What is participating life insurance?

Participating life insurance can help protect you, your family and the business you’ve worked hard to build. But it can also be a versatile tool in helping you accomplish your business objectives and create new opportunities, whether you’re a startup or a well-established company.

Who is it for?

Participating life insurance may be ideal for people seeking lifelong insurance coverage that can also be used to help safeguard and support their businesses. It can be a practical option for those who want access to cash to fund planned growth or seize unexpected business opportunities. It also works for business owners with idle assets who want to reduce taxes or leave a legacy for their loved ones.

How does it work?

Premiums you pay towards your participating life insurance go into an account called the participating account, which is pooled with premiums from other Canada Life participating policyowners. Our asset managers invest the funds in the participating account with the goal of managing risk and increasing its value. The assets are used to pay policy benefits, including death benefits. When the participating account performs well, you may be eligible to receive policyholder dividends.

How does it benefit your business?

Protection for life

You will always be insured, provided your premiums are paid.

Keep your business running

If you die, proceeds from your insurance can be used to pay off debts, keep daily operations going until a buyer can be found or a family member or key employee can take over the business. The payout can also be used to reassure creditors and suppliers that your business has the funds to continue.

Pay for planned growth and seize opportunities

You can borrow against your policy’s cash value to support your business during difficult economic periods, pay critical expenses and create avenues for additional cash flow. Keep in mind that any unpaid loans or withdrawn money from your policy will reduce both its cash value and the amount of money your beneficiaries receive when you die.

Build a solid succession plan

Without a good succession plan in place, even the most successful businesses can be ruined.

Whether you want to pass your business on to your family, sell it or liquidate its assets, participating life insurance can provide the funds to help you prepare for a smooth transition. You can use your insurance to:

  • Build tax-advantaged cash value that can help you achieve your financial goals and add to your retirement income.
  • Provide funds to help you or your partner buy the other person’s share of the business should you die prematurely.
  • Help ensure you have enough money to evenly divide your estate, pay capital gain taxes and other costs.