LIFE INSURANCE
Term to 100 life insurance
Before you act on anything about tax on this page
This practice is licensed in life and health insurance. It is not an accounting practice, it does not prepare returns, and nothing on this page is tax advice or an opinion on anybody’s tax position.
- Speak to an accountant before you act. Not after. If tax is any part of the reason a decision is being considered, a professional accountant who has seen the actual file is the person to decide it with, and this page is not a substitute for that conversation.
- The rules move. Tax rules, thresholds, rates, forms and deadlines change, most of them at least once a year, and a rule described here may have been amended since this page was built.
- The tax authority is the authority. For anything a reader intends to rely on, the Canada Revenue Agency and, in Quebec, Revenu Quebec publish the current rule themselves, free, and that is where it should be read.
- Nothing here is a calculation of anybody’s tax. This page describes how a rule is written. It does not work out what any reader will pay, recover or owe, because that depends on a whole return and on facts no page can see.
- No professional relationship is created by reading this. No reliance should be placed on it, and nothing in it is legal advice either.
In plain language: we are not accountants. Anything here that touches tax is general information, it changes, and it should be checked with an accountant and against the tax authority’s own page before anybody uses it for anything.
Permanent coverage with a cost that does not change and no expiry date. In the usual design there is no cash value inside the policy. The contract pays a benefit at death, and that is what it does.
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No price appears on this page, and none is sent by email. What a contract costs depends on the person and the design, and no honest figure can be produced from three answers.
What decides a term to 100 contract
- A level cost for lifeThe premium is set when the contract is issued and stays there. The coverage does not expire at an age and does not renew, because there is no term to renew.
- No cash value in the usual designThere is nothing to withdraw and no value accumulating inside the policy. Some versions add a limited value, which is a feature of that specific contract rather than of the category.
- Premiums often continue for lifeSome contracts stop the payments at an age written into the policy. Whether payments run for life or end at an age is decided by the version signed.
What term to 100 actually is
Term to 100 is permanent life insurance wearing a term name, and the name is the reason it confuses people. It is not a contract that expires at 100. It is coverage that stays in force for life, with a premium that is set at issue and does not rise, and in most designs it holds no cash value at all.
That last part is the whole product. A permanent contract that accumulates nothing costs less than one that accumulates something, because the insurer is being asked to do one job rather than two. If what a household needs is a payment that will certainly happen one day, and it needs nothing else, this is the least expensive permanent way to arrange it.
What the contract says about premiums after a certain age varies. Many are payable to age 100 and require nothing after it while the coverage continues. Some are designed to be paid up earlier, over a set number of years. Which one you are looking at is written in the contract and it changes the arithmetic entirely, so it is the first question to ask.
The trade you are making, stated plainly
You are giving up flexibility and accumulation, and you are buying certainty and a lower cost. That is the deal, and it is a good one for the household it suits.
What you give up: there is generally no cash value, so there is nothing to borrow against, nothing to surrender for, and nothing that grows. If the premium stops, the coverage generally stops, and a policy abandoned after twenty years of payments usually leaves nothing behind. A participating contract in the same situation would have value in it.
What you get: a permanent death benefit at a cost meaningfully below a contract that also has to build value, with no illustration to interpret, no dividend scale to watch and no decisions to make later. For a person who wants insurance rather than a financial instrument, that simplicity is a feature and not a compromise.
The failure mode is specific and worth naming. A household that buys term to 100 and then finds the premium uncomfortable in ten years has no reserve inside the contract to fall back on. The affordability question here is therefore not "can we pay this now", it is "can we pay this in a bad year, for the rest of our lives".
The obligations it was built for
The tax bill that falls at death. A cottage, a rental property or shares in a private company are deemed disposed of at death, and the tax on the accrued gain is payable by the estate whether or not anybody wants to sell the asset. That liability does not expire, it usually grows, and insuring it with a contract that ends at 65 or 75 solves nothing. Term to 100 is the plain answer where the family does not also want the contract to build value.
The final expense. Funeral costs, the settlement of an estate, the bills that arrive in the first weeks. It is not a large amount and it is a certain one, and leaving it to be found from a frozen account is how families end up borrowing at the worst moment.
The dependant who will always need support. A permanent need answered by a permanent contract, frequently alongside a trust, and that combination is a conversation for a lawyer or notary as much as for an insurance professional.
The estate that has to be equalised. One child takes the business or the cottage, and the others receive the equivalent in money. The money has to come from somewhere on a day nobody can schedule.
And the charitable gift somebody wants to make certain rather than hopeful.
When a corporation owns it, and the number people get wrong
Term to 100 is frequently owned by a private corporation, because the liability it answers, the tax on shares at death, belongs to that world. When it is, one number is misunderstood constantly and it is worth getting right before anything is signed.
Under paragraph (d) of the capital dividend account definition in subsection 89(1) of the Income Tax Act, life insurance proceeds received by a private corporation that was a beneficiary are credited to the capital dividend account to the extent that they EXCEED the adjusted cost basis of the policy to the corporation immediately before the death. Source: Income Tax Act, section 89, Justice Laws Website, read 5 September 2026.
The credit is therefore the proceeds net of the adjusted cost basis, not the whole death benefit. Any page or presentation that says the entire amount flows out tax free through the capital dividend account is overstating it, and the difference can be substantial on a contract that has been in force for decades.
Who owns the policy, who pays the premium and who is named as beneficiary each carry consequences that differ between a personally owned and a corporately owned contract, and the wrong arrangement is expensive to unwind later. That belongs with a qualified tax professional before the application, not after the policy is issued.
How much, when the amount is a tax bill you cannot yet see
Sizing a permanent contract is a different exercise from sizing a term one, and no page can print the answer. On a term policy the household is replacing an income and clearing a balance, both of which it can read off its own statements. On a permanent contract the amount is frequently a tax liability that does not exist yet.
The method is the same in outline. Identify the assets that will be deemed disposed of at death: a second property, a rental, land, shares in a private company, a portfolio outside a registered plan. For each, the estate will face tax on the gain accrued to that day, and that tax is payable whether or not anybody wants to sell.
Add what has to be settled quickly regardless: the final expenses, the professional fees of the estate, and any amount promised to a child who is not receiving the asset.
Subtract what can genuinely be sold without wrecking the plan. A cottage the family intends to keep is not a source of cash, and treating it as one is how the cottage gets sold.
What remains is the liquidity the estate will need on a day nobody schedules. The figure itself has to be produced by a qualified tax professional working from the actual holdings and the actual cost bases, not from a web page and not from a rule of thumb. What a page can tell you is which question to take to them.
The need does not stand still, and neither should the review
This is the part that separates a permanent contract from a term one. A mortgage falls every year. A tax liability on an appreciating asset rises every year. Insure a liability today and, twenty years from now, the contract is the size you bought and the liability is not.
There are three honest ways to deal with that and a household should choose one deliberately rather than drift. Buy for the liability you expect at the point it matters rather than for today, accepting a higher cost now. Buy for today and diarise a review every few years, adding coverage while health still allows it, which is the common approach and the one that quietly fails when nobody diarises anything. Or look at a design whose benefit is intended to grow, which usually means a participating contract rather than term to 100, and which costs more for exactly that reason.
What a household should not do is decide once and never look again, because that is a decision to be underinsured later without having chosen it. Put the review in a calendar with the policy documents, at whatever interval suits, and treat a missed review as a real event.
Term to 100 beside the alternatives
The comparison that matters is not term against permanent. It is what you want the contract to do besides pay a death benefit.
| Contract | How long it lasts | What it builds | What it is usually bought for |
|---|---|---|---|
| Term 20 and Term 30 | A set number of years, then it renews at a contract cost or ends. | Nothing. | A dated obligation: a mortgage, the years children depend on the household. |
| Term to 100 | For life, while the premium required by the contract is paid. | Generally nothing, and that is the design. | A permanent obligation where the household wants insurance and not an asset: an estate tax bill, a final expense, a lifelong dependant. |
| Participating whole life | For life, while the contract is in force. | Guaranteed cash value, and it is eligible for dividends, which are declared annually at the insurer’s discretion and are not guaranteed. | A permanent need where the contract is also meant to build value the owner can use. |
| Universal life | For life, subject to the contract and to how it is funded. | An account value that depends on what is paid in and on the investment options chosen, and the risk of those choices sits with the owner. | A permanent need where the owner wants control over funding and investment decisions. |
A household that will never use a cash value is paying for something it does not want if it buys a participating contract, and a household that wants a usable structure is buying the wrong thing if it buys term to 100. Neither mistake is discovered quickly, which is why the question belongs at the start.
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What it is, how it works in Canada, what it costs, what it risks, how long it takes and who it does not suit.
Jose Salloum Canadian Wealth Creation Centre Inc.
Read the guideSix things to read in the contract before signing
How long the premium is payable, and what happens at that point. To 100, to a stated age, or over a set number of years are three different contracts.
What happens if a premium is missed. With no cash value there is usually no automatic advance to fall back on, so the grace period and the reinstatement terms matter more here than on a participating contract.
Whether any cash value exists at all. A few designs include a small one, and a few include a return of premium on surrender at a stated age. Neither is standard, and neither should be assumed from a conversation.
Whether the coverage can be changed later, reduced, or exchanged for another contract, and on what terms.
What riders are attached, what each one costs and when each one ends. A rider that expires at 65 inside a permanent contract is a common surprise.
And who owns it and who is named as beneficiary, written down, with a note of why. That page is worth more to a family than the policy summary.
Tax, and the designation
A death benefit paid to a named beneficiary is generally received free of income tax. A payment made in consequence of the death of a person whose life was insured is excluded from the definition of a disposition in subsection 148(9) of the Income Tax Act. Source: Income Tax Act, section 148, Justice Laws Website, read 5 September 2026. Confirm your own situation with a qualified tax professional.
Proceeds paid to a named beneficiary generally pass directly to that person rather than through the estate, so they arrive faster and are not held up by the administration of an estate.
A permanent contract outlives more family changes than a term one, which means the designation on it is the one most likely to be wrong. It should be read at every significant change: a separation, a remarriage, a death, a child reaching adulthood, the sale of a business.
The four mistakes this page exists to prevent
Reading the name and assuming the coverage stops at 100. It does not. It is permanent insurance.
Buying it for a temporary obligation because it sounds safer. A dated need is answered more cheaply by a term contract of the right length.
Assuming there is value inside it to fall back on. In most designs there is none, which makes the affordability question a lifetime question rather than a this year question.
Believing the whole death benefit flows out of a corporation tax free. The capital dividend account credit is the proceeds net of the adjusted cost basis, and that is a different number.
Questions people ask
Does term to 100 end when I turn 100?
No. It is permanent life insurance. The name refers to the premium structure, not to an expiry. In many contracts the premium is payable to age 100 and nothing more is required after that while the coverage continues, but what your own contract says is what governs.
Does it build cash value?
In most designs, no, and that is the point: a permanent contract that accumulates nothing costs less than one that does. A few designs include a small value or a return of premium at a stated age. Neither should be assumed, and both are written in the contract.
What happens if I stop paying?
The coverage generally ends, and with no cash value there is usually nothing to fall back on and nothing returned. That makes affordability a lifetime question rather than a question about this year. Read the grace period and the reinstatement terms before you sign.
Is it better than participating whole life?
Neither is better in the abstract. Term to 100 buys a permanent death benefit and nothing else, at a lower cost. Participating whole life also builds guaranteed cash value and is eligible for dividends, which are declared annually at the insurer’s discretion and are not guaranteed. What decides it is whether the household wants the contract to do a second job.
Our company would own it. Is the death benefit tax free to the corporation?
The proceeds are received by the corporation, and the credit to the capital dividend account is the amount by which they exceed the adjusted cost basis of the policy to the corporation, under subsection 89(1) of the Income Tax Act. The whole death benefit does not flow out tax free. Take the structure to a qualified tax professional before the application.
Who should not buy it?
Anyone insuring an obligation with an end date, who is better served by a term contract of the right length, and anyone who wants the contract to build value they can use, who is looking at the wrong product.
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A first conversation establishes whether this fits. No illustration is prepared and nothing is arranged.
Often the answer is no, and you will hear it during the call rather than in a proposal afterwards.
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About the author
Jose Salloum is a Financial Security Advisor (Conseiller en sécurité financière) licensed by the Autorité des marchés financiers in Quebec, by the Financial Services Regulatory Authority of Ontario, and by the Insurance Council of British Columbia. Licensed since 2001, he works with Canadian families, business owners and incorporated professionals.
He is the founder of Canadian Wealth Creation Centre Inc. (CWCC), registered with the AMF, and of its educational branch IBCFinancial.com. He holds the Infinite Banking Concepts® Authorized Practitioner certification from the Nelson Nash Institute, a private certification rather than a regulatory licence.
CWCC is not registered with CIRO and does not provide securities advice. This page is general education and not advice on any individual file.
Important disclosures
This page is education, not advice. The content is general information prepared by Canadian Wealth Creation Centre Inc. It does not take your circumstances into account and is not a recommendation to buy, hold or cancel any contract. CWCC is not registered with CIRO and does not provide securities advice. The firm places insurance in Quebec, Ontario, Alberta, British Columbia, Manitoba and New Brunswick; clients elsewhere are served by advisors licensed in their province.
Nothing here was written with your file in front of us. Read it to understand the subject, then judge it against your own situation, ideally with someone who is licensed where you live and who has seen your numbers.
This is not tax advice, and the tax treatment depends on your own circumstances. The tax treatment described depends on the contract remaining exempt under the Income Tax Regulations and on the reader’s individual circumstances. A withdrawal, a surrender or a policy loan may be a disposition under the Income Tax Act, and amounts above the adjusted cost basis may be taxable in the year they occur. Tax rules change. Canadian Wealth Creation Centre Inc. is licensed in life and health insurance. It is not an accounting practice, it does not prepare returns, and nothing on this site is tax advice or an opinion on any reader’s tax position. Anything a reader intends to rely on should be confirmed with a professional accountant and against the current published rule of the Canada Revenue Agency and, in Quebec, Revenu Québec.
The tax result is not automatic and it is not unconditional. It rests on the contract staying within the Canadian rules and on your own situation. Before you rely on any of it, talk to an accountant who has actually worked with these contracts.
Guarantees come from the insurer, not from the government. Guaranteed values in a life insurance contract are contractual promises of the issuing insurer and depend on that insurer’s financial strength and claims paying ability. Dividends on a participating contract are not guaranteed, are declared at the insurer’s discretion and can change. Policyholder protection in Canada is provided by Assuris within its published limits; deposit insurance does not apply to insurance contracts.
The guarantees written into a contract are real, and they are the insurer’s. The dividend is not a guarantee at all; it is what the insurer decides to declare each year. Know which numbers are which before you make a plan around them.
Illustrations and projections are not predictions. Any figures, examples or illustrated values are hypothetical, are shown to explain a mechanism, and are not a forecast of the performance of any contract. Actual values will differ and may be lower than those shown. Past dividend scales do not predict future scales.
An example is there to show how the parts move, not to tell you what you will get. Any real illustration you are shown should be read on its guaranteed columns first.
Borrowing against a contract carries its own risks. A policy loan or a loan secured by a contract accrues interest. If the balance and interest are not managed, the death benefit is reduced, and a contract that lapses with a loan outstanding can produce a taxable gain in that year. Third party lenders set their own terms and can change them.
A loan is a loan. Interest builds whether or not you pay it, and a contract that runs out of room while it is owed can cost you both the coverage and a tax bill. This is the part of the strategy that needs the most discipline.
Investment discussion is general and comparative. References to investment products, accounts or returns are for comparison and education. CWCC does not sell securities and is not registered with CIRO. Segregated funds are insurance contracts; their guarantees are the insurer’s and apply only at the dates and on the terms written in the contract. Returns are not guaranteed and capital can be lost.
When this site compares a contract with an investment, it is describing how each works, not telling you which to buy. Questions about securities belong with someone registered to answer them.