Protect Key People and Build Personal Wealth
When a business owner or top executive becomes critically ill, the financial impact goes far beyond lost income; it affects business continuity, family security, and long-term plans.
The Executive Health Plan (EHP), also known as Shared Ownership Critical Illness Insurance, is a strategy in which a business and an executive (often the owner) share the costs and benefits of a critical illness insurance policy within a tax-effective structure.
Here’s how it works:
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The business owns the critical illness coverage and receives the benefit
if the insured executive becomes ill. -
The executive owns the Return of Premium (ROP) rider and receives all premiums back (tax-free)
if no claim is made by the end of the term.
This strategy provides:
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A lump-sum payout to the business in case of critical illness
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A tax-free benefit to the executive if no claim is made
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A smart use of retained earnings and off-balance sheet return
Why Business Owners Love the
Executive Health Plan
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Business continuity: The business receives a lump-sum payout to manage disruptions
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Tax-smart: Premiums paid by the business are typically not a taxable benefit
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Return of premiums: After 15–20 years, the executive may receive all premiums back — tax-free
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Wealth-building: Creates a high after-tax rate of return if no claim is made
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Recruitment & retention: Offers executive benefits with real value
Is the Executive Health Plan Right for You?
This strategy is ideal if you:
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This strategy is ideal if you:
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Want to protect your business from the financial impact of a critical illness
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Want to build personal wealth tax-free
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Are looking for smart ways to use retained earnings
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Want an executive perk with real financial value
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Get your answers
Most plans cover 25+ conditions, including cancer, heart attack, stroke, organ transplant, multiple sclerosis, and more
The corporation owns the base critical illness coverage, and the executive owns the return of premium (ROP) rider. The agreement defines who pays for what and how the benefits are distributed.
No, if structured correctly, the return of premiums paid to the executive is received tax-free under current CRA rules.
The corporation receives the tax-free critical illness payout and can use the funds for continuity, such as hiring a replacement, covering debt, or stabilizing operations.
Most ROP riders allow for a refund of premiums after 15 or 20 years, or at policy expiry — if no claim has been made.
Yes, the Executive Health Plan can complement key person insurance, buy-sell funding, or executive compensation strategies. It’s especially powerful for incorporated businesses with retained earnings.
Still Have Questions?
Disclaimer: The information contained in this article is provided for general informational purposes only and does not constitute financial, legal, tax, or investment advice. While we strive to ensure that the content is accurate and up to date, Safe Horizon Financial makes no guarantees regarding its applicability to your individual circumstances. Readers should consult qualified professionals (such as a licensed financial advisor, accountant, or lawyer) before making decisions based on the information presented. Safe Horizon Financial is not responsible for any actions taken or not taken as a result of this content.