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- Canada's top dividend-paying whole life insurance providers in 2024–2025 include Equitable Life (6.40%), Manulife and iA (6.35%), Empire Life (6.00%), RBC Insurance (6.30%), Sun Life (6.25%), and Canada Life (5.50%)
- The dividend rates are influenced by a variety of factors, like investment returns, death claims, tax payouts, and operational expenses of the company
- Dividend-paying whole life insurance policies provide guaranteed death benefit, lifetime coverage, tax-deferred cash value growth, and steady dividend income—ideal for wealth transfer and estate planning
- Policyholders can use annual dividends to buy paid-up additions, reduce premiums, earn interest, withdraw cash, or repay policy loans
- What is a dividend-paying whole life insurance?
- Which are the best dividend-paying whole life insurance companies in Canada?
- How can policyholders utilize their dividends?
- Who should consider purchasing a dividend-paying whole life insurance policy?
- Factors to consider when choosing a dividend-paying life insurance company
- How are whole life insurance dividends taxed in Canada?
- What happens to dividends if I cancel my whole life policy?
- How do I choose the best whole life insurance policy in Canada?
- Frequently asked questions
Whole life insurance is a popular choice among Canadians seeking lifelong protection and long-term financial security. The best dividend-paying whole life insurance companies in Canada include top industry providers like Manulife, Sun Life, Equitable Life, and many more. These companies offer whole life policies that provide lifetime coverage, build cash value, and pay annual dividends.
In this blog, we will break down how dividend-paying whole life insurance works and share details about the top Canadian insurers offering reliable, high-performing plans to support your financial goals.
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What is a dividend-paying whole life insurance?
Dividend-paying whole life insurance, also called participating whole life, offers the potential to earn annual dividends while providing guaranteed lifelong coverage and cash value growth. These dividends are a share of the insurer’s profits and are distributed to policyholders who own participating policies.
Key features of a dividend-paying whole life insurance policy include:
- Lifetime coverage: This policy offers financial protection that lasts your entire life, provided premiums are paid, unlike a term policy that expires in 10, 20, or 30 years
- Cash value accumulation: A portion of your premium contributes to a cash value that continues to grow tax-deferred over time
- Dividends: These are potential annual payouts offered by the company to the policyholders based on the company’s annual performance and surplus profit margin. Dividends can be utilised by the policyholder in a variety of ways
Which are the best dividend-paying whole life insurance companies in Canada?
Some of the top dividend-paying whole life insurance companies in Canada include Canada Life, Manulife, Empire Life, RBC, Equitable Life, Sun Life, and iA. These companies offer competitive dividend rates to their participating whole life insurance policyholders.
Comparing the dividend rates of top providers in Canada
| Insurance Company | Participating Plans | Dividend Scale Interest Rate (2024-25) |
| Canada Life | Participating Life Insurance | 5.50% |
| Empire Life | EstateMax, Optimax Wealth | 6.00% |
| Sun Life | Sun Par Protector II, Sun Par Accumulator, Sun Par Accelerator, SunSpectrum Permanent Life II, Sun Par Protector | 6.25% |
| RBC Insurance | RBC Growth Insurance, RBC Growth Insurance Plus | 6.30% |
| Manulife | Manulife Par, Manulife Par with Vitality Plus™ | 6.35% |
| Industrial Alliance (iA) | iA Participating Life Insurance (iA PAR) | 6.35% |
| Equitable Life | Equimax Estate Builder, Equimax Wealth Accumulator | 6.40% |
*Note: Dividend rates are not guaranteed and vary annually. Always confirm with the insurer or advisor for current rates
1. Canada Life
Canada Life is one of Canada’s oldest and most established insurance providers, offering participating whole life insurance products designed for stability and long-term growth. It is known for financial strength and a conservative investment approach, ensuring long-term policyholder value.
- Participating whole life insurance plans: Canada Life Participating Life Insurance
- Dividend scale interest rate: 5.50% as of July 1, 2024
- Financial strength rating: A+ (AM Best)
2. Sun Life
Sun Life offers a range of participating whole life insurance products that combine protection with growth potential. This company has a strong track record of maintaining dividend scales and providing flexible policy options.
- Participating whole life plans: Sun Par Protector II, Sun Par Accumulator, Sun Par Accelerator, SunSpectrum Permanent Life II, Sun Par Protector
- Dividend scale interest rate: 6.25% effective April 1, 2024
- Financial strength rating: A+ (AM Best)
3. Manulife
Manulife provides participating whole life insurance policies that focus on long-term growth and flexibility. This plan emphasizes policyholder engagement and offers tools to enhance overall well-being alongside financial security.
- Participating whole life insurance plans: Manulife Par, Manulife Par with Vitality Plus
- Dividend scale interest rate: 6.35% effective September 1, 2024
- Financial strength rating: A+ (AM Best)
4. Equitable Life
Equitable Life is a mutual company, meaning it’s owned by its policyholders, which can influence its dividend distribution. This company is also known for its stable dividend rates, which further increase investor confidence.
- Participating whole life insurance plans: Equimax Estate Builder, Equimax Wealth Accumulator
- Dividend scale interest rate: 6.40% effective July 1, 2024
- Financial strength rating: NA
5. RBC Insurance
RBC Insurance offers participating whole life insurance policies that blend protection with investment growth. RBC is backed by the financial stability of the Royal Bank of Canada, providing confidence to policyholders
- Participating whole life insurance plans: RBC Growth Insurance, RBC Growth Insurance Plus
- Dividend scale interest rate: 6.30% effective April 1, 2025
- Financial strength rating: A (AM Best)
6. Industrial Alliance (iA)
iA Financial Group offers participating whole life insurance policies that cater to various financial goals. It is known for its customizable plans, often offered at an affordable price.
- Participating whole life insurance plans: iA Participating Life Insurance (iA PAR)
- Dividend scale interest rate: 6.35% maintained for 2025
- Financial strength rating: A+ (AM Best)
7. Empire Life
Empire Life provides participating whole life insurance policies with a focus on simplicity and value. Empire Life’s whole life insurance products offer additional rider options and consistent dividend performance for the past few years.
- Participating whole life insurance plans: EstateMax, Optimax Wealth
- Dividend scale interest rate: 6.00% maintained until June 30, 2024
- Financial strength rating: A (AM Best)
How can policy holders utilize their dividends?
Policyholders of dividend-paying whole life insurance policies in Canada have several flexible options for using their dividends. While dividends are not guaranteed, many companies have a long history of consistently paying them. Here are the most common ways you can use them:
- Purchase paid-up additions: Use dividends to buy additional coverage that increases both your death benefit and cash value without requiring further premiums
- Reduce or pay premiums: Apply dividends to lower or cover your future premium payments, making the policy more affordable over time
- Accumulate with interest: Leave dividends on deposit with the insurer to grow at a guaranteed interest rate, creating a savings-like feature within the policy
- Withdraw as cash: Receive dividends in cash, which can be used freely, though they may be subject to taxation depending on the policy’s structure
- Repay policy loans: Use dividends to repay any outstanding loans taken against the policy’s cash value, preserving the long-term value of the policy
Who should consider purchasing a dividend-paying whole life insurance policy?
Dividend-paying whole life insurance policies serve as powerful financial tools for individuals and families with long-term goals. These policies suit high-net-worth individuals and people seeking stable growth, permanent protection, and wealth-building opportunities.
- High-net-worth individuals: Individuals looking to grow and transfer wealth efficiently benefit from the tax-sheltered cash value and predictable growth that strengthen an estate plan
- Parents or grandparents buying insurance for children: Parents or grandparents can establish multi-generational financial security by gifting a policy that provides lifelong coverage and builds a growing asset
- Business owners: Business owners can use these policies for corporate tax planning, accumulating retained earnings, or funding buy-sell agreements. These policies also serve as key-person insurance or form part of executive bonus structures
- Individuals seeking permanent coverage: Ones needing lifelong insurance protection gain level premiums, guaranteed death benefits, and access to cash value when necessary
- Legacy builders and philanthropists: Individuals aiming to leave a meaningful estate or make a charitable impact can use these policies for planned giving or legacy donations
- Long-term savers and wealth accumulators: Those pursuing stable, conservative growth with minimal risk benefit from the combination of guaranteed cash value accumulation and annual dividends
- Pre-retirees and conservative investors: Individuals nearing retirement can place funds in a safe vehicle that delivers guaranteed growth and compounding returns
Factors to consider when choosing a dividend-paying life insurance company
When selecting a dividend-paying whole life insurance policy, evaluate each provider carefully to find one that aligns with your financial goals and delivers lasting value. Make sure to check out things like dividend performance history, company structure, policy flexibility, and more before you invest.
- Dividend performance history: Choose a company that consistently pays dividends and demonstrates stability through strong dividend scales, interest rates, and performance during market downturns
- Company structure: Opt for a mutual insurance company if you want to benefit directly from profits, as they distribute dividends to policyholders rather than shareholders
- Financial strength and credit rating: Prioritize insurers with high financial strength and credit ratings from agencies like AM Best, Moody’s, or S&P Global ratings. These ratings reflect the company’s ability to meet long-term commitments, including dividend payouts
- Policy flexibility: Select a policy that offers customization and optional riders, such as waiver of premium or accidental death benefits, to ensure it can adapt to your changing needs over time
- Premium payment period: Decide whether you prefer limited pay options (like 10 or 20-year plans) or lifetime premium payments based on your financial situation and future goals
- Cash value accessibility: Choose a policy that provides straightforward access to cash value through loans or withdrawals. Review the terms to avoid unexpected fees and ensure flexible usage
How are whole life insurance dividends taxed in Canada?
In Canada, dividends paid out from a participating whole life insurance policy are generally not taxable at the time they are paid, as long as they remain within the policy. When dividends are used to purchase additional paid-up insurance, reduce premiums, or left to accumulate interest within the policy, they continue to grow on a tax-deferred basis.
However, if the policyholder withdraws dividends in cash or surrenders part of the policy for its cash value, a portion of the withdrawal may be considered taxable income. The taxable amount is typically calculated based on the adjusted cost basis (ACB) of the policy, which factors in premiums paid and dividends received. If the policy’s cash value exceeds the ACB, the excess may be taxed.
What happens if an insurer reduces dividends?
If an insurer reduces dividends, your whole life insurance policy may grow more slowly than expected. This means the cash value accumulation and death benefit growth could be lower than originally illustrated. However, your guaranteed values, such as the base death benefit and guaranteed cash value, remain unaffected.
Policyholders may need to adjust premium payments, reduce paid-up additions, or revise their long-term plans depending on how dividends are being used. It’s important to review your policy annually with your advisor to ensure it still aligns with your financial objectives.
What happens to dividends if I cancel my whole life policy?
If you cancel your whole life insurance policy, any accumulated dividends will automatically be included in the cash surrender value you receive.
Dividends that were used to buy paid-up additions will become part of the policy’s total value. Similarly, if you choose to leave dividends on deposit to earn interest, the additional amount, including interest that you have earned, will also be returned.
However, if dividends were paid out to you in cash each year, you would not receive any additional amount during your final payout. Moreover, surrendering a policy may have tax implications, especially if the cash value exceeds the total premiums paid.
How do I choose the best whole life insurance policy in Canada?
Choosing the best whole life insurance policy in Canada involves more than just comparing premiums. Since whole life insurance comes with lifetime coverage and potential cash value growth, selecting the right policy can seem overwhelming.
PolicyAdvisor makes this process simpler and smarter for you! Our licensed advisors work closely with you to understand your unique needs and help you compare the top policies across Canada. Whether you’re looking for wealth transfer, estate planning, or guaranteed lifelong protection, our experts will guide you toward the best plan that aligns with your objectives.
We also offer an AI-powered life insurance calculator that delivers accurate whole life insurance quotes in under 60 seconds, helping you make informed decisions quickly. Schedule a call with us today to get customized quotes.
Frequently asked questions
What happens if an insurer reduces dividends?
If your insurer reduces dividends, the overall performance of your whole life policy may be impacted. Specifically, the growth of your cash value and death benefit could slow down, especially if you’ve been using dividends to purchase paid-up additions.
However, your policy’s guaranteed values—such as the base death benefit and guaranteed cash value—remain fully intact. However, if dividends were being used to offset premium payments, you may need to resume out-of-pocket payments to keep the policy in force.
Is whole life insurance a good investment in Canada?
Whole life insurance is not a traditional investment like stocks or mutual funds, but it can be a valuable part of a diversified financial strategy. Moreover, it offers permanent coverage, tax-advantaged growth, and stable returns through dividends.
For individuals focused on long-term savings, estate planning, or looking for a conservative, low-risk asset, whole life insurance can provide both financial protection and predictable cash value accumulation.
What happens if I borrow against the cash value of my whole life policy in Canada?
Borrowing against the cash value of your policy is a common feature of whole life insurance. Additionally, you can take out a policy loan, often at competitive interest rates, without triggering immediate taxes.
However, the loan accrues interest, and if it’s not repaid, your death benefit will be reduced by the loan amount plus any interest due. Over time, unpaid loans can significantly impact the policy’s cash value and overall benefits, so it’s important to manage them carefully.
How does inflation impact whole life insurance dividends?
Inflation affects the real purchasing power of your policy’s dividends and cash value. While your whole life insurance policy may continue to grow, inflation can make that growth less meaningful over time.
Fortunately, many participating policies allow dividends to be used to purchase paid-up additions, which help increase both the cash value and death benefit. Also, this strategy can help counterbalance the effects of inflation and maintain the policy’s value in real terms over the long run.
Canada’s leading dividend-paying whole life insurance providers include Equitable Life, Manulife, Industrial Alliance (iA), Empire Life, RBC Insurance, and Canada Life. As of 2024–2025, their dividend scale interest rates are: Equitable Life at 6.40%, Manulife at 6.35%, iA at 6.35%, RBC Insurance at 6.30%, Sun Life at 6.25%, Empire Life at 6.00%, and Canada Life at 5.50%. These whole life insurance policies offer a guaranteed death benefit and tax-deferred cash value growth. The annual dividends are influenced by the company’s investment performance, mortality payouts, operational expenses, and more. Policyholders can utilize dividends to purchase paid-up additions, reduce premiums, accumulate interest, withdraw cash, or repay policy loans. This structure makes them suitable for long-term financial planning, wealth transfer, and estate planning strategies.
