Business professionals meeting to discuss insurance strategies

Shared Ownership Critical Illness Insurance

A specialized insurance arrangement where two parties share ownership and benefits of a single critical illness insurance policy.

What is Shared Ownership Critical Illness Insurance?

Shared ownership critical illness insurance is a specialized insurance arrangement where two parties, usually the business and a key employee, share ownership and benefits of a single critical illness insurance policy.

The business typically owns the portion of the policy that protects the company, to cover financial losses if that employee becomes critically ill

The employee owns a rider that provides for a full return of the premiums paid after a set period of time or age, if there's been no claim on the benefit by that time

Both parties share in the costs, ownership rights, and benefits according to a written agreement.

How It Works

The Corporation's Role

The corporation purchases a critical illness insurance policy on the person who is key to the generation of revenue for the business.

If there is a claim on the benefit, then the corporation receives the lump-sum tax-free benefit.

The Employee's Role

The employee owns and pays for the "Return of Premium" rider attached to the plan.

After a predetermined number of years, or a certain age of the insured (depending on the nature of the rider chosen), if there's been no claim on the benefit then the owner of that rider will personally receive all of the premiums paid by both them and the corporation.

Benefits for the Business

Protects against financial loss from losing a key person's contributions to the company
The potential of the return of premium offers a valuable retention tool for the business

Benefits for the Employee

If structured properly, the employee may share in the benefit paid if they get diagnosed with any of the covered illnesses or injuries (though taxes may be applicable)
The potential for the large lump-sum return of premiums at a future date

Expert Guidance

There are many factors and considerations to take into account when setting up this type of arrangement, and we at Highmark have extensive knowledge in educating our clients and their accountants in all areas of this strategy, to add clarity and simplicity to an otherwise complex plan.

Ready to Explore This Strategy?

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