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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)

Suitability Reasons


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

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Traditional Investment

While Living:

  • Taxes payable on investment income: Interest, dividends, realized capital gains

  • Passive investment income: Pay the highest corporate tax rate, no small business deduction

At Death:

  • Taxes payable on deferred capital gains

  • Taxes payable on transfer to shareholders estate

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Participating Whole Life Insurance
(Alternative asset class)

While Living:

  • Policy earnings grow tax-exempt up to government prescribed limits

At Death:

  • 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

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