Critical illness (CI) does not have specific mention in the Income Tax Act. It depends on the exact circumstances whether a CI policy resembles more to a life insurance or a sickness/accident insurance.
CI premiums paid by the corporation are not deductible. When the policy value is paid to the corporation on diagnosis of a critical illness, that benefit will be tax-free.
The same treatment applies to individuals (i.e. not deductible, not taxable).
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.