Corporate Life Insurance

When Should You Consider Purchasing Corporate Whole Life Insurance

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 check marks 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

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

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