Corporate Owned Insurance
When should you consider Participating Whole Life Insurance inside your Corporation?
You're a significant shareholder in a Canadian Controlled Private Corporation
Age 40+ and healthy
Corporation has excess annual cash flow and/or investment assets not needed for business purposes. Typically, been in business for at least 5 years.
Want to maximize your estate and transfer assets in a tax-efficient manner
Looking for stable and predictable asset growth (asset diversification)
The more checkmarks the greater the need for this strategy.
✔️ Business Succession plan in place?
✔️ Reduce tax on corporate investment income?
✔️ Desire to pass corporate assets to a beneficiary?
✔️ Have a corporate life insurance need?
✔️ Own taxable passive investment assets?
✔️ Own corporate investments with a deferred capital gain?
✔️ Want a certain amount of estate value guaranteed?
Comparing a traditional investment to participating whole life insurance while living and at death
Taxes payable on investment income: Interest, dividends, realized capital gains
Passive investment income: Pay the highest corporate tax rate, no small business deduction
Taxes payable on deferred capital gains
Taxes payable on transfer to shareholders estate
Participating Whole Life Insurance
(Alternative asset class)
Policy earnings grow tax-exempt up to government prescribed limits
All policy proceeds are paid tax-free to the corporation (no deferred gains)
Death benefit minus adjusted cost base paid out tax-free to shareholders estate through a notional Capital Dividend Account
Life insurance is Wealth Protection
Total Wealth = human capital + financial capital