What are the best whole life insurance?

Alexandre Desoutter Alexandre Desoutter  updated on 2020-11-25

Whole life insurance is a form of permanent life insurance that will pay out in the event of your death (and sometimes against diagnosis with a life-threatening disease) and that remains in force throughout your entire life (as long as you continue to pay the premiums).

What is whole of life insurance?

Whole of life insurance covers you for your entire life, as long as you keep paying the premiums. Whole life is a permanent type of life insurance. 

How does whole of life insurance work in Canada?

When you take out a whole life policy you pay monthly premiums for a stated amount of cover, for instance a sum insured of $250,000. You also nominate a beneficiary, which may be a trust, or a member of your family. When you die, the insurer will pay out the agreed sum to your beneficiary.  

A part of the premium goes for the cost of life insurance, that will be the pay out. The premiums you pay are invested and you can dispose of the investment returns as cash value.

If you prefer to be covered for a limited time, check out our guide about term life insurance.

Why should I get a whole of life insurance?

A whole of life insurance can protect your family by paying out a lump sum when you die. If you’re wealthy or own a valuable property you might want to protect them against a big inheritance tax bill, or you may want to leave children and grandchildren a nest egg.

A life insurance policy can be used as a form of savings for your family. Many parents with severely disabled children, for instance, use whole of life insurance to ensure their children will be properly looked after when their parents are no longer around.

Whole of life insurance provides a way to save for the future, because the premiums you pay are invested, the income earned generates a cash value that you can access later in the future.

On the other hand sometimes, you may only need life insurance for a certain length of time – for instance till your mortgage is paid, or till your children have grown up.

What can cover a whole life insurance?

A whole life insurance payout could cover:

  • paying the mortgage on your family home, if you’re the sole breadwinner or you need both incomes to be able to keep up the payments;
  • looking after a dependent partner if you have very young children;
  • paying for university tuition for your children;
  • paying for full time childcare if a non-earning partner dies;
  • looking after an aged parent or disabled child, if you’re a carer;
  • repaying debts.

What are the disadvantages of whole life insurance?

One big plus of whole of life insurance is that you’re covered for life. But there are also disadvantages – cost being a big one. 

  • The policy will cover you for all time, not just up until a certain date. 
  • Premiums don’t vary over time
  • Some policies also allow you to link the payout with investment, so the payout could grow in value over the years.  Investment income “the cash in value” that you earned in a whole life insurance policy is tax-free.
  • Whole of life premiums are much more expensive than term life insurance. If you only need life insurance to cover your mortgage, or simply want to ensure your family is covered if you die while your children are young, then term life insurance is much cheaper than whole of life.
  • If you have to give up paying your premiums, there can be high penalties. With investment-linked policies you’ll get back the value of the fund, but that could be a lot less than you’ve paid in premiums.

What is the difference with permanent life insurance?

Whole of life and universal life are both permanent life insurance.

  • Both universal and whole of life have financial aspect. But with universal life insurance, you choose your investment whereas for whole of life insurance, your company does. Universal life insurance is therefore much more flexible.
  • With whole of life insurance, the premiums are the same during all the policy. With universal life insurance, premiums can vary, and are investments.
  • The amount of death benefit change : As the premium change with universal life insurance, the amount of death benefit will change either. So this depends on amount of cash in value in the moment of the death. Whereas for whole life insurance, this grows either, but it is more predictable and flexible than whole of life insurance.

How much is whole life insurance?

Well it depends on many things. The exact price will depend on :

  • your age,
  • your state of health and medical history,
  • your weight,
  • whether you smoke,
  • how much you drink,
  • your lifestyle (a racing car driver will pay more than Mr Sensible),
  • the sum you want to insure,
  • any ‘extras’ such as critical illness cover that you want added to the policy.

What are the best whole life insurance in Canada?

Here are the top best life insurance :

Insurance companyDetails
Manulife whole life insurance
  • Two types of whole of life
  • Coverage that starts at $100,000 or $25,000 for the other whole of life insurance called, Performax Gold®
  • You can use your equity and cash value

as collateral for a bank loan
  • Guaranteed cash value that grows over time
Wawanesa whole life insurance
  • One of the oldest insurer in Canada
  • Term and whole life insurance available
  • Good rates
BMO whole life insurance
  • Guaranteed cash value
  • Really interesting features to increase your cash in value, for example you can make additional payments
  • Option to lower your premium if your financial situation changes
Sunlife whole life insurance
  • 3 types of whole life insurance
  • Guaranteed Life insurance : coverage amount from from $5,000 to $25,000.
  • SunSpectrum Permanent Life II Insurance : max amount $10,000,000. Policy is for people who don’t want to manager their life insurance policy.
  • Sun Permanent Life Insurance : Maximum amount $10,000,000. Simple protection and option to have increasing death benefit.
Best whole life insurance

What are the differences between term life insurance and whole life insurance?

Here are the main differences between term life insurance and whole life insurance:

Whole of life insuranceTerm life insurance
Protection Limited time : 10, 15, 20 years…Protection for life
InvestementNo
  • Yes – your premium are invested and generates cash in value.
  • Investment is managed by the insurance company
PremiumStay the same during the policy Stay the same during the policy
Whole of life insurance
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