In a guide to life insurance, Sun Life writes that participating life insurance is a good choice for people looking for innovative and cost-effective ways to maximize their life insurance protection. “It can help you build your tax-preferred cash values and enable you to increase your death benefit to keep pace with inflation and provide your family members with protection,” reads the Sun Life guide.
Participating life insurance is a good choice for people who are looking for innovative and cost-effective ways to maximize their life insurance protection. It can help you build your tax-preferred cash values and enable you to increase your death benefit to keep pace with inflation and provide your family members with protection. Participating life insurance can help ensure your estate transfers intact to your beneficiaries.
The insurer adds that participating whole life can help policyholders pass on their entire estate to their beneficiaries.
On its website, iA Financial Group describes for whom its non-participating whole life insurance product Legacy represents an ideal solution. The insurer identifies two profiles.
- For a professional who needs permanent insurance coverage of a million dollars or more, and wants to ensure the growth of his or her estate so that it can be passed on to the next generation.
- For a business owner who needs significant permanent insurance and wants to benefit from a source of short-term liquidity, diversify his assets and access asset classes usually reserved for the institutional market.
Legacy is what iA calls specialized insurance. It is actually used for estate planning purposes. Participating whole life insurance is usually used for this purpose.
Personas that converge
A persona is a fictional character with the main characteristics of a target clientele.
This notion was used as a starting point for profiling using generative artificial intelligence (AI). On March 13, Insurance Portal asked three chatbots powered by generative AI – ChatGPT from OpenAI, Gemini from Google and Perplexity AI from the company of the same name – to describe three personas of ideal customers for whole life insurance in Canada. The query asked them to specify which type of product best suited each: participating whole life or non-participating whole life.
The three bots delivered similar profiles. According to their personas, participating whole life insurance is aimed at a target audience interested in estate planning and growth of sum insured for estate planning purposes. Non-participating whole life insurance, on the other hand, is aimed at families and those seeking lower-cost lifetime protection.
There are, however, a number of differences between the three approaches. ChatGPT distinguishes itself by giving its personas names. ChatGPT is also the only company to have provided a comparative table of the different personas. Insurance Portal was inspired to provide similar tables to the profiles drawn up by Gemini and Perplexity AI.
The personas of the three bots in detail:
ChatGPT
Persona 1: Julie, the young professional planning her future
- Age : 30
- Situation : Single, computer engineer, good income, no children
Objectives:
- Ensure long-term financial protection
- Accumulate tax-sheltered savings
- Have the option of financial flexibility for future projects
Recommended product:
- Participating whole life insurance
Why?
- Julie can take advantage of dividends to increase the value of her policy or reduce her premiums over the long term.
- Her insurance accumulates cash value, which she can use as financial leverage (loan, withdrawal, retirement supplement).
- She invests early, which means lower premiums and significant growth potential.
- She can choose a 20-year payment option, allowing her to be free of payments while retaining lifetime protection.
Persona 2: Marc and Sophie, the couple with children looking for family protection
- Age: 45 and 42
- Situation: Married, parents of two children (14 and 10), homeowners
Objectives:
- Protect the family financially in the event of death
- Leave a capital sum to pay off the mortgage and cover the children's education
- Have an affordable, stable insurance solution
Recommended product:
- Non-participating whole life insurance
Why?
- Marc and Sophie are looking for stable, affordable protection.
- Non-participating whole life insurance offers them a fixed premium, which makes budget planning easier.
- The cash surrender value is guaranteed, giving them a degree of financial security.
- They can take out a joint policy (first-to-die), which is more economical than two separate policies.
Persona 3: John, the retiree who wants to optimize his estate
- Age: 67
- Situation: Retired, widowed, three grandchildren
Objectives:
- Leave an inheritance for his grandchildren
- Optimize his estate planning and reduce the tax impact
- Increase his sum insured with an investment approach
Recommended product:
- Participating whole life insurance
Why?
- John wants to maximize his death benefit to pass on a larger inheritance.
- With dividends, the value of his policy can grow over time.
- He can use his insurance as a tax-planning tool to avoid certain estate taxes.
- The cash surrender value can also be used in times of financial need.
Gemini
The prudent family planner:
- Age: 35-50
- Status: Married with young children, homeowner, stable family income.
Goals:
- Ensure long-term financial security for family.
- Finance children's higher education.
- Leave a modest inheritance.
Concerns:
- Stability and predictability of benefits.
- Protection against inflation.
- Accessible cash value in case of emergency.
Recommended product:
- Participating whole life
Why?
This product offers potential cash value growth through dividends, which can help counter inflation. The stability of premiums and benefits is also a major advantage.
The growth-oriented investor:
- Age: 45-60
- Situation: Established professional, high income, diversified investment portfolio.
Objectives:
- Optimize estate planning. Maximize inheritance for beneficiaries.
- Use life insurance as a long-term investment tool.
Concerns:
- Investment returns.
- Tax advantages.
- Policy management flexibility.
Recommended product:
- Participating whole life
Why?
Dividends can increase the overall return on the policy, which is attractive to investors. In addition, the tax advantages of whole life insurance are an asset for estate planning.
The continuity-minded business owner:
- Age: 40-55
- Situation: Owner of a small/medium-sized business, business partner(s), succession planning.
Objectives:
- Ensure business continuity in the event of a partner's death.
- Finance a buy-sell agreement.
- Protect the business against financial loss.
Concerns :
- Financial stability of the business.
- Protection of partners and employees.
- Succession planning.
Recommended product:
- Non-participating whole life
Why?
For business owners with tighter cash flows, premium stability may be more important than dividend growth. Premiums are generally lower, and they still have the protection of whole life insurance.
Perplexity.ai
The established professional:
- Profile: 45-year-old woman, lawyer, married with two children
- Financial situation: High income, has maximized RRSPs and TFSAs
Objectives:
- Long-term family protection and tax optimization
Recommended product: Participating whole life insurance
- This option is best suited because it offers:
- Lifetime protection for her family
- The possibility of receiving dividends, which can increase the value of the contract
- An investment component managed by the insurer, ideal for affluent individuals looking to grow their wealth
The young entrepreneur:
- Profile: 32-year-old male, owner of a growing start-up
- Financial situation: Variable income, reinvesting in his business
Objectives:
- Basic protection, financial flexibility
Recommended product:
- Non-participating whole life insurance
This choice is more suitable because:
- It offers lifetime protection at a generally lower cost
- It provides stable coverage without the fluctuations associated with dividends
- The fixed premium facilitates financial planning for an entrepreneur with variable income
The forward-looking retiree:
- Profile: 65-year-old male, recently retired, widowed
- Financial situation: Comfortable pension, homeowner
Objectives:
- Leave an inheritance, cover funeral expenses
Recommended product:
- Participating whole life insurance
This option is preferable because:
- It offers guaranteed lifetime protection
- The possibility of receiving dividends can increase the amount bequeathed to beneficiaries
- The increasing cash value can be used to supplement income if necessary
A final word
ChatGPT concludes its answer by writing that each type of whole life insurance meets specific needs. The participating option is best suited to those seeking financial growth and flexibility, while the non-participating option is ideal for those who prefer simplicity and security.
Gemini separates the two. Participating whole life offers potential cash value growth, but premiums can be higher," it writes. As for non-participating whole life, Gemini points out that premiums are generally lower.
Perplexity AI's strong point is that this chatbot always provides hyperlinks to Web resources at the end of its response. But these don't always lead to the most recent pages. One of them points to the Canadian Life and Health Insurance Association's (CLHIA) Canadian Life & Health Insurance Facts - 2023 Edition, while the 2024 edition is available. The 2025 edition was not yet available, at the time of writing.
Gemini and Perplexity recommended speaking to an advisor to find out which product best suits their situation. ChatGPT did not.
This article is a Magazine Supplement of the April issue of the Insurance Journal.
