Skip to main content

Protect and Grow Your Assets Using Participating Whole Life Insurance


A participating whole life insurance policy helps preserve wealth and provides a tax-free death benefit to named beneficiaries. It also provides permanent life insurance protection and tax-advantaged cash value accumulation.

What Is participating whole life insurance?

Participating whole life insurance is a type of permanent life insurance. It provides you with guaranteed lifetime coverage as long as you pay the required policy premiums. Premiums remain the same throughout the premium paying period, so that even as you age or experience health issues, your costs to maintain the policy will not increase.

Beyond its insurance protection, a whole life policy has a tax-advantaged investment component that can help you build a larger estate than you could in a taxable account. The cash value that accumulates in your policy grows free of annual taxation.

With this type of insurance, your policy has the opportunity to share in the earnings of the insurance company’s participating account. Premiums paid are deposited into the participating account and invested by the insurance company. Earnings of the participating account are impacted positively and negatively by investment returns, actual claims experience and expenses. Your share in the earnings of the participating account, although not guaranteed, is credited to your policy in the form of policy dividends. These dividends can be taken in cash, left to accumulate or, most commonly, used to purchase additional paid-up insurance.

 Benefits at a glance

  • Security of guarantees—Participating whole life insurance provides a core set of guarantees for basic premiums, the death benefit and cash surrender values.
  • Death benefit—The death benefit and any paid-up additions are distributed tax free to named beneficiaries, thereby enhancing your estate.
  • Annual vesting—When policy dividends are used to purchase additional paid-up insurance in your policy, they form a new accumulated cash value “floor” that is guaranteed and cannot be reduced, unless initiated by you, the policy owner.
  • Account growth—Guaranteed cash values and policy dividends when maintained within your policy are not subject to tax on the growth during your lifetime. This will help you meet your long-term financial goals and transfer assets efficiently to your beneficiaries.
  • Access to cash—You can access the accumulated cash value of your policy at any time. It is accessible through policy loans, policy withdrawals of the cash value—lump sum or steady stream—and also by pledging the accumulated cash value as collateral for a tax-free line of credit—all of which provide you with added liquidity and flexibility.


Benefit from professional management

MD Financial Management works with some of the most established and reputable life insurance companies in Canada. Participating account assets are managed by experienced teams of investment professionals, at each respective insurance company, who are committed to maintaining asset quality, effective diversification and adherence to risk management.

Safeguards from high volatility exist through each insurer’s use of a reserve fund. In years when participating accounts show exceptionally strong returns, a portion of the return that is eligible for policy dividends is diverted to the reserve fund. This reserve is intended to offset any years of weaker investment performance in the future and provide greater predictability of credited policy dividends.

To learn more, talk to your MD Advisor about how a participating whole life policy issued by some of Canada’s largest life insurers can be an integral part of your wealth management plan.

Learn more about MD's insurance offering or contact your MD Advisor to find out how we can help.