Is Life Insurance a Good Investment? An Insurance Advisor’s Honest Answer
Participating whole life insurance policies marketed as investments on social media are designed for business owners netting $500K+ annually — not average Canadians. Dividend projections are based on undisclosed assumptions, and some policyholders with 40+ year-old policies are receiving zero dividends despite the insurer claiming 110 consecutive years of payouts. Buy insurance for insurance; invest separately.
I’m going to go a bit off the beaten path with this one. This isn’t about real estate directly — but if you own property in the GTA, you almost certainly have life insurance or have been pitched life insurance. And there’s a massive conversation happening right now about “investment-grade” insurance policies — the ones being marketed on TikTok and Instagram as the way to “become your own banker” or build tax-free wealth.
I sat down with life insurance advisor Adam Neiman, and what he told me was genuinely eye-opening. He’s not a crusader. He’s not trying to blow up the industry. He sells life insurance for a living. But he has a bone to pick with one specific corner of it — and after hearing him out, so do I.
The pitch you’ve probably seen
If you’ve spent any time on social media, you’ve seen some version of this:
- “RESPs are outdated — buy this instead for your child”
- “What doctors and dentists do to build tax-free cash”
- “Become your own banker with this one policy”
- “Dividends for life — your family gets the money when you die”
These are all marketing pitches for participating whole life insurance policies. The concept: you pay a premium, part goes to insurance coverage, part goes into an investment component managed by the insurance company. The investment grows tax-sheltered, you get dividends, and when you die, your family gets a big payout.
On paper, the illustrations look incredible. You put in X dollars a month, and by the time you’re 60 or 70, you’ve got a million dollars sitting there. The problem, according to Adam, is that those illustrations are built on assumptions that nobody will tell you about.
How Adam discovered the problem
Adam didn’t set out to be a whistleblower. He bought books of older policies when he started in the business, which gave him access to clients who purchased these products in the 1960s, 70s, 80s, and 90s. And he started noticing something: the actual values these clients were seeing today were way off from what they were promised when they bought.
The turning point came with one specific client. Her grandfather had bought a participating whole life policy for her in 1979. Adam took over as the advisor of record and started receiving her annual statements. The first year: zero dividend. The second year: zero dividend again.
“I was kind of floored. I’d never seen a policy with no dividend. Especially because this same company — I was at their event maybe a week earlier — and they said, verbatim, ‘We’ve paid a dividend every year for the last 110 years.'”
He emailed the insurance company. Their response: “A lot has changed since 1979. Interest rates were high then, they’re low now. Sorry.” The next year, same question, same response — copy and pasted word for word.
The assumption problem
Here’s what Adam dug into, and what most people — including most insurance advisors — don’t fully understand:
When you buy a participating policy, you’re shown an illustration with projected dividends. Those projections are based on a set of underlying assumptions the insurance company makes: investment returns, mortality rates, how many people cancel their policies, how many people borrow against them. Your dividends aren’t based on how well the fund actually performs. They’re based on how closely reality matches the company’s internal predictions.
Adam put it this way: “Imagine an advisor says, ‘Buy this stock. I predict it’ll go from $5 to $10.’ But you’re not paid based on the actual stock price. You’re paid based on how accurate my prediction was. If I predicted $5 to $10 and it only goes to $9, you might get nothing — even though the stock went up 80%.” That’s essentially how participating policy dividends work.
And here’s the kicker: no insurance company will disclose what those underlying assumptions are. It’s proprietary. A chief actuary at a major insurer told Adam directly: “If you want transparency, this product is not for your clients.” Veterans in the industry call it a “black box.”
Who these products are actually designed for
Adam was very clear: the insurance companies themselves have gotten better about messaging who this product is for. At a recent industry event, the company presenter said these policies are designed for small business owners who net over $500,000 per year after all expenses and salary — people who have leftover cash they literally don’t know what to do with.
- Young people without significant savings
- People buying it as a “child plan” replacement for RESPs
- Anyone whose primary investment is this policy
- People with no TFSA, RRSP, or real estate equity
- Anyone who thinks the illustration is guaranteed
- High-net-worth business owners ($500K+ net annual)
- People with maxed-out TFSAs, RRSPs, all write-offs used
- Those with significant non-registered cash looking for tax shelter
- People who want permanent coverage and view dividends as a bonus
- Estate planning situations with sophisticated tax needs
But the reality on the ground? Most people buying these products are not in that category at all. They’re regular people who saw a convincing Instagram reel and want to “be their own banker.”
The nuance Adam wants you to hear
This is what I appreciated about the conversation. Adam isn’t saying insurance companies are scammers. He isn’t saying permanent life insurance is bad. He’s saying one specific thing:
Adam spends $327/month so that if something happens to him, his wife gets $6 million. He spends $160/month on disability so he gets $5,000/month tax-free if he can’t work. That’s insurance doing what insurance is supposed to do: covering catastrophic risk. Not generating investment returns.
Universal life policies let you separate the insurance cost from the investment component. You pick from a list of funds — US equity, bonds, managed portfolios — just like you would with an RRSP. You can see exactly what you own and what it’s worth. The returns aren’t a black box.
Adam’s core message: don’t confuse insurance premiums with investment contributions. If you’re putting $400-500/month into a participating policy for 30 years and at the end it’s worth far less than the illustration showed, you’ll wish you’d bought real estate or an index fund instead. Keep insurance and investing separate.
Why I’m sharing this on a real estate blog
Because my clients are homeowners. They’re building wealth through property. And I regularly see people who have been sold financial products they don’t fully understand — products that pull money away from things that could actually grow their net worth, like paying down their mortgage faster or building equity through a smart purchase.
If someone is telling you to put $500/month into a life insurance policy instead of making lump-sum payments on your mortgage, I’d want you to at least understand the trade-off. Real estate is transparent. You can see what your property is worth. You can see comparable sales. You can calculate your equity. That transparency matters.
This episode is one of those conversations that I think everyone should hear, whether you’re buying a home, selling a home, or just trying to make smart financial decisions for your family.