while your child is young and healthy.
  • Provide financial support for the family during emergencies or recovery periods.
  • Establish a foundation for lifelong coverage.

One important note about children and teens accident insurance:

While it provides valuable financial protection, it’s meant to supplement—not replace—government or group coverage.

Government healthcare often covers only part of the medical costs after an accident, and it usually doesn’t address long-term financial needs like rehabilitation, tutoring, mobility aids, or income replacement for a parent who must take time off work. Accident insurance for kids helps close these gaps, but:

  • Coverage limits and exclusions (like certain illnesses, high-risk activities, or pre-existing conditions) are important to review carefully.
  • Some benefits are time-sensitive (e.g., treatment must start within a certain number of days after the accident).
  • The cost is typically low compared to adult policies, but benefits can still be significant.

What are the popular plan features of Life and Investment insurance?

  • Coverage Options: Starting from as low as $25,000 up to $250,000
  • Payment Periods: Options like Pay for 20 Years, Coverage for Life
  • Return of Premium: Get your money back if coverage is no longer needed (select plans)
  • Cash Value Access: Withdraw or borrow from the policy if needed
  • Critical Illness Add-ons: Get extra protection for childhood illnesses (optional)

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Long Term Care Insurance

What is long-term care insurance?

Long-term care insurance protects the insured and their family from financial hardship due to unforeseen medical and/or living expenses related to critical illness, which results in the loss of independence.

How much does it cost and how long would I need to pay?

The cost depends on several factors like your age, health, the insurance provider and the type of policy that you select. Some policies are set up with 20-year or lifetime periods. The actual term of the insurance will depend on the supplier and the policy.

Who’s eligible for this insurance?

Anyone between the ages of 18 and 80 is eligible. However, people in their 40s and 50s should consider including it as part of their retirement plan.

Under what circumstance would I receive a payout from this insurance?

During your retirement, the insurance would payout if you became sick with a chronic illness that prevented you from living independently. This is determined if you are unable to eat, dress, move, use the toilet or bathe by yourself.

What does long-term care insurance cover?

Once it’s been determined that you’re no longer able to live independently, long-term care insurance will help pay for:

  • Expert medical advice
  • The ability to live at home with in-home and/or respite care
  • Assisted living and long-term care facilities
  • Senior day-care

How is it paid out?

Long-term insurance pays a tax-free monthly benefit that can be used to pay for any type of service that you choose. There’s no need to submit receipts or wait for approval.

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Business Overhead Expenses Coverage

What Is Overhead Expense Disability Coverage?

Business Overhead Expense Disability Coverage (BOE Coverage) is a specialized plan designed to cover your business’s monthly fixed operating expenses if you, the owner, become disabled and are unable to work. Unlike personal disability insurance that replaces lost income, BOE coverage ensures your business can continue to operate.

This coverage is ideal for self-employed professionals, small business owners, incorporated consultants, and partners in a business who bear the burden of ongoing operational costs.

Comparison: Personal vs. Overhead Expense Disability Insurance

Here’s how OE Insurance compares to standard personal disability insurance:

Personal Disability Insurance:

  • Replaces personal income only
  • Doesn’t cover rent, staff, or operations
  • Typically up to 70% of income


Overhead Expense Disability Insurance:

  • Covers essential business operating costs
  • Keeps your business afloat during recovery
  • Benefits based on actual expenses

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Insurance for Individuals with Pre-existing Conditions

Can I get insurance if I have a pre-existing condition?

One of the main reasons people hesitate to apply for life insurance or critical illness insurance is the fear that their health history may disqualify them.
Fortunately, insurance options for individuals with pre-existing conditions are available and can be a suitable choice for many. While coverage may come with certain limitations or higher premiums, there are still opportunities to get protected.

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Tax Reduction

Is life, health, or disability insurance premium tax-deductible?

Generally, premiums paid for life, health, and disability insurance are not tax-deductible for individuals or businesses. Unless you qualify for a specific exemption based on your personal or business situation, you should assume that the answer is no.

To gain a clear understanding of any tax deductions you may be eligible for, it is strongly recommended to consult with a tax professional.

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Guaranteed Advantage Program by Desjardins

What is the Guaranteed Advantage program?
Guaranteed Advantage is a guaranteed income investment product offered by Desjardins Insurance. It protects investors from market fluctuations while still offering growth potential.

Who is this program suitable for?
It is ideal for individuals seeking a secure investment with guaranteed returns and protection against market downturns.

What are the main benefits of Guaranteed Advantage?

  • Guaranteed return at the end of the contract (if held to maturity)
  • Guaranteed death benefit to protect capital in case of the investor’s death
  • Diverse investment options tailored to risk tolerance
  • Potential for higher returns if markets perform well

What is the investment duration for this program?
Durations typically range from 3 to 10 years, depending on your financial goals and investment horizon.

Is the capital guaranteed?
Yes, if the investment is held until the end of the term, the principal is guaranteed.

What asset allocation options are available?
The program includes diversified portfolios combining equities and fixed income, aligned with different risk profiles.

Can I withdraw funds before maturity?
Yes, but early withdrawal may result in receiving less than the guaranteed amount and may include fees or reduced returns.

Can I designate a beneficiary for this plan?
Yes, you can name one or more beneficiaries to receive the funds in case of death.

How is this different from traditional investments?
This is an insurance-based investment product, not a typical bank deposit or mutual fund, offering unique advantages like guaranteed death benefit and tax-efficient features.

How can I purchase this program?
You can purchase Guaranteed Advantage through a licensed financial advisor or Desjardins insurance representative who will tailor the plan to your financial needs.

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Guaranteed Interest Funds (GIF)

How is this program different from traditional investments?
This program is an insurance product, not just a bank investment or mutual fund, and includes specific benefits such as guaranteed payment in the event of death and tax advantages.

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Registered Retirement Savings Plan (RRSP)

What is an RRSP?
An RRSP is a registered savings plan in Canada designed to help you save for retirement while benefiting from tax advantages.

Who can open an RRSP?
Any Canadian resident with earned taxable income and under the age of 71 can open an RRSP.

What are the main benefits of an RRSP?
The key benefits of an RRSP include:

  • Tax deductions for contributions
  • Tax-deferred investment growth
  • Lower tax rate at withdrawal (typically during retirement)

What is the RRSP contribution limit?
For 2024, the contribution limit is 18% of your previous year’s earned income, up to the annual maximum set by the government ($30,780 for 2024).

Can unused RRSP contribution room be carried forward?
Yes, any unused contribution room can be carried forward to future years.

Can I use my RRSP for buying a home or going back to school?
Yes, under the Home Buyers’ Plan (HBP) and the Lifelong Learning Plan (LLP), you can withdraw funds from your RRSP under specific conditions and repay them without tax penalties.

What happens if I over-contribute to my RRSP?
Over-contributions beyond the $2,000 buffer are subject to a 1% monthly tax on the excess amount.

Until what age can I contribute to an RRSP?
You can contribute to your RRSP until December 31 of the year you turn 71. After that, you must convert it into a RRIF or purchase an annuity.

How can I check my RRSP contribution room?
Your RRSP contribution limit is listed on your Notice of Assessment from the CRA or can be accessed through your CRA “My Account” online.

Can I name a beneficiary for my RRSP?
Yes, you can designate a beneficiary for your RRSP to ensure the funds are transferred directly and efficiently upon death.

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Registered Education Savings Plan (RESP)

What is an RESP (Registered Education Savings Plan)?
An RESP is a registered savings account designed to help families save for their children’s post-secondary education.

Who can open an RESP?
Parents, grandparents, guardians, or any other individual can open an RESP for a child.

How much can I contribute to an RESP?
There is no annual contribution limit, but the lifetime maximum contribution per child is $50,000.

Does the government contribute to an RESP?
Yes, the Canadian government provides the Canada Education Savings Grant (CESG), which matches 20% of contributions up to $500 per year and a maximum of $7,200 over the lifetime of the plan.

What can RESP funds be used for?
RESP funds can be used for education-related expenses such as tuition, books, student housing, and other post-secondary education costs.

What happens if my child does not pursue post-secondary education?
You can withdraw your contributions tax-free, but investment earnings are taxed and government grants must be repaid.

How long can an RESP stay open?
An RESP can remain open for up to 35 years from the date it was opened.

Q8: Can I open multiple RESP accounts for the same child?
Yes, multiple RESP accounts can be opened, but total contributions to all accounts for one child cannot exceed $50,000.

Q9: Can I open a family RESP for multiple children?
Yes, a family RESP can be opened to benefit multiple children, as long as they are related by blood or adoption.

How can I check the status of my RESP?
You can contact the financial institution where the RESP was opened to check account information and contribution records.

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First Home Savings Account (FHSA)

Is there a required holding period before I can withdraw funds?
No, unlike the HBP, there is no mandatory holding period for funds in an FHSA before making a withdrawal.

Can I continue contributing to my FHSA after buying a home?
Yes, as long as a qualifying withdrawal has not been made, you can continue contributing and receive tax deductions. However, any contributions made after a qualifying withdrawal are no longer tax-deductible.

What happens to my FHSA if I move out of Canada?
Investment growth in the FHSA remains tax-free while you are a Canadian resident. However, withdrawals made while you are a non-resident will be subject to taxes and withholding.

What happens in the case of divorce or separation?
FHSA funds can be transferred between spouses or to RRSP/RRIF accounts without affecting either party’s contribution limits.

What happens if the account holder dies?
The FHSA can be maintained until the end of the year following the year of death, and the income remains tax-free during this time. If the surviving spouse is eligible, the amount can be transferred tax-free to their own FHSA or RRSP/RRIF.

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Tax-Free Savings Account (TFSA)

What is a Tax-Free Savings Account (TFSA)?
A TFSA is a registered savings account allowing Canadians to earn tax-free investment income, including interest, dividends, and capital gains.

Who is eligible to open a TFSA?
Any Canadian resident aged 18 or older with a valid Social Insurance Number (SIN) can open a TFSA.

What is the annual contribution limit for a TFSA?
The annual TFSA contribution limit is set by the Government of Canada and may change each year. For 2024, the limit is $7,000.

Can unused TFSA contribution room be carried forward?
Yes, unused contribution room can be carried forward indefinitely, allowing you to contribute in future years.

Are TFSA contributions tax-deductible?
No, contributions are not tax-deductible. However, all earnings and withdrawals from the account are tax-free.

Can I withdraw money from my TFSA at any time?
Yes, you can withdraw money from your TFSA at any time without paying taxes, and withdrawals create additional contribution room for future years.

What happens if I exceed the TFSA contribution limit?
Exceeding the contribution limit results in a tax penalty of 1% per month on the excess amount until corrected.

Can I have multiple TFSA accounts?
Yes, you can have multiple TFSA accounts, but your total contributions across all accounts must not exceed your available contribution room.

How can I check my TFSA contribution limit?
You can check your current TFSA contribution limit via the Canada Revenue Agency’s (CRA) “My Account” service or by directly contacting the CRA.

Can I name a beneficiary for my TFSA?
Yes, you can designate a beneficiary or successor holder for your TFSA, simplifying estate planning and asset transfers.

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What if I decide to only partially retire?

If you decide to cut back on your hours or if you start working part-time, you should contact your Life and health insurance advisor to reassess your business insurance needs.

You’ll have 3 options:

• If the company still needs the full coverage amount, no changes have to be made to the insurance or the shared ownership agreement.
• If the company doesn’t need as much coverage, your Life and health insurance advisor can ask for it to be reduced.

The policyowners (typically you and the company’s signing authority) have to sign the change request. Decreasing the coverage will trigger a health benefit payment.

It will also reduce the critical illness and death benefits your company
may receive in the future.

The premiums you and the company have to pay will also decrease. Once you fully retire and your company no longer needs critical illness coverage, you’ll be entitled to receive the health benefit based on the new premium and the initial policy issue date. Your Life and health insurance advisor will help you terminate the coverage

Once you and the company’s signing authority have signed the appropriate form, Desjardins Insurance will send you a cheque following the processing of your request.

• If a succession is already in place in the company and you no longer play a key role, the coverage would no longer be required. At that time, with the agreement of the company’s signing authority, you can either terminate the coverage and receive your health benefit in full or transfer the ownership of the contract to you personally.

We recommend you meet with your Life and health insurance advisor to update the Business Needs Analysis (BNA). An up-to-date BNA will be useful in the event that the tax authorities decide to review your file.

What if I decide to fully retire?

The coverage is then no longer required by the company, and, with the agreement of the company’s signing authority, you can either terminate the coverage and receive your full health benefit or transfer the ownership of the contract personally.

We recommend you meet with your Life and health insurance advisor to update the Business Needs Analysis (BNA), so you have a record that the coverage is no longer needed. An up-to-date BNA will be useful in the event that the tax authorities decide to review your file.

The health benefit starts at the end of year 4, so if you decide to fully retire earlier than originally planned, you could trigger the health benefit any time after year

The health benefit amount depends on when you retire. For example, if you retire after 10 years and you had initially selected the health benefit scale returning 100% of the premiums paid after 20 years in the Term to 100, you’d receive 50% of the health benefit.

You cannot receive the health benefit before the expiration of the coverage period without tax consequences if the company still needs it.

For a key employee who is not a shareholder, the Canada Revenue Agency (CRA) might be of the view that you have received a taxable benefit by virtue of your employment upon the payment of the health benefit. Since the determination of the value of the benefit is a question of fact, you should consult an independent taxation advisor in this regard.

What if I sell or wind up my company?

Plans for your company may change. The company may be wound up or amalgamated, a corporate restructuring may be done to add an Holdo, or you may sell your shares.
In either of these cases, you should keep these things in mind:

• Your legal and taxation advisors are aware you have a Health Priorities – Business policy. Together, you need to plan what has to be done if your circumstances change.

Once you sell your shares, the new shareholders will be entitled to direct what happens to the critical illness and death benefits, which means you might no longer be able to receive any portion of those amounts.

If you stay on as a key employee, the company will most likely still need the coverage. If the company no longer needs the coverage, the health benefit can be paid out or the company can transfer their ownership interest to you.

Either way, your Life and health insurance advisor will have to fully analyze the situation. A post-issue Critical Illness Insurance Needs Analysis may have to be done to determine whether the company is impoverished.

• Your original shared ownership insurance agreement addresses these situations so that you and your company are prepared if your plans change.

What if I am a key employee who is not a shareholder? Are there any special considerations for me to be aware of when I am talking with the company about an EHP?

Yes, there are some important differences when you are a key contributor to the company’s financial well-being but are not a shareholder. The main areas are:

Since the company will be the beneficiary of the critical illness and death benefits, it’s important to make sure that your personal needs will be met if you are diagnosed with a critical illness or die prematurely.

That’s why it’s important to conduct a review of your personal critical illness and life insurance needs when considering setting up an EHP.

Your Life and health insurance advisor can complete a Personal Insurance Needs Analysis and provide you with information about solutions to meet your needs and those of your loved ones and assist you in putting your personal risk management program in place.

As an employee, you and the company will need to review your compensation to determine the most advantageous method of ensuring that you will be able to afford your portion of the premiums under the shared ownership agreement.

The two key compensation methods are an increase in your salary or a bonus, both of which can be calculated so that your after-tax income will allow you to cover your portion of the premiums for the jointly owned critical illness insurance.

When it comes time for you to receive the health benefit while you are an employee, the CRA might be of the view that you have received a taxable benefit by virtue of your employment by the company.

Since the determination of the value of the benefit is a question of fact, you should consult an independent taxation advisor in this regard.

If you leave the company altogether, including on your retirement, then the critical illness coverage will no longer be required by the company.

With the agreement of the company’s signing authority, you can either terminate the coverage and receive your full health benefit or, under the terms of your shared ownership agreement, the company will transfer its interest in the contract to you personally.

Since the health benefit starts at the end of year 4, if you cease to be an employee or fully retire earlier than originally planned, you could trigger the health benefit any time after year.

The health benefit may be reduced to reflect it being taken earlier than the original health benefit period selected when the contract was issued.

We recommend you meet with your Life and health insurance advisor to update the Business Needs Analysis (BNA), so you have a record that the coverage is no longer needed. An up-to-date BNA will be useful in the event that the tax authorities decide to review your file.

This will also be an opportunity to review your personal critical illness insurance needs to keep your risk management plan up-to-date.

If you become a shareholder in the future, you and the company should have your legal and taxation advisors do a review of how this change in your status will affect the shared ownership agreement, including the potential taxation of the health benefit.

This change in your status should trigger a review and an updating of the shared ownership agreement to reflect your new status as a shareholder.

What if an EHP doesn’t make financial sense right now? What are my options?

Once you and your Life and health insurance advisor have completed the Business Needs Analysis and determined that your company could benefit from adding critical illness insurance to its risk management plan, you could choose to acquire a corporate-owned Health Priorities critical illness policy with a Return of Premium on Death rider as a cost-effective measure.

You or a key employee could be the insured individual. The company would be the sole owner of the critical illness insurance contract, pay the premiums and be the beneficiary.

The reason that this approach makes sense is that having the Return of Premium on Death rider will allow to convert the contract into an EHP in the future as your company’s cash flow increases.

In this scenario, we recommend you meet with your Life and health insurance advisor to update the Business Needs Analysis to verify that the coverage is still required and that an EHP is appropriate.

Since converting the contract would be a change in the ownership, your legal and taxation advisors should be consulted to do a comprehensive review of your individual circumstances to ensure that the change does not result in the company being impoverished and that a shared ownership agreement is prepared and signed.

This will ensure that you have the proper paperwork to provide to the CRA if they ever review your situation.

Why does Desjardins Insurance price Health Priorities – Business the way that it does? What’s the logic?

When Desjardins Insurance designed the concept of jointly owned critical illness insurance, we introduced the Business
Needs Analysis (BNA).

This form is essential (and mandatory in Quebec province) to determine how much and for how long the critical illness insurance is needed by the company.

Our goal is to split the premium between the company and the insured shareholder or key employee, and have each party
assume their fair share based on the benefits they’re entitled to.

To ensure there’s no impoverishment for the company,
it has to pay for the critical illness and death benefits for a pre-determined coverage period according to its need.

The shareholder or key employee must pay the portion of the premium corresponding to the selected coverage beyond the
company mandated coverage duration, if applicable, in addition to the health benefit premium.

For example, we never take for granted that if the Health Priorities – Business Term to 75 product is selected, the coverage is automatically needed until the shareholder or key employee turns 75, with the shareholder or key employee only paying for the health benefit (ROP).

Here’s how the premium would be split for a 45-year-old shareholder or key employee and a company that needs $1 million in coverage until the shareholder or key employee turns 65

For the Health Priorities – Business Term to 75 with a health benefit that’s equal to all the premiums paid after 15 years, the total premium is $28,100.

The premium is split, with the company paying $10,550 and the shareholder or key employee paying $17,550.

In that case, since the company needs the coverage until the shareholder or key employee turns 65, the premium that will be paid by the company is exactly the same as what it would be for the Health Priorities – Term to 65 with ROPD.

In other words, if the company had purchased a critical illness policy with the same benefits, independently from the shareholder or key employee, the company would disburse the same amount.

Splitting the costs between the parties based on how long the company needs the coverage minimizes the risk of inadvertently impoverishing the company when critical illness insurance is no longer needed, and payment of the health benefit is triggered.

For a key employee who is not a shareholder, the CRA might be of the view that you have received a taxable benefit by virtue of your employment upon the payment of the health benefit.

Since the determination of the value of the benefit is a question of fact, you should consult an independent taxation advisor in this regard.

Why are EHP beneficiary designations structured the way they are?

At Desjardins Insurance, we’ve structured the contract so that a beneficiary can be designated to receive the ROP option.

Over time, we’ve maintained the beneficiary designation feature for the shared ownership concept, following the regular review of the product made from a tax and legal perspective.

On the critical illness insurance application, a beneficiary can be designated for each of the following benefits: critical illness, death and health.

What are the benefits of the Business Needs Analysis (BNA)?

The BNA helps Life and health insurance advisors establish how much coverage a company needs if the insured shareholder or key employee is diagnosed with a critical illness. It’s also used to determine how long the company needs the coverage.

The BNA helps show Desjardins Insurance’s underwriters that you and the client have worked out a realistic amount for the insurance need.

Completing the BNA allows clients to systematically quantify—often for the first time—how much their company is worth.

It also helps them recognize and acknowledge the extent of the insurance need to adequately protect their company against a critical illness. In the case of a key employee who is not a shareholder, the BNA can show clients what the financial costs of replacing that employee could be and assigns a concrete figure to those costs.

This may be helpful if the shared ownership insurance agreement is questioned down the road by other advisors or, more importantly, by tax authorities.

How important is the shared ownership insurance agreement?

The shared ownership insurance agreement is an essential part of the paperwork that makes the entire EHP concept work so well. Desjardins Insurance provides a “bare bones” sample document for reference and discussion purposes only.

The sample document isn’t a professional advice. Desjardins Insurance doesn’t assume any liability for its potential use.

Clients need to ask a qualified legal advisor to draft a shared ownership agreement for them. These professionals will be able to address the client’s future planning considerations in the agreement.

mohammad rahimian
Moe Rahimian - Insurance Broker, Toronto
My reputation is more important than my paycheck.
Direct phone number:
📞 905-370-0011
Rahimian Insurance Company has been operating in Canada since 2002. We are an official member of the Insurance and Financial Advisors of Canada. We offer individual, group, and investment insurance services. I, Mohammad Rahimian, along with my experienced colleagues, am at your service—offering free consultations with our expertise in the field of insurance.

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