Tag Archives: How is Life Insurance Taxed

Taxation of Life Insurance

Posted on: February 7th, 2013 by Peter Choma

Life insurance can be divided into two types: term and permanent. Term insurance has no investment component and pays out a tax-free death benefit if you die during the life of the policy. Permanent insurance, generally universal life or whole-life is designed to last throughout your life time and often has an investment component allowing you to build up cash values inside the policy in a tax-sheltered manner.

The laws regarding the taxation of life insurance in Canada are anything but straight forward and can be a complex topic; the best possible advice will come from a tax professional that can assess your own individual circumstances. The subject of taxes and life insurance are basically broken down into two main areas;


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