What Is Participating Whole Life Insurance?

Jun 1, 2026

What Is Participating Whole Life Insurance?

Most people buy life insurance for one reason: to make sure their family is protected if something happens to them. But there is a type of life insurance that does something more – it builds value over time while you are still alive. That type is called participating whole life insurance, and it works very differently from the term policies most Canadians are familiar with.

Here is what it means, how it works, and whether it might be a fit for you.

Permanent Coverage That Does Not Expire

Term life insurance covers you for a set period – 10, 20, or 30 years. Participating whole life insurance is permanent. It covers you for your entire life, as long as premiums are paid, and the death benefit is guaranteed.

That permanence is the first major difference. But the bigger difference is what happens to your premiums while you are alive.

With a term policy, your premiums go entirely toward the cost of insurance. With participating whole life, the insurer pools premiums into a participating account that is professionally managed. Dividends may be paid when the account’s experience is favourable, based on factors such as investment returns, expenses, and mortality experience.

How Dividends Work

The word “dividend” here is different from stock dividends. In the context of a participating whole life policy, a dividend is a share of the insurance company’s surplus – essentially, the company returning a portion of the money when investment performance, claims experience, and expenses go better than expected.

These dividends are not guaranteed. They are declared each year by the insurance company based on how the participating account performed. That said, many Canadian participating insurers have long histories of paying dividends, though past performance does not guarantee future results.

When you receive a dividend, you have a few options for how to use it:

  • Take it as cash. The dividend is paid to you directly.

  • Apply it to your premium. It reduces how much you pay out of pocket.

  • Buy additional paid-up insurance. This is the most common choice. The dividend purchases more coverage, which in turn earns its own dividends. Over time, this compounds.

  • Leave it on deposit. The dividend sits with the insurer and earns interest.

Most policyholders who hold participating whole life for the long term choose to purchase additional paid-up insurance, because it accelerates both the death benefit and the cash value of the policy.

The Cash Value

One of the most distinctive features of a participating whole life policy is that it builds cash value. The policy builds guaranteed cash value as part of its structure, and dividends can add a non-guaranteed layer of growth if they are used to buy paid-up additions.

The policy accumulates cash value that you may be able to access, subject to policy terms, in a few ways:

  • Policy loans. You can borrow against the cash value without going through a lender or credit check. Policy loans do not have fixed repayment schedules, but any unpaid balance can reduce the death benefit.

  • Surrendering the policy. If you decide you no longer need the coverage, you can cancel the policy and receive the accumulated surrender value. The tax treatment on surrender can be technical and depends on the policy’s adjusted cost basis — the disclaimer at the end of this article applies here.

The cash value grows on a guaranteed basis, separate from the dividends. The dividends, if used to purchase paid-up additions, add a non-guaranteed layer of growth on top.

Who Is This Type of Policy For?

Participating whole life is not the right fit for every situation. Because premiums are higher than term insurance, it is most commonly used by people who have a long-term need for life insurance and who can sustain the premium over time.

Some of the most common situations where it makes sense:

Families building long-term wealth. For parents who want to ensure a guaranteed death benefit no matter when they pass, plus build a tax-advantaged asset over decades, participating whole life offers both.

Business owners and incorporated professionals. A participating whole life policy held inside a corporation may offer a tax-efficient approach to building cash value inside a permanent policy, depending on the structure and the corporation’s specific situation. It can be used by incorporated professionals – such as dentists and physicians – to redirect excess corporate cash into a long-term, protected asset.

Estate planning. For those who want to leave a specific, guaranteed sum to their heirs or a charitable organization, a participating whole life policy creates a known outcome – the death benefit- regardless of when death occurs.

High net worth individuals. When other registered accounts (TFSA, RRSP) are maximized, participating whole life can offer a tax-efficient way to build cash value inside a permanent policy, outside of registered limits.

How It Fits Alongside Term Insurance

Term and participating whole life insurance are not competitors- they serve different purposes, and many Canadians use both at different stages of life.

Term insurance is a straightforward, affordable way to protect your family during the years it matters most – while a mortgage is being paid down, while children are young, or while income replacement is the primary concern. It does exactly what it is designed to do.


Participating whole life steps in when the need for coverage is permanent, when building long-term cash value matters, or when the policy is part of a broader estate or corporate strategy. The two products often complement each other well, and choosing one does not mean ruling out the other.

What to Take Away

Participating whole life insurance combines permanent death benefit protection with a growing cash value and the potential for dividends. It is a longer-term commitment with higher premiums, and it is designed for situations where permanence, cash value, and legacy planning are part of the picture.

If you are considering permanent life insurance, take time to review how dividend performance has held up at the insurer you are looking at, understand the various dividend options, and think through whether the long-term commitment fits your situation.

This content is provided for general informational purposes only. It is not intended to provide investment, tax, or legal advice, and should not be relied upon as such. Policy design, dividend scale performance, cash value growth, and tax treatment vary by insurer and by the specific policy contract. Always review the policy illustration and contract terms carefully.

Sources:

Participating Life Insurance – CLHIA

What Is Life Insurance and How Does It Work?

May 1, 2026

Insurance products and services are provided through Assante Estate and Insurance Services Inc.
This material is provided for general information and should not be considered individual investment, tax, accounting, or legal advice, or construed as an offer or solicitation to buy or sell securities.

The statements and opinions expressed are those of the presenter(s) and not necessarily those of CI Assante Wealth Management Ltd. All opinions expressed and information provided herein are subject to change without notice. Every effort has been made to compile this material from reliable sources as at the date indicated however, no warranty can be made as to its accuracy or completeness Market conditions may change which may impact the information contained herein. All charts and illustrations in this document are for illustrative purposes only and they are not intended to predict or
project investment results. In considering any particular investment or investment strategy, please remember that past performance is no guarantee of future performance. We caution you not to place undue reliance on any statements that are predictive in nature, depend upon or refer to future events or conditions, as a number of factors could cause actual events or results to differ materially from those expressed in any forward-looking statement, including economic, political and market changes and other developments. The information contained herein may not apply to all types of investors. Before acting on the information presented, please seek professional financial advice based on your personal circumstances.

CI Assante Wealth Management Ltd. is a Member of the Canadian Investor Protection Fund and the Canadian Investment Regulatory Organization.

 What Is Life Insurance and How Does It Work?

Have you ever wondered what would happen to your family’s finances if you were no longer here? It’s not an easy thought. But it is an important one. Life insurance is designed to protect the people you care about most if something unexpected happens.

Many people avoid this topic because it feels uncomfortable or confusing. The good news is that life insurance is actually quite simple once you break it down.

What Is Life Insurance?

Life insurance is a contract between you and an insurance company. You pay a regular payment called a premium. In return, the insurance company agrees to pay a lump sum of money to someone you choose (your beneficiary) if you pass away.

That lump sum is called a death benefit. In most cases, it is paid tax-free to your beneficiary.

Think of life insurance like a safety net. You hope it is never needed. But if it is, it can help your family stay financially stable during a very difficult time.

Millions of Canadians have some form of life insurance coverage. For many families, it plays an important role in protecting income and covering large expenses.

How Does Life Insurance Work?

The process is straightforward.

First, you apply for coverage. The insurance company reviews details such as your age, health, lifestyle, and sometimes your occupation. This helps them decide your premium and whether you qualify.

Once approved, you begin paying premiums. As long as you keep paying, your coverage remains active.

If you pass away while the policy is active, your beneficiary files a claim. The insurance company reviews the claim and then pays out the death benefit.

Your beneficiary can use the money for any purpose, such as:

  • Paying off a mortgage
  • Covering funeral expenses
  • Replacing lost income
  • Paying off debt
  • Supporting children’s education

The goal is to reduce financial stress at a time when your family is already dealing with emotional loss.

The Two Main Types of Life Insurance

Most people choose between two main types of coverage: term life insurance and permanent life insurance.

Term Life Insurance

Term life insurance covers you for a set period of time, such as 10, 20, or 30 years.

It is usually the most affordable option, especially for young families. If you pass away during the term, the policy pays out. If the term ends and you are still living, the coverage ends unless you renew it.

Term insurance works well for temporary needs. For example:

  • Protecting your income while your children are young
  • Covering a mortgage while the balance is high
  • Replacing income during your working years

It is simple and focused on protection.

Permanent Life Insurance

Permanent life insurance covers you for your entire lifetime, as long as premiums are paid.

It also includes a savings feature called cash value. Over time, this value can grow on a tax-deferred basis.

Permanent coverage is usually more expensive than term coverage. However, it can support longer-term goals such as:

  • Covering final expenses
  • Leaving money to family or a charity
  • Helping manage taxes at death
  • Supporting estate planning goals

The right type of coverage depends on your needs, timeline, and budget.

How Much Coverage Do You Need?

This is one of the most common questions people ask.

A good starting point is to ask: If I were gone tomorrow, what financial gap would my family face?

You may want to consider:

  • Your mortgage balance
  • Other debts
  • Ongoing living expenses
  • Childcare costs
  • Future education expenses
  • Final expenses

Some people use a simple guideline like 10 times their annual income. But that is only a starting point. Your personal situation matters more than any rule of thumb.

For example, someone with no dependents and little debt may need very little coverage. A household with young children and a large mortgage may need much more.

The goal is to match coverage with real responsibilities.

Is Life Insurance Expensive?

Many people assume life insurance costs more than it does. In reality, term coverage can be very affordable, especially if you are young and in good health.

Your premium is based on factors such as:

  • Age
  • Health history
  • Smoking status
  • Coverage amount
  • Type of policy

The younger and healthier you are when you apply, the lower your premium is likely to be.

Waiting can increase the cost. Health can change over time. Securing coverage earlier can help lock in lower rates.

Who Should Consider Life Insurance?

Life insurance is not necessary for everyone. But it is important for many people.

You may want to consider coverage if:

  • Someone depends on your income
  • You share debts with a partner
  • You have children
  • You own a home
  • You want to leave money behind for loved ones

Even stay-at-home parents may need coverage. If they were not there, the cost of childcare and household support could be significant.

In Canada, life insurance benefits are generally paid tax-free to beneficiaries. This helps ensure that the full amount can be used for its intended purpose.

Final Thoughts

Life insurance is a practical tool. It helps protect the people you care about from financial hardship if something unexpected happens. It can provide stability, cover major expenses, and support your family’s future.

If you are unsure whether you need coverage, start by reviewing who depends on you and what financial responsibilities you carry. A short conversation can bring clarity and peace of mind.

If you would like to explore how life insurance fits into your overall strategy, I would be happy to guide you through the options and help you make an informed decision.

Insurance products and services are provided through Assante Estate and Insurance Services Inc. The opinions expressed are those of the author and not necessarily those of CI Assante Wealth Management Ltd. This material is provided for general information and the opinions expressed and information provided herein are subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on the information presented, please seek professional financial advice based on your personal circumstances.
 

 

Tax Lines to Look Out For on Your 2025 Canadian Tax Return

Apr 1, 2026

 

Tax Lines to Look Out For on Your 2025 Canadian Tax Return

The deadline for filing your 2025 income tax return is April 30, 2026. With several changes this year, from a lower federal tax rate to new benefits and eliminated credits, it pays to know what has changed before you file. This guide covers the key updates, deductions, and credits separated into sections for Individuals and Families, and Self-Employed Individuals.

For Individuals and Families

Federal Tax Rate Reduction

Effective July 1, 2025, under draft legislation introduced May 27, 2025, the lowest federal income tax rate was reduced from 15% to 14%. Because this change took effect halfway through the year, the blended rate for 2025 is 14.5%. This applies to the first $57,375 of taxable income and could save an individual up to $420 per year, or up to $840 for a two-income household.

Because the lowest rate also determines the value of most non-refundable tax credits, the government introduced a new top-up credit. This credit restores the full 15% value on eligible non-refundable credits claimed on amounts above $57,375, so the rate cut does not reduce the value of credits like the Basic Personal Amount, medical expenses, or tuition. This top-up credit will remain in place through the 2030 tax year.

Basic Personal Amount (BPA)

For 2025, the Basic Personal Amount has increased to $16,129 for taxpayers with net income up to $177,882. For those with net incomes above this amount, the BPA is gradually reduced, reaching a minimum of $14,538 at incomes of $253,414 or higher.

Capital Gains

The proposed increase in the capital gains inclusion rate from 50% to 66.67% on gains over $250,000 for individuals (and on all gains for corporations and most trusts) has been cancelled. The inclusion rate remains at 50% for all taxpayers. However, the lifetime capital gains exemption has been raised to $1,250,000 for qualifying dispositions of small business shares and farming or fishing property, up from $1,016,836.

Canada Disability Benefit

A new benefit became available in June 2025, providing up to $200 per month ($2,400 per year) for Canadian residents aged 18 to 64 who are approved for the Disability Tax Credit.

The benefit is income-tested, with the maximum amount generally available to single individuals with adjusted family net income of $23,000 or less. For couples, the threshold is higher (generally $32,500 after a working income exemption).

The benefit is gradually reduced as income increases. For single individuals, it is typically reduced by 20 cents for each dollar above the threshold. For couples, the reduction may be 20% or split at 10% each, depending on whether one or both partners qualify for the benefit.

What Has Been Eliminated

Canadian Journalism Tax Credit: The 15% non-refundable tax credit for qualifying digital news subscriptions (up to $75 per year) is no longer available for 2025.

Home Accessibility and Medical Expense Double-Claim: Under proposed measures announced in Budget 2025 and included in Bill C-15, 2025 is expected to be the final year that certain expenses qualifying for the Home Accessibility Tax Credit can also be claimed as a medical expense. Starting in 2026, these expenses will generally need to be claimed under only one provision and cannot be double-counted. Individuals planning eligible renovations may wish to take advantage of the current rules before this change takes effect.

Alternative Minimum Tax (AMT)

The updated AMT rules that took effect in 2024 continue to apply. These include a higher minimum tax rate, modified calculation for adjusted taxable income affecting foreign tax credits and minimum tax carryovers, and limited value on most non-refundable tax credits.

Popular Tax Credits and Deductions

Canada Training Credit (CTC) Eligible taxpayers aged 26 to 65 can claim this refundable tax credit to cover a portion of eligible tuition and fees for training or courses to enhance their skills.

Canada Caregiver Credit (CCC) This non-refundable tax credit supports individuals caring for family members or dependents with a physical or mental impairment. The amount varies based on the dependent’s relationship, net income, and circumstances.

Child Care Expenses Child care expenses, such as daycare, nursery schools, day camps, and boarding schools, are deductible if incurred to enable a parent or guardian to work, pursue education, or conduct research.

Disability Tax Credit (DTC) The DTC provides a non-refundable tax credit for individuals with disabilities or their caregivers to reduce the amount of income tax payable. For 2025, the disability amount is $10,138. Applicants must have a certified disability lasting at least 12 months. The expenses eligible for the disability supports deduction have also been expanded for 2025.

Moving Expenses Deductible moving expenses include transportation and storage costs, travel expenses, temporary living costs, and incidental expenses incurred when relocating at least 40 kilometers closer to a new work location, educational institution, or business location.

Interest Paid on Student Loans Interest paid on eligible student loans can be claimed as a non-refundable tax credit. The loans must be under federal, provincial, or territorial student loan programs.

Donations and Gifts Donations made to registered charities or other qualified organizations qualify for non-refundable federal and provincial tax credits. Typically, eligible amounts up to 75% of net income can be claimed. Note: due to the Canada Post strike in late 2024, eligible donations made in the first two months of 2025 can also be claimed on a 2024 return.

GST/HST Credit The GST/HST credit is a quarterly refundable payment designed to offset the impact of sales tax on low to moderate-income individuals and families. Eligibility is automatically assessed based on the annual tax return.

RRSP Contributions The maximum RRSP contribution for 2025 has increased to $32,490 (up from $31,560 in 2024), based on 18% of the previous year’s earned income. The TFSA annual contribution limit remains at $7,000 for 2025.

First Home Savings Account (FHSA) Contributions of up to $8,000 per year (lifetime limit of $40,000) are tax-deductible, grow tax-free, and qualifying withdrawals for a first home purchase are also tax-free. The FHSA can be used alongside the Home Buyers’ Plan, which maintains a withdrawal limit of $60,000.

For Self-Employed Individuals

CPP Contributions

Self-employed individuals pay both the employee and employer portions of CPP, for a combined rate of 11.90% on earnings up to the YMPE ($71,300). For CPP2, the self-employed rate is 8% on earnings between $71,300 and $81,200, with a maximum CPP2 contribution of $792.

Filing and Payment Deadlines

  • Tax Return Deadline: June 15, 2026.

  • Balance due must be paid by April 30, 2026.

Reporting Business Income

Report income on a calendar-year basis for sole proprietorships and partnerships.

Digital Platform Operators

Reporting rules require platform operators to collect and report seller information to the CRA. If income is earned through a digital platform, it is important to ensure it is properly reported.

Filing season for 2025 returns opens February 23, 2026. With a lower federal tax rate, increased contribution limits, and several eliminated credits and taxes, reviewing these changes before filing can help maximize savings and avoid surprises. The CRA is also no longer mailing paper tax packages, so returns and forms are available online at canada.ca or by calling 1-855-330-3305.

Sources

Canada Revenue Agency. “Personal income tax: What’s new for 2025.” – Canada.ca – https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/whats-new.html

Canada Revenue Agency. “Important changes to the 2025 income tax package.” – Canada.ca – https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2025/important-changes-2025-income-tax-package.html

Canada Revenue Agency. “Maximum Pensionable Earnings and Contributions for 2025.” – Canada.ca – https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2024/canada-revenue-agency-announces-maximum-pensionable-earnings-contributions-2025.html

Canada Revenue Agency. “Basic Personal Amount.” – Canada.ca – https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/federal-government-budgets/basic-personal-amount.html

Canada Revenue Agency. “Tax rates and income brackets for individuals.” – Canada.ca – https://www.canada.ca/en/revenue-agency/services/tax/individuals/frequently-asked-questions-individuals/canadian-income-tax-rates-individuals-current-previous-years.html

“Budget 2025 – Tax Measures” (Home Accessibility Tax Credit change) – https://budget.canada.ca/2025/report-rapport/tm-mf-en.html

 

The opinions expressed are those of the author and not necessarily those of CI Assante Wealth Management Ltd. This material is provided for general information and the opinions expressed and information provided herein are subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on the information presented, please seek professional financial advice based on your personal circumstances.

 

Executive summary – Peter Hofstra

Mar 19, 2026

Last month, Portfolio Manager Peter Hofstra joined us for dinner and shared some critically important insights on the geopolitical landscape, market outlook, and how AI is reshaping our lives and our investment opportunities. Overall, the tone was quite optimistic given current world dynamics – here are our three key takeaways:

 

  • Peter labels AI as the biggest opportunity of the next decade – from streamlining healthcare and education to revolutionizing the business world, AI presents the largest single investment opportunity of the next 10+ years. Forget the robots you’re imagining – this is data-scraping at an unfathomable scale that will give us information that would take dozens of humans years to go through – in mere seconds.
  • It won’t be a straight line, so expect volatility – the growth trajectory, while impressive, won’t be a smooth ride. However, for those who can invest for the long-term, Peter believes the results will be more than worth the volatility along the way.
  • Separate the political news from your market expectations – while it feels like the political landscape is incredibly destabilized, the markets are often able to look past the upsetting developments and continue to grow. Peter expects the current situation to be no different – so sticking to your plan is more important now than ever.

So what does this mean for you and your family? We know from experience that the most volatile times often present the greatest opportunities, so we will continue to work with you to ensure you are in a great position for growth and stability in the decade ahead. In conjunction with that, we believe that now more than ever, families need to take an intergenerational view on their wealth planning, not just for retirement, but for their children and grandchildren – otherwise, they risk being left behind in this AI revolution.