Permanent Life Insurance
A Deeper Look
Permanent life insurance offers lifelong protection while also serving as a powerful financial planning tool. It not only provides a guaranteed death benefit but can also help build cash value that grows tax-deferred within the policy — creating opportunities for wealth accumulation, flexibility, and estate efficiency.
Whether structured as Whole Life or Universal Life, these policies combine insurance protection with investment potential, offering stability today and financial strength for the future.
Building Long-Term Value and Flexibility
Unlike term insurance, permanent life coverage continues for your entire lifetime — and the policy’s cash value grows over time, providing flexibility when you need it most.
You can make additional deposits over and above the cost of insurance to help your cash value and death benefit grow faster, on a tax-deferred basis.
This growing asset can be accessed during your lifetime — through policy loans or withdrawals — to help with business investments, supplement retirement income, or manage short-term liquidity needs, all while maintaining your insurance protection.
Because the underlying growth is stable, conservative, and uncorrelated to market volatility, permanent life insurance can also act as a diversifier within your fixed-income portfolio — offering reliable returns and valuable estate benefits.
For business owners, corporate-owned permanent life policies can be an especially tax-efficient strategy. The cash value grows tax-deferred within the corporation, and on death, the death benefit is received tax-free, with proceeds flowing through the Capital Dividend Account (CDA) for tax-free distribution to shareholders.
Types of Permanent Life Insurance
Whole Life Insurance
Whole Life Insurance is designed for long-term security and predictable growth. It offers guaranteed premiums, guaranteed cash value, and a guaranteed death benefit — making it ideal for those seeking a stable, hands-off solution.
Many policies also participate in the insurer’s annual dividend program, which can be used to purchase additional coverage, enhance cash value growth, or reduce premiums. This makes Whole Life a great fit for clients who value consistent, steady returns and want to build tax-deferred equity within their policy without active management. What’s more, surplus funds can be deposited into the cash value account on a tax-deferred basis.
Key Advantages:
Guaranteed lifetime coverage and premiums
Tax-deferred cash value growth
Additional cash deposit option for those with surplus funds
Eligible to earn dividends to enhance policy value
Low-volatility, stable returns (ideal fixed-income complement)
Suitable for personal or corporate ownership
Universal Life Insurance
Universal Life Insurance offers greater flexibility and control. It separates the cost of insurance from the investment component, allowing you to choose how your cash value is invested within a range of options (e.g., fixed interest or market-linked).
You can adjust your premiums, investment allocations, and death benefit as your financial situation changes — making it ideal for individuals or corporations who want to actively manage their long-term financial strategy.
Key Advantages:
Flexible premiums and death benefit options
Investment choice and control over policy growth
Tax-deferred accumulation of investment gains
Ability to increase deposits to grow value more aggressively
Effective tool for corporate investment and wealth transfer planning
How Whole Life Insurance works
COVERAGE FOR LIFE
GUARANTEED CASH VALUE
TAX-ADVANTAGED GROWTH
INCOME TAX-FREE PAYOUTPermanent Insurance Features and Benefits
Feature
Whole Life Insurance
Universal Life Insurance
Coverage Duration
Lifetime (guaranteed)
Lifetime (flexible)
Premiums
Fixed and level
Flexible - adjustable over time
Cash Value Growth
Guaranteed rate, stable performance
Market-linked, variable performance
Investment Control
Managed by insurer
Chosen by policyholder
Risk Profile
Low-steady returns
Low to high - depends on investments
Dividends
Applicable for participating policies
Not applicable
Policy Management
‘Set it and forget it’- minimal oversight
More actively managed approach
Who does this best suit?
Clients seeking a predictable, tax-advantaged asset to diversify their fixed-income portfolio
Clients seeking flexibility, control and enhanced tax-advantaged growth potential
For Business Owners
When owned by a corporation, both Whole Life and Universal Life can serve as valuable corporate planning tools. They can:
Offer tax-efficient cash value accumulation within the corporation.
Create a tax-free death benefit that flows through the Capital Dividend Account (CDA).
Serve as an alternative to passive investments, often with better long-term outcomes.
Provide key person protection or buy-sell funding.
How an Immediate Financing Arrangement (IFA) works
Key Advantages
Tax Efficiency: Under certain conditions, both the policy premiums and interest costs associated with the bank loan may be tax-deductible, creating meaningful annual savings.
Liquidity Retention: Maintain access to working capital instead of locking it into long-term insurance payments.
Wealth Preservation: Ensure your family, shareholders, or beneficiaries receive a substantial, tax-free death benefit.
Investment Leverage: Use the policy’s cash value as a financial asset that supports your ongoing business or investment growth.
An Immediate Financing Arrangement (IFA) is a sophisticated financial strategy designed for high-net-worth individuals and business owners who want to benefit from permanent life insurance protection — without tying up capital.
Here’s how it works:
A business or individual purchases a permanent life insurance policy that builds cash value over time. That policy is then assigned as collateral to a bank, which provides a loan for up to 90% of the amount of the annual premium. The loan proceeds can be reinvested in the business or other investment opportunities, allowing your money to continue working for you.
Upon death, the insurance proceeds repay the loan, and the remaining benefit is paid tax-free to your estate or corporation.
