I was reading the 2026 Projection Assumption Guidelines, released by FP Canada and the Institute of Financial Planning, and stopped at the summary on page 20.
Inflation: 2.1%. Return rates — short-term: 2.4%; fixed income: 3.2%; Canadian equities: 6.3%; U.S. equities: 6.4%; international developed-market equities: 6.6%; emerging market equities: 7.5%. A borrowing rate of 4.4%. Elsewhere in the document — primary residence and rents, each at inflation plus one. And a full probability-of-survival table.
It is an admirable document. Every assumption a planner needs to build a long-term projection, sourced from the CPP and QPP actuarial reports. Disclosed, published free and updated every year. Nobody has to guess, and nobody has to defend a number they invented.
Permanent life insurance is absent from the document, except as part of a reference to evidence of good health on a list of bullet points about life expectancy.
I went looking into FP Canada’s Body of Knowledge next. Under the foundations of life insurance, a planner is expected to explain the characteristics used when comparing term, whole life, term-to-100 and universal life. The characteristics named include the impact of interest rates, the tax impact, diversification and the impact on overall asset allocation.
So, the profession names allocation as the ground on which these products should be compared. The verb it uses — 90 times in its Topic 11: Insurance — is explain.
“Explain foundational uses of life insurance …”
“Explain approaches to determine a suitable amount of life insurance for an individual …”
The glossary of verbs also includes calculate, compare, estimate and evaluate.
This is not an oversight. It is nobody’s failing.
The guidelines publish assumptions — numbers a planner must adopt because the future cannot be known. Every rate in that document is an estimate about markets.
Life insurance is the one allocation where the number does not have to be estimated. Mortality cost and death benefit are written into the contract, so the return can be calculated for a particular person rather than assumed for a class. There is no one number for everyone — it can be worked out exactly for anyone.
The arithmetic is ordinary: A male aged 37, non-smoker, buying a fully guaranteed non-participating policy: $90,000 of coverage for $1,233 a year, payable for 20 years and then nothing further. Total outlay: $24,660.
Nothing in that sentence is projected. No dividend scale, no credited interest rate, no assumption of any kind. The premium and death benefit are both contractual. The only unknown is the date.
The guidelines address that too. Page 18 asks planners to run sensitivity analysis on mortality, because small changes in the projection period produce large changes in the result. The survival table gives the percentiles directly. For a man in his late 30s, half will reach 90, one in four will reach 95 and one in 10 will reach 98.
The insurer prints this figure on its own illustration. To check it, or to build it for any case in front of you: 20 cells of −1,233, zeros through to the year of death, then 90,000 and =IRR() across the row.
The result is the company’s own number verified rather than taken on faith. Using the guidelines’ survival percentiles for the year of death:
| Survives to | Share of men | Return on the death benefit |
| Age 90 | one half | 2.92% |
| Age 95 | one in four | 2.63% |
| Age 98 | one in 10 | 2.48% |
What this table describes is a floor. Every figure in it is contractual — the premium, the benefit, the fact that nothing further is owed after 20 years. Nothing in it depends on a dividend scale holding or a market behaving.
Guaranteed is not the same as risk-free. The return still moves with the date, and the policy has to be kept in force. But the amount does not move, and an amount that does not move is worth measuring from.
A family can stop there. A fully guaranteed contract is a complete answer, not a stepping stone.
Or they can start there — because once a floor exists, everything else has something to be judged against: participating insurance, where cost is adjusted by the insurer according to the pool’s experience; the structural choices that lift the effective return; the decision to hold more than one kind of contract.
None of those can be assessed in isolation. All of them can be assessed against a number that cannot move. That is the whole reason to begin with the guaranteed figure rather than the attractive one.
Now it can be compared to something, which is the entire point of putting it in these units.
Compared to what?
Take a TFSA funded with the identical deposits — $1,233 a year for 20 years, nothing after. Both the death benefit and the TFSA are tax-free, so there is no gross-up to argue about and no marginal rate to assume.
The question then is straightforward: can that account average 2.92% a year, compounded over 53 years, and still be there on the day it is needed?
The guidelines put long-term fixed income at 3.2% before fees, and state plainly that fees must be subtracted to reach a net return. They also note that fees commonly run from 0.5% to 2.5%. You can finish that arithmetic without my help.
Fixed income is not the only comparison, and it is not the hardest one. The guidelines put Canadian equities at 6.3% and U.S. equities at 6.4%. Held in that same TFSA across the same 53 years, that is a different result altogether, and any planner should say so.
It is also a different kind of number — an expectation about markets rather than a term in a contract. It also answers a different question: what this money might become for the person who owns it, rather than what arrives, tax-free and on-schedule, for someone else on the day they die.
Both belong in front of the family. Only one of them can be promised.
What the TFSA has that the policy does not is liquidity. It can be spent or rebalanced. The client can change their mind. The insurance cannot. That is a real cost and it belongs in the comparison alongside everything else.
Some disclosure about my own choices, since they moved the numbers.
I used a 20-pay structure rather than premiums running to age 100, because a policy that finishes paying is a safer thing to own than one that does not. I used $90,000 rather than $100,000 because pricing bands change at the round number, and I wanted the case to be unremarkable rather than flattering. It is one product, one insurer, one age, one sex, one date. Change any of them and every figure moves.
One contract is not a portfolio. Over a horizon this long, circumstances change and the flexibility to adjust comes from holding more than one component — a longer conversation for another day. And 2.92% is a plain number. It takes no account of the structural choices — corporate ownership and the capital dividend account among them — that can move the effective return higher. Those are real, and they are a separate conversation. Pull the illustration and check the arithmetic.
None of this argues that anyone should buy permanent life insurance. It argues something narrower — that a family cannot decide how much of their wealth belongs in a thing until somebody tells them what the thing costs and what it returns. We have the number, but we have not been putting it where planners can find it.
Ben Feldman said the basic purpose of life insurance is to create cash at the time of death. Nothing more and nothing less. Some families will want to guarantee a specific amount of tax-free money arriving for someone else on a date nobody can predict. They may want simply to allocate something, long term, that benefits others. Most, asked plainly, will tell you they’ve never been asked.
Zero is a perfectly good answer to that question. But it should be an informed zero — measured in the same units as every other allocation in the plan, using the profession’s own published assumptions and written down where the client can see it.
