Updated: May 12
In this article, I will talk about if the life insurance proceeds are taxable in Canada
Are life insurance proceeds taxable in Canada?
The final answer is no. You put in tax-free money and you get out tax-free money.
Same rule applies for living benefits: critical illness, disability, and accident & sickness insurance.
Are life insurance proceeds taxable for corporations?
The proceeds are not taxable for corporations either. The same rules apply here: you put in tax-free money and you get out tax-free money.
Usually, the life insured is a key person or the owner, or the shareholder.
The family will have access to this money through the Capital Dividend Account and you will need help from your accountant to do this.
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