• Last Updated:
  • Jun 22nd, 2018 6:49 pm
[OP]
Jr. Member
May 20, 2002
193 posts
26 upvotes

Executive health savings plan

Does anyone have experience with an executive health savings plan (ehsp)? They are also called a split dollar critical illness plan.


I am considering this more for my holdco as an investment and for insurance.

For anyone curious it is a life insurance and critical illness policy that is 2/3 paid by the holdco with retained earnings and 1/3 by me personally. From what I understand the 1/3 personal is a return of premiums rider.

Payouts could be from a critical illness or death or from return of premiums.

I dont know how the CRA will view this and really it is anyones guess.

I may be deploying 30k per year into this so I would appreciate anyones input.

Both my accountant and financial plannwr are non committal on their opinions.

Thanks for your opinon
4 replies
Deal Addict
Aug 28, 2007
1851 posts
246 upvotes
Calgary
Can you approach the vendor of the plan for any supporting information? One would think any smart marketing department would have done at least enough research to provide you with documents to validate the strategy. From there you could ask them to identify their competitors so you could conduct due diligence. A good salesperson would be prepared for that as well.

I'd be interested if you posted the outcome of that here on RFD, as your idea has appeal. Thanks
[OP]
Jr. Member
May 20, 2002
193 posts
26 upvotes
Further to your comment of discussion with other vendors I have spoken with sun life. They have a plan too. My impression is that they are very similar.
Deal Addict
Aug 28, 2007
1851 posts
246 upvotes
Calgary
I looked at the Desjardin PPT and I'm still not clear if the benefit is superior. It appears they are bolting a life plan and a CII plan together and splitting the premium cost between the owner and the business to make it tax friendly upon payout. The Life and CII will pay out normally if the bad things happen, but if all goes well you get your premium money back from both sides (company and personal). The premium payback is tax-free. They've calculated it as over an 8% return

The return would be based on assumptions of a lot of variables staying the same for 20 years. I presume their actuaries have figured out the percentages on the life and CII parts and done a discounted cash flow on your premiums to ensure they will generate greater than 8% on your money over the intervening twenty years.

If you're risk averse and want life & CII anyway, then it's probably a way to get it as efficiently as possible. I'm certainly no expert, however, merging insurance with savings/investing is not my personal preference.

Top