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For insurance representative use only.

This document is not intended for public distribution.
Protection Solutions
Your guide to
Making Retirement Better
Grow. Protect. Live. Transfer.
Grouped Critical Illness Insurance
with Standard Life
For insurance representative use only.
This document is not intended for public distribution.
Grouped critical illness coverage (grouped CI) is not a
group insurance plan. A group insurance plan is a group of
employees covered under a single contract.
A grouped, or common, plan is where the employer puts
in place an arrangement whereby employees are covered
under individual CI contracts as part of a common plan
involving two or more employees.
The employer puts the arrangement in place. The company is the policyholder (or
owner) and the employee is the beneft recipient. The employer pays the premiums,
which are then tax-deductible – a big advantage to the employer. The employer-paid
premiums are not taxable to the employee – a big advantage to the employee.
For the employee, the beneft received, should a claim be paid, is non-taxable to them
and can be used at their discretion.
The Grouped CI Advantage – A Tax Efficient Benefit Arrangement
For the employer, it allows them to offer a valuable benefit to existing employees
in appreciation of work well done, and a way to attract new employees. The
benefit helps relieve their employee of the immediate financial stress of a
critical illness and allows them to concentrate on a speedy recovery.
The employee is free to use the lump-sum benefit as needed – to pay the
mortgage, reduce debt, provide homecare or childcare. The benefit is there for
when it is needed most.
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The following are required to implement this concept and maintain its tax effectiveness:
Two or more insurable employees
Individually issued CI policies
An umbrella agreement under which all the policies are grouped together.

How does Grouped CI work?
The arrangement is considered a GroupAccident
andSicknessPlan for tax purposes. Each contract is
issued on an individual basis. There must be two
or more insurable employees participating (this
is crucial to ensure that the plan qualifes under
paragraph 6(1)(a) of the Tax Act). The employer,
who is also the owner of the policy, pays the
premiums, which are deductible for tax purposes.
The employee is the insured and the beneft
In the event the employee contracts one of the
illnesses covered under the plan, the beneft is paid
tax-free directly to the employee or their named
benefciary. Once a full beneft is paid, the critical
illness contract for that employee is over.
The umbrella agreement
In order to ensure that the plan meets the
requirements for a grouped or “common plan”
it will need to be documented. We recommend
that the employer distribute a copy of the plan
description to their employees.
PleaserefertothefollowingTaxing Issuesforadditional
taxinformation:Grouped CI as an Employee
Beneft(PC5786B-10-2006)andThe Taxation
of Corporately-Owned Critical Illness Insurance
The umbrella agreement would document the
details of the plan and its members. In it, the
employer would state that it is implementing the
group accident and sickness arrangement and
would provide a description, including, but not
limited to, the following:
The purpose of the arrangement
Defnition and description of the plan Members
Plan funding (i.e., with the employer paying the
premiums for the individual CI contracts being
The type of critical illness policies (i.e., number
of illnesses and amount of the beneft) to be
included in the plan
Record management
Termination of employment
We can offer you guidance on how to set up this
type of umbrella agreement.
Plan membership
The umbrella agreement defnes the employees
who will participate in the plan, known as
Members. These Members may fall into different
Classes, which will allow the employer to structure
a plan tailored to the employees he has. For
example, there could be an Executive Class made
up of management, and an Ordinary Class of
Members for all other employees. These Classes
will also defne the eligibility of a Member to join
the plan, based on things such as length of service
with the company and their position.

Where participants are both shareholders and employees,
they should be able to demonstrate that they participate
in the arrangement by virtue of their employment, not
their shareholding. They should be receiving employment
income, as reported on a T4 slip.
Protecta Grouped Critical Illness Insurance
Each employee Class should have
the same type of plan. For example:
• All Executive Members have
coverage under Protecta 65
Enhanced for $150,000.
• All Ordinary Members have
coverage under Protecta 10 for
$25,000 or $50,000.
This is determined by the employer
and spelled out in the umbrella
Protecta Grouped Critical Illness Insurance
Making it Happen
Making it Happen
We can provide you with suggestions in making the arrangements in the most effcient
manner, from presentation to implementation.
Applying for the individual plans
Each employee applies for the critical illness policy
and is underwritten on an individual basis. The
employer is the owner/payor and the employee is
the beneft recipient.
The medical underwriting requirements for the
Protecta Critical Illness policies are based on
the age of the applicant (insured) and coverage
amount (see PC4439 UnderwritingRequirements
on Advisor Source), as they would normally be.
However, there will be no CI offered on children
for this type of arrangement.
The type of plan (Protecta 10, Protecta 65,
Protecta 75, Protecta 100), coverage (Protecta
or Protecta Enhanced) and beneft amount are
determined by the employer. These may vary by
Member Class. The coverage is not transferable
from one Member (insured) to another.
To facilitate the medical requirements, such as a
paramedical or UHIV, we could arrange for the medical
supplier to be on site for a day for the preliminary
For tax purposes, we would suggest not adding
the Return of Premium on Death (ROPD) or Return
of Premium on Surrender (ROPS) options. There
is also some uncertainty from CRA’s perspective
about whether this may cause the arrangement
not to be an A&S arrangement. In any event,
where an employer has deducted the premiums
originally paid, any ROP benefts it receives
generally represent a recovery of these expenses,
and will be included in income.
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Protecta Grouped Critical Illness Insurance
Making it Happen
At implementation, applications for the CI
coverage should be submitted concurrently to
establish the necessary “group”, and ensure there
are at least two insurable lives. New Members will
be added as they become eligible under the terms
of the agreement. All applications must be marked
GroupedCI at the top of the frst page.
Portability and flexibility are key
features of the Grouped CI plan, not
to mention CI coverage is not widely
available for group insurance. In
addition, with group insurance, the
employee would be expected to pay
premiums, while with Grouped CI, the
employer pays the premiums on the
employee’s behalf and still deducts the
premiums as an expense.
Rated employees
Reasonable ratings are acceptable under the plan.
The employer reserves the right to determine a
Member’s eligibility under the plan only if that
employee is excessively rated. This is stipulated in
the umbrella agreement.
The employer determines the limits of
the plan, as it is the employer who pays
the premiums.
Records and statements
The employer should make available a copy of the
agreement to the plan Members for review during
normal business hours. All information pertaining
to the individual policies are confdential and must
be kept in a secure place.
All Grouped CI policies will begin with LGCt for
the policy number. Standard Life will provide
statements to the employer upon request.
As the employer is the owner, all changes to the
individual policies must be signed by the company
representative (as determined by the employer)
and the employee. We would suggest that the
employer assign an individual for this purpose.
Benefciary designations are determined by the
employee (insured), and the employer is obligated
to respect all direction in that regard. This right is
protected under the umbrella agreement.
Termination of employment
If they should change employer, the employees
can assume the policy themselves. Unlike most
group insurance plans that may provide coverage
convertibility at an attained age cost when an
employee leaves, this plan is fully portable with no
change to issue age, beneft or cost.
There is no loss to the employer when an
employee leaves the plan. The employer had
deducted the premiums as an expense, and gained
tax advantages from doing so.
The employee would now pay the premiums, but
at the same cost the employer paid – there would
be no increase.
The umbrella agreement will specify the terms of
transfer of the policy from employer to employee,
and will cover the unearned premium as well as
the time frame for the transfer. The employer
must offer the employee the right to take over the
coverage in writing.
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Employers could make direct contributions to an
individual or group RRSP for employees who are highly
rated or declined. While this will be a taxable benefit to
the employee, the employee will have an offsetting RRSP
contribution. (Of course, RRSP contribution room needs to
be checked).
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Protecta Grouped Critical Illness Insurance
This document must not be relied upon as professional advice of any kind whatsoever.
Legal, as well as, professional advisors should be contacted for advice with respect to any
particular circumstances.
With Protecta critical illness coverage, if an employee is diagnosed with one of the
critical illnesses covered by the policy, such as heart attack, cancer, stroke, or coronary
artery bypass surgery, and survives a period of usually 30 days, they will receive a lump
sum payment.
The employee is free to use this beneft as needed – to pay the mortgage, reduce debt,
provide childcare. It is their choice.
A company’s greatest asset is its employees.
Protecta Grouped CI is an important
benefit for employees’ financial health.
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Protecta Grouped Critical Illness
Marketing materials to provide employers with:
5864 Protection Solutions Folder
PC 6085 Prospecting letter for Protecta Grouped CI
6084 This is all about Protecta Grouped CI with Standard Life
6078 Q&A on Grouped Critical Illness Insurance
4776 This is all about Protecta Critical Illness Insurance from Standard Life
5866 This is all about Protecta Critical Illness Insurance for business owners
4900 Protecta Critical Illness Insurance (At a Glance)
PC 5786 Grouped CI as an Employee Beneft
PC 5772 The Taxation of Corporately-Owned Critical Illness Insurance
PC 5787 Corporately-Owned Critical Illness Insurance
5628 Have you thought about the fnancial impact of a critical illness?
PC 5870 Sample cover letter to doctor
5016 Insurability checklist
5071 Comprehensive Application Form

Marketing materials to provide employees with:
6078 Q&A on Grouped Critical Illness Insurance
4776 This is all about Protecta Critical Illness Insurance from Standard Life
5628 Have you thought about the fnancial impact of a critical illness?
5016 Insurability checklist
Feel free to consult “Your Guide to Protecta Critical Illness Insurance with Standard Life” (4213) and
“Protecta Critical Illness Insurance (At a Glance)” (4900) for more information on critical illness insurance.
Marketing Materials
Eastern Region
Central Region
Western Region
Ask about our Business Markets Program
The materials listed below can be used to provide your clients with a kit for the employer
as well as some information for the employees. These materials are available, both in
print and PDF format, on Advisor Source at Printed copies
can be ordered through the regular distribution channels.
Standard Life 7
The Standard Life Assurance Company of Canada
Talk soon.