Maximize Your Business’s Full Potential

This isn’t just about long-term coverage — it’s a smart tool to support your business and open the door to new possibilities.

Understanding Participating Life Insurance for Business Owners

Lifetime protection gives your business a tax-free payout if you, a partner, or a key team member passes away. 

This isn’t just about having insurance—it’s also a smart way to build money over time. As long as you keep up with your payments, your policy grows in value. That built-up cash is something your business can tap into when needed. Just keep in mind, that using that cash can lower the final payout from the policy. The money you pay goes into a shared account with other policyholders. We manage this fund carefully and based on its performance, you could receive a dividend.

How does it work?

• Keep up with your premium payments, and your policy builds cash value that grows tax-free (up to set limits).
• Your contributions are added to a shared fund managed by financial experts.
• That fund helps cover costs like insurance payouts, taxes, and other expenses.
• If the fund does well, your business could earn a share in the form of dividends.
• You can choose to use those dividends as extra cash, to boost your coverage, or to help pay future premiums.
• When you pass away, your business gets a tax-free payout from the policy.

Your policy’s cash value

• Guaranteed growth

As your policy’s cash value increases, the new amount is locked in and can’t go down—unless your business decides to use some of it. The value only decreases when you access the funds.

• Flexible access

There are a few ways your business can use the cash value from your policy—you can take out some of the money, borrow against it, or use it to back a loan from another lender. Just keep in mind, that doing so might lower your coverage and could lead to taxes.

Accessing your cash value

Take Out Cash from Your Policy

• Your business can take out part—or even all—of the cash value, minus any outstanding loans or fees.
• Taking money out will lower your coverage and might come with tax consequences.
• If your business pulls out the full amount, the policy will be canceled.

Use Your Policy to Borrow Money

• You can borrow against your policy’s cash value and repay it gradually with interest.
• This is only possible if there’s enough value and it’s not already being used as loan collateral.
• The loan is usually tax-free and won’t affect your coverage right away.
• If you don’t pay it back, the unpaid amount—plus interest—will be taken out of the payout when you pass away.

Use Your Policy to Secure a Loan

• Your business can use the policy’s cash value as backing for a loan from a bank or other lender (called a movable hypothec in Quebec).
• The business won’t owe taxes on the loan, though a shareholder could depending on how it’s used.
• The company will need to pay interest to the lender, just like any regular loan.
• This kind of loan won’t lower your insurance coverage or affect your capital dividend account.
• If the loan isn’t paid off, the unpaid amount and interest will be taken from the policy’s payout when the insured person passes away.

Participate in the earnings of your account

When the account your policy is tied to does better than expected, your business could receive a dividend. You can choose how to use it:

• Add it to your policy for more coverage and possibly more cash value
• Use it to lower or even pause your future payments
• Take the dividend as a cash payout

Why do you need participating life insurance for your business?

•          Your business

Make the most of your business’s available funds to unlock greater growth potential.

•          Your family

Ensure your business loans are covered for them after you’re gone.

•          Your partners

Secure the money needed to purchase your partner’s share of the business.

How can you use participating life insurance in your business?

1. Looking for extra cash flow?

Your corporation can tap into the tax-advantaged growth from a life insurance policy—within set government limits—whenever extra funds are needed.

2. Use insurance to support a business transition

If a partner passes away, the insurance payout can provide the funds needed to purchase their shares and keep the business running smoothly.     

3. Safeguard your top talent

Access funds to cover costs and keep operations steady while you search for and train the right person to fill a critical role.

4. Protect Against Business Debt

Use the policy funds to help pay off any remaining business loans or financial obligations.    

5. Put Idle Funds to Work and Ease Your Tax Burden

Permanent life insurance offers a way to grow wealth outside your day-to-day operations while helping lower taxes on passive income.

What is the cost of participating whole life insurance?

Participating life insurance can be more expensive than term and universal life insurance because of the policy’s guarantees.

The price of your policy isn’t one-size-fits-all. Several key factors influence how much you’ll pay:

1. Your Age

The younger you are when you apply, the lower your premiums are likely to be.

2. Your Health

Pre-existing conditions, family medical history, and overall lifestyle (like smoking or fitness habits) can raise your costs.

3. Your Gender

Since women tend to live longer than men, they often pay lower rates for life insurance.

4. Your Job

High-risk professions can lead to higher premiums due to increased likelihood of claims.

Universal vs. Participating Life Insurance: What’s the Difference?

Both universal and participating life insurance offer permanent coverage for your business, but they function differently. Here’s a side-by-side comparison:

Feature	Participating Life Insurance	Universal Life Insurance
Growth Potential	Cash value grows with guaranteed returns	You choose how to invest based on your risk tolerance
Coverage Duration	Lifelong protection	Lifelong protection
Management Style	Managed conservatively by professionals	You manage or guide the investment strategy
Premium Flexibility	Typically fixed, with guaranteed options	More flexibility in how and when you pay premiums
Dividends	May receive dividends based on performance	No dividends; returns depend on investments
Cost	Cost-effective long-term option	May vary based on investment choices and fees
Payout Guarantee	Guaranteed death benefit	Death benefit may vary based on performance