Critical Illness Insurance: Taxes

[JeanClaude]

Hello,

I'm looking for taxes related information for critical illness insurance.
For instance, in case you are diagnosed a critical illness covered by your insurance policy, what taxes will be applied to the premiums, and to the benefits?

I know this can vary from one country to another, and from one state to another. But I'm looking for general information.

Any idea?

Thank you very much.

 

[Briefcaseboy]

CALL THE IRS AT THIS NUMBER

1-800-829-1040 FOR INDIVIDUAL TAX QUESTIONS

 

[JeanClaude]

CALL THE IRS AT THIS NUMBER

1-800-829-1040 FOR INDIVIDUAL TAX QUESTIONS

Thank you, but I'm looking for a document or article. It' for my personal knowledge: I don't live in the US

 

[kheyknee]

You have to check your policy to see if the benefits are indemnity or expense incurred.

Indemnity benefits are lump sum payments made without regard to actual medical expenses. If the premium is paid pre-tax the benefits are subject to taxation.

Expense incurred benefits are not taxable even if the premium was paid using pre tax dollars.

 

[somarco]

I believe you need to go a bit further than that.

If CI benefits are tied to a life policy they are considered an advance on the death benefit and may be taxable unless you die very soon.

If it is a health policy, the benefits are rarely taxable.

The definition of indemnity is to make whole which presumes payments made under an indemnity plan are reimbursement for expenses incurred.

 

[arnguy]

Check with the tax authority of the country where you reside or try to google the information.