How Are Dividends Paid on Life Insurance?
How much are you earning in your savings account right now? What if could earn a 6% dividend? With one of these policies, you can create a pool of money that grows with tax advantages and pays a dividend based on the profitability of Canadian insurance companies. We know that insurance companies are profitable. Now, you can participate in their profits.
How is Your Money Invested by the Insurance Company to Pay Dividends?
When you pay premiums into a dividend-paying participating whole life insurance policy, you get to take advantage of the investment acumen of insurance companies that have a long, established record of consistent positive returns. Beyond the portion of your payment that’s used to pay for benefits and expenses, the rest of your payments are being invested in a participating account.
This is happening according to the same safe and conservative investment protocols that have enabled insurance companies to pay out benefits, every year – for more than a 100 years. They have a track record of steady performance that is very much in contrast to the peaks and valleys of the stock market. While most insurance companies’ participating accounts outperforms traditional conservative investments like GICs, you don’t get the volatility that investors in the S&P or TSX get – even in absolutely awful investment climates, as we saw in 2008-2009. The insurance companies’ investments held steady, enabling them to pay dividends even in the worst of times. Canada Life, for example, has paid a dividend for over 140 years and has never missed a payment. It’s hard to beat that kind of consistency with any other kind of product.
Again, this isn’t to present a participating life insurance policy as your only investment alternative. If you see an opportunity to make money on an IPO, real estate venture or some other investment opportunity, your policy is not an alternative – rather, it is the vehicle through which you will have capital ready to make the investment (just so long as the numbers make sense – and we can help you understand your options)!
How Do Dividends Impact Your Financial Position?
If you were to take the cash value of the dividend out and spend it, you’d be liable for tax penalties – which negates a large benefit of using the Infinite Banking Concept. Instead, by adding the value of the dividend back into the insurance policy – and only taking out money when you need it in the form of a loan against the policy, you retain that benefit. Now you’re taking advantage of compound interest – and your dividends and pool of money will grow!
Managing a dividend-paying participating whole life insurance policy in this way to reap the full advantage is easy when you have guidance and coaching from an expert. That’s why we’re here. We’re happy to answer any questions you have about insurance policy dividend payments and any related topic. You can reach us by phone or email via the Contact page here.
Download Reference Materials from Canadian Life Insurance Companies About Participating Whole Life Insurance Dividends
For a more detailed description of how participating accounts are invested and to see actual, historic returns compared to other investment types, click on any of these PDFs.
Equitable Life of Canada Dividend 25 Year Historical Performance (PDF)
Canada Life Insurance Dividend Historical Performance Since 1950 (PDF)
Sun Life Understanding Participating Whole Life Insurance with Historical Performance (PDF)
Contact Us
At Safe Pacific Financial, we specialize in helping Canadian business owners, incorporated professionals, and investors structure life insurance for maximum wealth protection, tax savings, and business growth.
If you would like to discuss whole life insurance or investments, we’re happy to chat and see if we can be a good fit to work with you. Fill out our contact form and we will get back to you within 24 hours on business days.
Related Insights
Episode 5 of the Infinite Banking Concept Series - Leaving a Legacy
Welcome to the fifth and final blog in our comprehensive series about the Infinite Banking Concept in Canada. Throughout these four previous blogs we’ve talked about...
Episode 3 of the Infinite Banking Concept Series - How Policy Loans work and what is the Adjusted Cost Basis?
Let’s look at a Whole Life Insurance Policy Illustration that's correctly set up for the Infinite Banking Concept. In this illustration with a Canadian life...
What is the Immediate Financing Arrangement?
Who is this for? We tell everyone that they shouldn’t set this up unless they want and need life insurance. If you have someone you...
Infinite Banking is a scam!
Is Infinite Banking as good as everyone says it is or are they scamming you? We’ll answer that today.
Should you invest using DCA or a lump sum?
So, what investment strategy is going to you the most money, dollar cost-averaging or a lump sum investment? I can’t see the future but based...
The Ten Commandments of Whole Life Insurance in Canada
There’s this great article titled “the ten commandments of whole life insurance” and it is linked if you want to read along. One thing that’s...
The Waterfall Concept using Life Insurance (in Canada)
The “Rockefeller” Method, or the Waterfall Concept. One of the main things we have to preface this with is that in the United States, this...
How can a Canadian business owner use life insurance to fund major purchases?
Today, allow us to shine a light on the infinite banking concept through the lens of a case study —showcases how an entrepreneur, used this...
You can now invest with us!
We have got a big update for you today – a brand new offering from us at Safe Pacific.
The Infinite Banking Concept Episode 4 – Infinite Banking is a Scam
In today's blog, we'll go over the main reasons given for why the Infinite Banking Concept is a scam. We'll be going over why people...
The Wealth Multiplier Podcast - Wealth and Legacy: A Deep Dive with Vince Cardella
In this episode of The Wealth Multiplier Podcast, host Laurent Munier of Safe Pacific Financial sits down with Vince Cardella, Principal of Strategic Wealth Planning...
RRSPs for Canadian Business Owners, should you invest?
You have two main options: keep the funds inside the corporation or withdraw and invest personally. Today we’re going to go through these 2 scenarios...
