Critical illness insurance for business owners in 2024
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Critical illness insurance for business owners is a type of insurance coverage designed to provide financial protection if the business owner is diagnosed with a specified critical illness or medical condition.
This insurance is particularly relevant because a serious health issue can not only impact your well-being but also affect the financial stability of your business. Good critical illness insurance for business owners provides a lump sum payout for both covered illnesses and ensures business continuity during recovery.
In this guide, we explore how this insurance works, the pros, and cons, the best critical illness insurance for business owners in Canada, and more. You can use our free comparator to compare plans, get free personalized quotes, and start protecting your business right away.
CII for Business Owners: Key Takeaways
- Critical illness insurance protects your business from financial hardship.
- Business-owned CII offers tax advantages and other benefits.
- Weigh in different factors of individual vs. business-owned CII before deciding.
- Various companies offer CII, including Canada Life, Sun Life, and Manulife.
- Cost varies depending on individual and business factors.
What is critical illness insurance for business owners?
Critical illness insurance is a valuable tool for business owners in Canada, providing financial security in the event of a serious illness.
It offers a tax-free lump sum payment upon diagnosis of a covered illness, which can help:
- Cover business expenses like payroll, rent, and utilities.
- Maintain business operations during your absence.
- Protect corporate assets from being used for personal expenses.
- Fund business succession plans or buy out a partner's share.
- Pay for additional medical expenses not covered by provincial healthcare.
- Provide financial stability for your family and dependents.
Most CII policies cover a range of critical illnesses, including:
- Cancer
- Heart attack
- Stroke
- Multiple sclerosis
- Alzheimer's disease
- Kidney failure
- Blindness
- Paralysis
- And more
This is just a quick overview of what is typically covered by most critical insurance policies. Some policies might offer more coverage options at higher costs. Analyze your policy carefully to know about your coverage. You can get started by getting quotes from different providers in Canada, using our comparison tool below.
Find a critical illness insurance policy that's right for you
How does critical illness insurance for business owners differ from individual plans?
Both business-owned and individual CII can provide financial protection against critical illnesses, but they have key differences.
Here's a breakdown to help you decide which option is better for you:
Business-Owned CII
- Owned by the business: The business pays the premiums and receives the tax-free payout upon your diagnosis.
- Corporate asset protection: The payout is considered a business asset and cannot be used for personal expenses.
- Business succession planning: Funds can be used to buy out a partner's share or implement succession plans.
- Tax implications: Premiums are tax-deductible for the business and the payout is tax-free.
- Limited flexibility: You may not be able to change beneficiaries or adjust coverage levels easily.
Individual CII
- Owned by you: You pay the premiums and receive the payout, which may be taxable (depending on your province).
- Personal financial protection: Provides financial support for you and your family.
- Flexible coverage: You can choose the coverage amount, beneficiaries, and riders.
- Tax implications: Premiums may be partially tax-deductible for individuals, and the payout may be taxable depending on your province.
How to choose the right option?
The best option for you depends on your individual and business circumstances. Here are some factors to consider:
- Business impact: How critical are you to the operation of your business?
- Financial needs: How much financial support would your business need in case of your illness?
- Tax implications: Consider the tax implications of each option.
- Flexibility: How important is flexibility in coverage and beneficiaries?
- Personal needs: Do you need additional financial protection for yourself and your family?
Good to know
Business-owned CII is typically more expensive than individual CII, and you can own both individual and business-owned CII.
How much can critical illness insurance for business owners cost?
The cost of Critical Illness Insurance (CII) for business owners in Canada depends on various factors, including:
Individual factors
- Age: Premiums typically increase with age.
- Gender: Women generally pay slightly more than men.
- Health: Pre-existing conditions can significantly impact premiums.
- Smoking status: Smokers pay more than non-smokers.
Policy factors
- Coverage amount: Higher coverage amounts lead to higher premiums.
- Policy term: Longer terms generally have lower monthly premiums.
- Waiting period: Policies with shorter waiting periods before benefits begin are more expensive.
- Riders: Adding optional riders, like a waiver of premium, will increase the cost.
Business factors
- Industry: Some industries are considered riskier and may have higher premiums.
- Number of employees: The number of employees covered can affect the cost.
- Claims history: A history of claims can lead to higher premiums.
Here's a rough estimate of the cost based on age and coverage amount:
| Age | $250,000 coverage | $500,000 coverage | $1,000,000 coverage |
|---|---|---|---|
| 30 | $40-60/month | $70-120/month | $140-240/month |
| 40 | $70-120/month | $120-200/month | $240-400/month |
| 50 | $120-200/month | $200-300/month | $400-600/month |
These are just estimates, and the actual cost may vary significantly based on your circumstances. To get an accurate quote, use our comparator below.
Find a critical illness insurance policy that's right for you
Which companies offer critical illness insurance for business owners in Canada?
Several companies offer critical illness insurance for business owners in Canada.
Here are some of the most well-known ones:
- Canada Life: Offers both individual and business-owned CII with flexible coverage options and competitive rates.
- Sun Life: Provides a comprehensive range of CII products, including business-owned plans with tax-free payouts.
- Manulife: Offers individual and group CII plans with various riders and benefits.
Let’s take a look at their coverage and see what makes them a good choice.
Canada Life’s business-owned critical illness insurance
Canada Life offers a comprehensive business-owned critical illness insurance plan designed to protect your business and its future in the event of a key person's illness.
This plan provides financial security and peace of mind, allowing you to focus on your recovery while ensuring your business continues to operate smoothly.
Here are some of its key features:
| Feature | Description |
|---|---|
| Coverage Amount | Up to $10 million |
| Waiting Period | 30 days |
| Benefit Options | Lump sum payment, accelerated benefit rider, waiver of premium rider |
| Policy Term | 1 to 30 years |
| Renewable | Yes, guaranteed renewable |
| Premiums | Based on your age, health, smoking status, coverage amount and other factors |
Suncentral shared ownership from Sun Life
Suncentral Shared Ownership is a unique strategy offered by Sun Life Canada that allows two or more parties to share the cost and benefits of a single critical illness insurance policy.
This approach can be a cost-effective way for businesses and individuals to access comprehensive financial protection against critical illnesses.
Here is how it works:
- Individuals or businesses agree to share ownership of a single Sun Life CII policy.
- Each party contributes a portion of the premium based on their desired coverage level.
- Upon diagnosis of a covered critical illness, all parties receive a share of the lump-sum payout proportionate to their contribution.
Who can benefit from it?
- Businesses can protect key employees and ensure business continuity.
- Business partners can share the cost and benefits of CII coverage.
- Families can provide coverage for multiple family members at a lower cost.
- Individuals can access higher coverage than individual policies might offer.
If you would like to know more about Sun Life's coverage and its rates, use our comparator and get personalized critical insurance quotes with all the relevant details you might need.
Find a critical illness insurance policy that's right for you
Critical illness insurance for businesses from Manulife
Manulife offers you three options: Manulife Synergy, Lifecheque® critical illness insurance, and CoverMe® critical illness insurance.
Manulife Synergy: This is a 3-in-1 insurance product that combines life, disability, and critical illness coverage.
It can be customized to include business-specific benefits, such as a lump-sum payment in case of a critical illness, which can help:
- Maintain business operations
- Cover payroll and other expenses
- Protect corporate assets
- Provide financial support for the business owner's family
Lifecheque® critical illness insurance: This provides a tax-free lump-sum benefit upon diagnosis of a covered illness, helping you focus on recovery without financial worries.
CoverMe® critical illness insurance: This offers a simple and affordable way to protect your business from the financial impact of a critical illness.
You get a tax-free lump-sum benefit that can be used for various purposes, including:
- Hiring temporary staff
- Paying off business debts
- Investing in business growth
- Buying out a partner's share
Other critical illness insurance for business owners in Canada
- Empire Life: Offers individual and business-owned CII with a focus on simplicity and ease of purchase.
- iA Financial: Provides individual and group CII plans with competitive rates and excellent customer service.
- Assumption Life: Offers a range of individual and group CII products with unique features and benefits.
- Hub International: A large insurance broker offering access to various CII products from different insurers.
- BFL Canada: A specialty insurance broker specializing in business insurance, including CII for business owners.
