How Much Is Taxed On Life Insurance? 
The death benefit of a life insurance policy is tax free . In Canada , if the beneficiary is a corporation , the death benefit is received by the company tax free . The amount that the death benefit exceeds that Net Cost of Pure Insurance can be paid out as Capital Dividend to shareholders Tax Free . -LRB- Ask for details -RRB- In Canada the cash value of the policy is not taxed as long as the policy remands exempt from accrual taxation . Insurance companies make sure policies remand exempt . The ratio of death benefit to cash value can not exceed the cash value of a endowment at age 85 . If surrendered the amount that exceeds the adjusted cost base is taxed the same as interest income . If you borrow in excess of the adjusted cost base you will attract taxation . A deemed disposition can occur on most transfers of ownership . Check with you insurance company to be sure . 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 . 