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Understanding How London Life Participating Life Insurance Works

Understanding how London Life Participating Life Insurance Works Diagram

  1. When you purchase participating life insurance, the premiums you pay go into an account called the participating account, together with all funds from other London Life participating policies.
  2. To determine guaranteed premiums, guaranteed cash values and guaranteed death benefits, London Life uses long-term assumptions for factors such as investment returns, mortality, expenses, lapses and taxes.
  3. When actual and expected future results in the participating account are collectively more favourable than the assumptions supporting guaranteed values, earnings are generated that become part of the participating account surplus (retained earnings).
  4. Earnings retained in the participating account become part of the surplus, which helps to provide strength and stability to the participating account for the future.
  5. Each year, London Life may distribute a portion of the earnings of the participating account as participating policyowner dividends, as approved by the board of directors. Dividends are not guaranteed.

The London Life participating account held a surplus of $1.6 billion at Dec. 31, 2011.

The philosophy behind participating life insurance is to provide participating policyowners with insurance at a cost that takes into account the actual long-term performance of the participating account.

Asset Mix

A large portion of the total participating account assets is invested in bonds and mortgages to support long-term stable growth and core guarantees within London Life participating life insurance policies.

Asset class Total assets on Dec. 31, 2011 ($ millions) Per cent of total invested assets
Short term $589.4 3.3%
Fixed income $13,793.7 77.6%
Equities $3,391.7 19.1%
Total invested assets $17,774.9 100.0%
Total participating assets $19,817.9



During times of economic change, the London Life dividend scale interest rate has been relatively stable compared with many financial instruments. The graph below shows how the longer-term focus for participating account investments and smoothing of returns has had a stabilizing effect on the London Life dividend scale interest rate.

Understanding how London Life Works - Graph - Life Insurance in Windsor Ontario Canada

London Life’s long-term investment strategy – together with its strategy of smoothing – helps reduce the impact of short-term volatility son the investment component of dividends received by participating life insurance policyowners.


London Life has the largest Canadian participating account, measured by assets.1 The company has 1.6 million participating policies in force at Dec. 31, 2011.

London Life has paid dividends to participating policyholders every year since 1886.

London Life’s credit ratings were maintained in 2011. It continues to enjoy strong ratings relative to its North American peer group due to its conservative risk profile and stable earnings track record.

London Life and design are trademarks of London Life Insurance Company.
London Life Logo - Windsor Life Insurance | Brendon Laing

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