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| Small Business Services: Related Articles |
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Disability Insurance
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| The event of a disability can be devastating to
anyone and the last thing you want to worry about is your financial
situation. A good plan of disability insurance can provide some
financial relief if a disability should occur. One of the important
aspects of a disability insurance policy is that the benefits should be
exempt from income tax. A disability insurance plan paid by an
individual will not be considered to be taxable income. However, if the
insurance plan is paid for by an employer, any benefits paid as a result
of a disability would be considered to be payments for a wage loss
replacement plan and would be taxable under section 6(1)f of the income
tax act. It is important therefore, that any group insurance that
includes disability insurance be an employee-pay-all plan with respect
to the premiums that relate to the disability insurance. Premiums, paid
by the employer and included in the employee's income as a taxable
benefit, are considered to be paid by the employee and thus any benefits
would be tax exempt. All employees should review their disability
insurance plan to be aware if the premiums they are paying are on an
employee-pay-all basis or not.
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In Success" |
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