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Farshad Asl once said, “I don’t call it life insurance, I call it love insurance. We buy it because we want to leave a legacy for those we love.”

There can be few better summaries of what life insurance truly is.

For a better perspective, let’s get into some details about what life insurance is and why it is so beneficial for you and your loved ones.

Life insurance is an agreement where, upon the insurance policy holder’s death, the insurance company will pay a lump sum of tax-free money to the beneficiaries.

In return, the policyholder will have to pay the insurance company a fixed amount of money over time.

This is a good way to leave a sum of money for the people you love. If your spouse, parents, or children are dependent on your income, then buying life insurance can be a good idea.

Life insurance benefits can help replace lost income when the policyholder passes away, which means that the beneficiaries could use this money to cover their daily expenses, debts, loan payments, and more.

There are different types of life insurance policies, with different benefits.

One such benefit is the shared profits between the policyholder and the insurance company. This is a type of life insurance called Participating Life Insurance. These policies can further be divided into Participating and Non-Participating Life Insurance Policies.

Let’s dive into their definitions to understand their respective benefits, pros, and cons.

Participating Life Insurance

It is a type of permanent life insurance that provides the policyholder (buyer) with guaranteed lifetime coverage. All they need to do in return is to pay the policy premiums as per the guidelines of the insurance company.

As the name suggests, this policy allows the policyholder to participate in the benefits of the insurer (insurance company.) This is one of the most lucrative benefits of this policy in that it enables the buyer to share the profits of a life insurance company like Manulife for example. These profits shared are in the form of bonuses or dividends.

Non-Participating Life Insurance

On the contrary, a Non-Participating Life Insurance plan does not enable the policyholder to participate or receive any kind of benefits that the insurance company earns throughout the year. This means that the policyholder will not receive any bonuses or dividends too as opposed to what the Participating Life Insurance Plan offers.

But that doesn’t mean that this policy doesn’t have its benefits. Instead of shared profits, this type of life insurance offers the policyholders with some other guaranteed benefits and maturity.

Some Pros and Cons of the Participating Life Insurance Policy

Participating policies can cost less than non-participating policies over the long term. With cash value policies, the dividend increase as the policy’s cash value increases.

Whole life policies are risk-free because the insurance company bears all risks. However, in Participating Life policies, the insurance company will shift some of the risks to the agreement owner.

We have already discussed that this policy allows a policyholder to share in the profits of the insurance company in the form of a dividend.

This dividend can be used for various purposes like:

  • To use it to pay the insurance premium
  • It can be left with a life insurance company like The Co Operators to generate interest. Or the policyholder can take a cash payment like that on a stock
  • You can take your dividend as cash, buy more insurance or pay for your existing coverage

How does it work for you?

  • Pay your premiums and your policy’s cash value grows tax-free overtime
  • Your payments go into the participating account that is managed by the insurer
  • You receive dividends based on the participating account’s or the insurance company’s overall performance and profits

Participating in life insurance is an excellent solution if you are:

  • Looking for lifetime protection and significant savings potential
  • Interested in innovative ways to save for retirement or to more make plans for your estate
  • Concerned about the effect of inflation on your death benefit


Participating in whole life insurance provides the following benefits:

Death benefit

The death benefit and any paid-up additions are distributed tax-free to named beneficiaries.

Retirement funds

A whole life insurance policy can be used to build supplemental retirement income.

Annual vesting

Policy dividends are used to buy more paid-up insurance in your policy. They form a new accumulated cash value “floor”. That is guaranteed and cannot decrease unless initiated by you, the policy owner.

Account growth

Guaranteed cash values and policy dividends kept in your policy are not subject to tax on the growth during your lifetime.

This will help you meet your long-term financial goals and transfer assets to your beneficiaries.

Access to cash

You can access the accumulated cash value of your policy at any time. It is accessible through policy loans, through policy withdrawals of the cash value, or by pledging the accumulated cash value as collateral for a tax-free line of credit — which provides you with added liquidity and flexibility.


Another benefit of whole life insurance is its ability to offer you some flexibility. With its potential to accumulate a cash value over time, you have the option to use this cash for a variety of reasons.

The Bottom Line

Participating life insurance can be a good option if you are looking for coverage for your family, along with an investment component attached to it. As always, it’s best to contact your life insurance broker to see if this type of life insurance is right for you.