Participating Life Insurance

Participating insurance products—also called whole life insurance—combines lifetime coverage with an investment component.

You can use participating life insurance to:

• Pay final expenses and any debts you may have
• Ensure your family has the resources to maintain a comfortable standard of living
• Pay any taxes owing on your estate so more of your estate is transferred to your children or grandchildren
• Leave a legacy in your community or with your favourite charity
• Provide your business with the money necessary to fund a buy-sell agreement
• Protect your business against the loss of a key employee

During your lifetime, it can:

• Build tax-advantaged savings that you can draw upon as needed for personal or business opportunities; any cash values withdrawn from the policy may be subject to tax
• Supplement your retirement income
• Provide funds for long-term care or home care

Features:

• The potential for tax-advantaged growth within the policy without the risk of loss associated with equity markets
• Protection for your lifetime as long as premiums are paid when due
• Guaranteed premiums
• Guaranteed cash values (this amount increases over time and grows on a tax-advantaged basis)
• Guaranteed basic death benefit paid tax free to the named beneficiary

Investment performance built for the long term

Participating insurance is a permanent life insurance product. But the investment performance of the par account is an important component in determining the long-term value of your policy.

A team of professional investment managers invest the assets in the participating account. Assets held in the account include: publicly traded government and corporate bonds, residential and commercial mortgages, corporate lending, real estate, equity-related investments, short-term investments and policy loans.

How participating insurance works

When you purchase participating insurance, the premiums you pay are credited to an account called the participating account with funds from other Great-West participating policies. We calculate premiums and other basic guaranteed values for these policies using conservative assumptions for death claims, investment returns, expenses (including taxes) and other relevant factors.

We use conservative assumptions because the guaranteed premiums, guaranteed cash surrender values and guaranteed death benefit are based on these assumptions and are in place for the life of the policy. If the actual results collectively are better than the assumptions supporting the guaranteed values, earnings are generated in the participating account that become part of the participating account surplus (retained earnings). We hold a surplus in the participating account to maintain its strength and stability into the future. Each year, we distribute a portion of the earnings policyholder dividends as approved by the Board of Directors in accordance with applicable legislation.

Dividends

The opportunity to earn policyholder dividends is unique to participating policies. Participating policyholders share in the success of the pool of participating policies through the payment of policyholder dividends.

Dividends are not guaranteed and, will vary upward or downward, from those illustrated depending on future circumstances and dividend scales. A number of variables, including investment returns, mortality experience and expenses (including taxes) affect the dividend scale.

When we credit dividends to a policy, they have a cash value. This cash value, once credited to the policy, is owned by the policyholder and cannot be reduced or used in any way without the policyholders’ authorization other than to pay premiums. Policy cash values accumulate on a tax-advantaged basis. As cash values accumulate, policyholders can withdraw cash from their policies or borrow against it. Any cash values withdrawn from the policy may be subject to tax.

Policyholder dividends can provide you with considerable flexibility now and in the future. These dividends can be used to buy additional insurance each year on a tax-advantaged basis without proving your insurability at that time. They can also be used to lower your out-of pocket premiums. You choose how it’s used to provide a balance between future growth and affordability.

History shows that actual dividends paid over the life of a policy will go up and down and this must be kept in mind when planning the use of future dividends.

For specific information about what life insurance can do for you and how you can benefit from owning a policy, speak to your financial security advisor. They can show you ways to tailor your insurance coverage to meet your needs today and in the future.