Corporate Estate Strategies with Whole Life Insurance
How participating whole life insurance provides comparable growth to moderate-aggressive portfolios with much lower volatility and tax-efficient wealth transfer
Important: Insurance Products (Not Mutual Funds)
This case study discusses life insurance products and their tax treatment. Life insurance is regulated under the Insurance Act. This case study does not discuss or compare mutual funds offered through WhiteHaven Securities Inc.
Client Profile: Kevin
Background
Profile
Business owner, cybersecurity partner
Investment Knowledge
Solid, invests in ETFs and stocks (aggressive profile)
Personal Strategy
Continues active trading in RRSP
The Situation
Retirement Analysis
Age 60-90, 3% inflation
Discovery
Significant holding company assets won't be needed during lifetime
Time Horizon
30-50 years
Purpose
Wealth transfer to next generation
The Solution
Product
Participating whole life insurance
Growth Potential
7.5-8% annually
Volatility
Much lower than stock portfolios
Tax Efficiency
90-100% CDA credits for tax-free distribution
Key Benefits
Values Only Move Up
Never decline, steady growth
Low Correlation
True diversification from stock markets
Zero Management
No ongoing investment decisions
Liquidity Options
Policy loans, partial surrenders
The Approach: Participating Whole Life Insurance
We selected participating whole life insurance to structure part of the long-term portfolio for several key reasons
Comparable Growth
Can be structured to increase in value similarly to a moderate-aggressive portfolio: approximately 7.5-8% annually. Dividend rate at issue: 6.45%. Historical 20-year average: ~8.2%.
Very Low Correlation
Whole life insurance values have very low correlation to stock market performance. When stock markets decline, whole life policy values don't decline with them.
Values Only Move Upward
Policy values only move upward; they never decline. Unlike investment portfolios that experience ups and downs, whole life policy values grow steadily over time.
Tax-Efficient Transfer
90-100% of death benefits credited to the Capital Dividend Account (CDA), allowing tax-free dividends to be paid out to beneficiaries.
When Whole Life vs. Investment Portfolios
Whole Life Is Appropriate When:
- Assets designated for next generation (long-term estate strategies)
- Tax efficiency for wealth transfer is a priority
- Stability and predictability are valued over maximum growth
- You want diversification with low correlation to stock markets
- You prefer structures that don't require ongoing management
Investment Portfolios May Be Better When:
- You need liquidity and flexibility in short to medium term
- You want active control over investment decisions
- Maximum growth potential is the primary goal
- You're comfortable with market volatility
- You have time and expertise to manage investments actively
Key Takeaways
What this case study demonstrates
Comparable Growth
For long-term estate strategies, participating whole life can provide growth comparable to moderate-aggressive portfolios (7.5-8% annually) with much lower volatility.
Tax Efficiency Matters
The CDA benefit allows 90-100% of death benefits to be distributed tax-free, which can significantly improve after-tax outcomes compared to traditional investment portfolios.
Stability Has Value
For assets you won't need for 30-50 years, stability and predictability can be valuable, especially when combined with growth potential.
Explore Estate Strategies
If retirement planning shows you have assets in your holding company that won't be needed during your lifetime, consider discussing whole life insurance as part of your estate strategy.
Important Disclosure
This case study is illustrative only and not a substitute for professional advice. All client names and specific identifying details have been changed to protect confidentiality. This is an illustrative example of process and approach, not a guarantee of outcomes.
Every situation is unique. Insurance products, premium structures, dividend rates, and tax outcomes depend on many factors including age, health, corporate structure, tax rules, and insurance company performance. What worked in this case may not be appropriate for your circumstances.
Dividend rates are not guaranteed. Past dividend rates (including historical averages) do not guarantee future dividend rates. Insurance company dividend payments depend on company performance, investment returns, claims experience, and other factors.
Insurance is offered through iAssure Inc. Insurance products and related services are provided through iAssure Inc., an independent firm in the insurance of persons and in the group insurance of persons. These activities are neither the business nor the responsibility of WhiteHaven Securities Inc.