How Much Is Life Insurance Taxed? 
In Canada life insurance death benefits are usually tax free . One exception would be a policy registered as an RRSP -LRB- not currently done , but was in the past -RRB- , Cash value growth is not taxed while it is inside a policy , unless it exceeds the MTAR -LRB- Maximum Tax Actuarial Reserve -RRB- . Insurance companies monitor their policies to be sure this does not happen . Surrendering the policy would trigger taxation . There are other events such as borrowing , or most transfers of ownership , that could also trigger a gain . The proceeds , less the cost of insurance is taxed the same as interest income . If you have further questions , or feel that I could be of assistance , please do not hesitate to contact me . If you would like to work with a local life insurance broker , you could start with a Google search . For example , if you search for : life insurance broker Halifax or life insurance agent Halifax , my name , along with several others , will come up . You can use the same method to find a life insurance broker in your community . 