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One product, three entirely different jobs

Most arguments about life insurance go nowhere because the two sides are discussing different things. It can be a safety net for a family, an asset that compounds tax-sheltered, or a route for money to leave a corporation and reach the family without tax.

Those three jobs need different products and are judged by different standards. What follows is sorted by the question you arrived with, not by product name.

Would my family be alright?

The first job of a policy, and the only one most people are ever sold. It is also the easiest to get wrong in the direction of buying the wrong kind rather than too little.

Is a policy an asset, or just an expense?

A participating whole life policy accumulates cash value that compounds tax-sheltered and can be borrowed against. That is a real financial instrument — and it is also slow, illiquid early, and expensive if abandoned. Both halves are true.

My money is stuck inside my corporation.

This is where insurance stops being about protection and starts being about tax. Corporately-owned policies interact with the capital dividend account, and that interaction is the reason this strategy exists at all.

Run it on your own numbers

Reading only ever gets you someone else's example. Both of these run on your figures, and both are willing to return the answer that it does not work.

Don't take our word for it

Primary sources from the regulators and the tax authority. We gain nothing from these and they will not agree with everything we say, which is rather the point of listing them.

Wallace Wang Financial Services holds LLQP licensing (life insurance and segregated funds) across five provinces, carries errors-and-omissions coverage and a FundServ code. We are not securities-licensed; nothing here is a recommendation to buy or sell a security, and none of it is tax advice. Policy terms are governed by the contract issued by the insurer.