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    Participating Whole Life Insurance


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Term Life   Universal Life   Whole Life   Participating Whole  Life


Participating Whole Life Insurance is a whole life insurance plan that provides a combination of permanent lifetime insurance protection (Basic Life Protection) and an opportunity to accumulate a cash reserve to use as a savings plan for financial emergency, to supplement your children’s education fund, or to have additional funds for retirement and so on.

During your lifetime, Participating Whole Life Insurance can:

●  Build cash value that you can use for personal or business opportunities (any cash value withdrawn from the policy may be subject to tax);

●  Supplement your retirement income;

●  Provide funds for long-term care or home care.


Basic Life Protection 

The basic insurance protection is guaranteed for life, as long as you pay the premiums when they are due. This insurance provides you with protection for a guaranteed level premium. There are two guaranteed premium payment options: level premiums payable for life and level premiums payable for twenty years.  The basic life insurance protection provides you with guaranteed cash value, which you could get upon surrender of the policy to the insurance company.



Besides basic life insurance protection, your policy is eligible to receive annual dividends on the permanent insurance portion of your policy.  You have an opportunity to share in the earnings in the participating account that is why this policy is called Participating.


Where the dividends come from?

When you purchase participating life insurance, the premiums paid (along with funds from other participating policies) are deposited into an account called the participating account, and invested.  A portion of the surplus generated on this account, may be paid to policyholders in the form of dividends.


The participating account is mainly impacted by returns earned on investments, mortality, terminated policies, expenses and taxes. The amount available for distribution in any year will vary upwards or downwards depending on the actual and expected experience. Your share in this earnings is annually credited to your policy as a dividend payment.

Dividend scale interest rate is calculated by the insurer every year and the amount of dividends is not guaranteed.  Generally, dividends increase with the numbers of years the policy exists.


Dividend options

Participating whole life insurance is eligible to receive annual dividends through a variety of dividend options. You choose one of following dividend options:

  1. Paid in cash or cash to reduce or pay premiums

  2. On deposit

  3. Purchase Units in common stock segregated funds 

  4. Paid Up Additions (PUAs)

  5. Enhanced protection

Option 1.

If you have elected to receive your dividends paid in cash each year, the dividend paid may be subject to taxation.

If you have elected to use the dividend to reduce your premiums each year, any dividends payable will be applied to reduce the current year’s premium. If, in the future, dividends are sufficient to pay your entire required premium, you will receive any excess in cash. Dividends may be subject to annual taxation once the annual dividend is greater than the required premiums.


Option 2.

This dividend option operated similar to a saving account. Any dividends payable are deposited with the insurance company and will earn an interest rate. You have access to this cash and can make withdrawals at any time. Interest earned on the dividends left on deposit is taxable as earned and the dividends paid may be subject to taxation.


Option 3.

This option is similar to Option 2, but with a little more risk and greater chance to earn income on your contributions.


Option 4.

Dividends are used to purchase Paid Up Additions (additional policies), which are added to the basic policy and create another “layer” of permanent participating whole life insurance, eligible to earn dividends.

Purchasing Paid Up Additions is the opportunity to have more insurance without providing further evidence of good health or new premium outlays. The dividends earned on the Paid Up Additions combined with the dividends earned on your basic permanent coverage can result in substantial increase in both the death benefit and cash value over the life of your policy.

Cash withdrawals are made by surrendering Paid Up Additions.


Option 5.

The policy begins with a combination of basic permanent insurance and yearly renewable one-year term insurance which increases amount of coverage.  (This one-year term insurance is called the Enhancement). So, the total Death benefit will be higher than the guaranteed coverage. Then dividends are used first to pay for the one-year term insurance each year to reach the amount of coverage chosen and any excess is used to purchase Paid Up Additions. Any new PUAs automatically replace part of the one-year term insurance. Once all of the original one-year term insurance has been replaced by PUAs, the dividend conversion point is reached. At that point, all future dividends are used to purchase additional PUAs.


Participating life insurance is an excellent solution for people who are:

●  Looking for lifetime protection combined with the opportunity for significant savings;

●  Wanting to increase their death benefit over time to keep pace with inflation;

●  Interested in accessing the cash value to supplement their retirement income or to pay for long term care, while ensuring that there is a death benefit in place to protect their  estate.



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 Investments:     RESP    |  Canada Education Savings Grant  |    Canada Learning Bond    

RRSP   |  Home Buyer's Plan    |    Lifelong Learning Plan   |   Spousal RRSP  |    TFSA     |    Segregated Funds

Revised: December 16, 2017