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.
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 Participating Life Insurance Financial Facts (PDF)
Sun Life Participating Whole Life Insurance Facts & Figures with Historical Performance (PDF)
Next Steps:
We have been structuring dividend-paying whole life insurance policies for 100s of Canadian business owners, high-income professionals and their families since 2011.
We are totally independent - no insurance company owns us or tells us what to do. We have no sales targets and operate on a philosophy of no pressure, no rush.
To see if a whole life insurance policy is right to achieve your business and personal financial goals, schedule a no-pressure call with one of our advisors now.
Related Insights
Are You Ready for the Strategy You Want?
We've noticed a pattern in client meetings over the past few weeks that we want to talk about openly. Business owners are coming in excited about...
RRSP vs. TFSA: Which Is Better for High Income Canadians
If you're a high-income Canadian, here's the truth: using RRSPs and TFSAs the wrong way could mean paying far more to the CRA than you...
The Million Dollar Baby Plan: Grow a Legacy for your Children
What if the birthday gift you gave your child today could turn into a million-dollar asset tomorrow? That's the idea behind the Million Dollar Baby...
Before You Sell Your Investments, Read This.
Markets are down, your portfolio took a hit, and you're wondering—should I sell now and cut my losses? Stop. Because selling during a market downturn...
Why Life Insurance Isn't Just for When You Die
If you think life insurance is something you'll never personally benefit from, you're missing the bigger picture. Permanent life insurance can provide liquidity, protect your...
Whole Life Insurance vs. Universal Life Insurance
Permanent life insurance can double as a powerful wealth-building tool—but not all policies are created equal. If you're an incorporated Canadian professional or business owner...
How Dollar‑Cost Averaging Is Helping Canadians Build Wealth
Between work, family, and everything else life throws at you—who has the bandwidth to watch the stock market every day? If you're a busy Canadian...
Must-Know Strategies for Business Owners Right Now
Over the past few weeks, our client meetings have shifted into a higher gear. The conversations we're having aren't about the basics anymore — they're about optimization. Business owners who already have insurance,...
Using Life Insurance to Fund a Buy-Sell Agreement
Imagine one of your business partners passes away tomorrow. Suddenly, their spouse or their kids own a share of your company—and you're expected to buy...
5 Mistakes High-Income Canadians Make With Their Wealth Plans
If more money automatically meant more wealth, every top-earning Canadian would retire stress-free. But that's not reality. The gap between earning well and building lasting...
What are Notional Accounts and How do They Work in Canada
If you've wondered what are Notional Accounts and how do they work in Canada, this is the post for you. Most incorporated Canadians are great...
What Canadian Business Owners Are Telling Us Right Now — And What To Do About It
Every week, our advisors sit down with incorporated business owners and professionals across Canada. And while every client's situation is unique, the conversations we're having...
