Participating life insurance
Participating life insurance: coverage that grows
Permanent insurance whose death benefit and value increase each year through dividends paid by the insurer — without you having to manage investments.
- Guaranteed, growing death benefit and cash value
- Annual dividends vested once paid
- Investments managed by the insurer
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What is participating life insurance?
Participating life insurance is permanent insurance whose premiums are invested in a pooled fund managed by the insurer (the participating account). Each year, the insurer may distribute part of that fund's results to policyholders as dividends.
Dividends are not guaranteed, but once paid they are yours. Used to buy additional insurance, they grow the death benefit and cash value year after year, tax-sheltered.
At a glance
- Term
- Lifetime
- Relative cost
- $$$
- Cash value
- Guaranteed + dividends
- Management
- By the insurer
Free · No obligation · An advisor compares insurers for you
How it works
- 1
You choose the base amount
This amount and its cash value are guaranteed by contract, as in classic whole life.
- 2
Your premiums join the participating account
A diversified fund (bonds, equities, real estate, loans) managed long-term by the insurer, with a smoothing approach that dampens market swings.
- 3
The insurer pays dividends
Each year, based on the account's results (returns, mortality, expenses). You choose how to use them: paid-up additions, premium reduction, deposit or cash.
- 4
Coverage grows
With paid-up additions, the death benefit and cash value increase over the years, without new evidence of health or any management on your part.
Advantages
- Strong guarantees (base amount and value) plus growth potential
- No investment decisions to make: the insurer manages the account
- Smoothed returns, less volatile than a market portfolio
- Vested dividends: once paid, they cannot be taken back
- 10, 15 or 20-year payment options for a paid-up contract
- Valued tool for estate planning, planned giving and corporations
Things to consider
- Future dividends are not guaranteed: the insurer can reduce the dividend scale
- Highest premium among life insurance types for a given base amount
- Modest cash value in the early years; surrendering early is disadvantageous
- Illustrations rely on assumptions; always look at the reduced-scale scenario too
- Less control over investments than universal life
Options and riders
Like other permanent insurance, participating life can be customized.
Additional deposit option
Lets you pay extra amounts to buy more paid-up insurance and accelerate growth, within tax limits.
Term rider
Adds low-cost term coverage for a large, time-limited need.
Waiver of premium
On total disability, the insurer pays the premiums and dividends continue.
Child rider
Insures your children at low cost, with guaranteed conversion at adulthood.
Guaranteed insurability
Scheduled coverage increases without evidence of health.
Built-in critical illness
Lump-sum benefit at diagnosis of a covered illness.
How to use the dividends?
The choice is made at purchase and can often be changed during the contract.
| Option | Effect | For whom |
|---|---|---|
| Paid-up additions | Buys additional permanent insurance: amount and value grow | Most policyholders; maximizes long-term growth |
| Paid-up additions + term | Combines high term coverage that additions gradually replace | High need today, limited budget |
| Premium reduction | Dividends reduce the premium payable | Policyholders who want to ease the budget |
| Cash or deposit | Dividends paid out or left on deposit at interest (taxable) | Need for liquidity |
Who is it for?
- People who want permanent coverage with growth potential, without managing investments
- Parents and grandparents who insure a child to pass on a contract that will have gained value
- Business owners and incorporated professionals
- Anyone planning a legacy, a planned gift or tax at death
Options to compare with your advisor
Trademarks of their respective owners. Sommet Protection is not affiliated with any insurer and does not distribute any product.
How it works
- 1
Request your callback
Your coverage, your first name, your mobile: three answers are enough. The rest is optional.
- 2
An advisor contacts you
Your request goes to one partner advisor, who calls you at a time that suits you. You follow the progress live.
- 3
Receive your scenarios
You get clear options, with the advantages and limits of each. You decide.
Frequently asked questions
Are dividends guaranteed?
No. They depend on the participating account's results and the scale set each year by the insurer. However, dividends already paid and the paid-up insurance they bought are vested and guaranteed.
How is it different from classic whole life?
Classic whole life is fully guaranteed but does not grow. Participating life offers the same base guarantees plus dividends that grow the amount and value — in exchange for a higher premium.
How do I read an illustration?
An illustration shows the current-scale scenario and reduced-scale scenarios (e.g. −1% or −2%). Always look at the guaranteed values and the reduced scenario, not just the most favourable one.
Are dividends taxable?
Dividends used to buy paid-up insurance or reduce the premium grow tax-sheltered inside the contract. Those paid in cash or left on deposit may be taxable.
Can I pay premiums for only 10 or 20 years?
Yes, most insurers offer 10, 15 or 20-year payment periods. The contract is then paid up: no more premiums, and dividends continue.
Is it a good product for a corporation?
Often, yes: the corporation pays the premiums, the value grows tax-sheltered and, at death, part of the benefit can be paid to shareholders tax-free through the capital dividend account. Your accountant and advisor validate the structure.
Complementary coverage
Our coverage
Choose the coverage you're interested in — your advisor can also combine them.
Life insurance
Term, permanent, universal, participating or simplified issue: understand the differences, then let an advisor compare insurers for you. Free and without obligation.
Learn moreTerm life insurance
Cover your mortgage, your debts and your family's income for a specific period. Your advisor compares terms, premiums and options from several insurers.
Learn morePermanent life insurance
Coverage designed to last a lifetime, provided the policy stays in force. Depending on the product, premiums and cash values may be guaranteed or variable.
Learn moreUniversal life insurance
Lifetime insurance paired with an investment account you control. You decide the amount deposited, the funds selected and the pace of deposits, within tax limits.
Learn moreSimplified issue life insurance
A few health questions, no blood test, no medical appointment. Coverage that stays accessible even if you were declined elsewhere or have a health history.
Learn moreDisability insurance
Illness or accident: your ability to earn an income is your most valuable asset. Disability insurance pays you a monthly benefit while you recover.
Learn moreCritical illness insurance
At diagnosis of a covered illness, you receive a tax-free amount to use as you wish: care, time off, help at home, debts. No requirement to be unable to work.
Learn moreSommet Protection is a marketing company: it is neither a firm nor an insurer, does not sell insurance and gives no advice. This site does not allow you to purchase insurance online. Your request is passed on to an independent, AMF-certified partner financial security advisor who will contact you to analyze your needs. Eligibility and premiums are established by the insurer after reviewing your file. Product descriptions are provided for information purposes and do not replace the insurance contract, which alone prevails.