Whole Life Insurance: What is it? How it works? Get free quotes
Watch out!
Kindly use the filters below to select your province of residence, as well as your age.
- Possibility to modify the contract at any time
- Tax-sheltered savings option that grows
- Guarantees for children included
Permanent Life Insurance by Beneva offers lifetime coverage with flexible payments. Clients may decide to surrender all or part of your policy to provide a cash flow, for example, as additional retirement income. Also, premiums are fixed.
- Fixed or decreasing insurance amount
- Fixed premiums and guarantees
- Option to convert to permanent life insurance without medical evidence
Pick-A-Term by iA is a term life insurance solution designed with affordability and flexibility in mind, suitable for various stages of life including young families and pre-retirees. It offers terms from 10 to 40 years, which can align with significant financial commitments like mortgages or educational expenses. The fixed and guaranteed premium structure simplifies budgeting, while options to renew annually or convert to permanent insurance provide adaptability as needs evolve. This product is ideal for those seeking financial security without the long-term commitment of permanent life insurance, accommodating both personal and business insurance needs.
- Versatile term options from 10 to 40 years, matching key financial periods.
- Premium rates are guaranteed and known upfront, aiding in financial planning.
- Allows conversion to permanent coverage at any time without health checks.
- Can be renewed annually to adapt to changing insurance needs.
- Available with additional benefits such as critical illness and disability insurance.
- At renewal, premiums may increase based on the new term.
- Decreasing Benefits Option is not suitable for those needing consistent coverage amounts throughout the term.
- Numerous coverage and benefit options could complicate decision-making.
- Lifetime protection at a guaranteed rate
- Guaranteed surrender values and guaranteed paid-up values
- Suitable for all age groups
Solution 100 by Empire Life offers lifetime coverage and protection up to age 100. Premiums end at age 100 with coverage lasting your entire lifetime, and rates will never increase, no matter your age or health status. Solution 100 offers the option to change to reduced paid-up value and stop paying premiums or access cash values through surrender or a policy loan.
- Guaranteed Level premiums
- Guaranteed cash surrender values
- Guaranteed Paid-up values
- No online quote available
- Benefit in case of disability and tax-free
- Lifetime protection and tax-advantaged investments
- Option to guarantee a child's or grandchild's insurability
RBC Whole Life Insurance by RBC offers lifetime coverage, cash value guarantees, a potential for dividends, and the chance to plan your estate. It is one of the more cost-effective policy options in the long term. By creating policy dividends, RBC Whole Life generates long-term growth. This is the ideal solution for clients having predictable long-term needs.
- Multiple riders available
- Online account access
- Digital e-policy
- Available to permanent residents only
- Option of level costs or annually renewable term costs
- Three death benefit options
- Non-taxable disability protection
Genesis by iA Financial Group is a flexible product that allows you to save and maximize your estate tax-free, insure your mortgage, protect the value of your business, have access to liquid assets for additional retirement income, deal with the unexpected, or bring a project to life.
- Guaranteed costs of insurance
- Surrender value
- Disability benefits
- No electronic policy
Whole life insurance is a lifelong financial companion providing a safety net for your loved ones in case the unexpected happens. It also has a savings component for your own goals. It's a commitment to safeguarding both your family's future and your present financial well-being.
But how does it work? How is it different from term life insurance? Which one should you choose? Find out all this and more in our guide.
Explore the best whole life insurance Canada plans using our free comparator, compare the options, and get over 20 free personalized quotes in a few moments right here.
Whole Life Insurance in Canada: 5 Key Takeaways
- Lifelong Coverage: The insurance lasts your whole life and supports your family financially after you pass away.
- Part of your payment goes into a savings account that grows tax-free and you can use the money when needed.
- The amount you pay for the insurance doesn't change over time, making it easier to budget.
- You might get extra money (dividends) from the insurance which can lower your future payments or be saved for later.
- You can use the saved money for big expenses like education costs or retirement.
What is whole life insurance in Canada?
Sometimes called “traditional life insurance” or “whole of life insurance”, whole life insurance policies provide beneficiaries with a payout after the policyholder passes away. This lets you ensure that loved ones will be taken care of in your absence.
As a form of permanent life insurance, whole life insurance is also an investment that you can use during your life. Many whole life insurance policies include a cash savings component. A portion of the monthly premium is set aside in a savings account where it accumulates, tax-free, for the policy's life.
Similar to a registered retirement savings plan (RRSP), you can access these accumulated savings - often called the Cash Surrender Value (CSV) of the policy - in the form of a loan against your policy or a withdrawal. You’ll also receive dividends, which you can either receive in cash, re-invest or use to purchase additional coverage.
Unlike term life insurance, which guarantees coverage for a fixed period of the policyholder’s lifetime, whole life insurance provides lifetime coverage.
Whole life insurance explained
Imagine Sarah, a 30-year-old Canadian, decides to purchase a whole life insurance policy. She opts for a policy with a $250,000 death benefit and pays an annual premium of $2,500. Over the years, as Sarah consistently pays her premiums, the policy accumulates cash value. Let's say after 15 years, the cash value has grown to $30,000. At this point, Sarah could choose to access this cash value in whole life insurance to help fund her child's education.
Do I need a Canada whole life insurance plan?
Wondering who should buy whole life insurance? Most adults, particularly those with dependent children or other family members will benefit from life insurance.
While it is unpleasant to consider, imagine what would happen to your spouse and a child if you were to lose your life to an unexpected illness or an automobile accident. Would they be able to keep up with the mortgage and stay ahead of bills? A whole life insurance policy can make all the difference in maintaining their standard of living and being able to go to university.
Before we jump into more details, you can use our comparator below to explore the best options. You can compare the best Canadian plans and get personalized quotes on whole life insurance for free right here.
Get whole life insurance quotes
How does Canada whole life insurance work?
When you purchase a whole life insurance policy, you’re buying two things: a guaranteed benefit paid at the time of your death and a cash investment account that grows, tax-sheltered, over your lifetime.
Each month, a portion of your premium goes towards the cost of the insurance, including administrative fees, while another portion goes straight to a cash savings account. Early on, the amount deposited in the savings account might be small, however, it increases over time.
At the time of your death, your beneficiaries receive the benefit coverage you initially purchased and the accumulated cash value of the policy.
What is whole life insurance cash value?
Cash value in life insurance refers to the savings component of a permanent life insurance policy. Over time these savings accumulate giving you a lot of financial flexibility. A principal advantage is that it grows tax-free and gives you an asset to draw upon.
This amount can be accessed in a few different ways.
- A loan: borrowing against your policy makes for an easy, no-credit-check loan. Because you’re borrowing from yourself, you may not even have to reimburse it.
- Paying premiums: Miss a payment? No problem, it’ll be deducted from your policy’s cash value.
- Cash surrender value (CSV): Finally, if you cancel your policy you can cash out the cash value minus surrender fees.
Is whole life insurance worth it?
While the high cost of whole life insurance policies may not always match every budget, for many the peace of mind associated with a guaranteed benefit may be worth the higher premiums.
Other people who might benefit from whole life insurance coverage include:
- High net worth individuals. A whole life insurance policy can help you to defer taxes while maintaining access to the policy’s CSV.
- People who need help with savings. The cash savings portion can help you set aside money for retirement.
- People with a substantial legacy. The benefit associated with this policy can be used by your beneficiaries to offset inheritance.
What do Canada's whole life insurance plans cover?
Whole life insurance provides your beneficiaries with a one-time, tax-free payment. The amount depends on the insurance policies. Beneficiaries can use this money towards nearly any expense. This could help them to cover:
- Funeral expenses
- Existing debt
- Mortgage payments
- Home repairs
- Bills and living expenses
- Tuition
- A nest egg
Assuming the account was in good standing, it is rare to have problems claiming benefits from a life insurance policy.
How much does Canadian whole life insurance cost?
A woman in her thirties who does not smoke can expect to pay around $140 per month for $250,000 worth of coverage. A man in his forties with a taste for cigars might pay closer to $300 per month for similar coverage.
Life insurance premiums vary depending on many factors, including your age, gender, health, and smoking status.
Because premiums for whole life insurance policies stay the same for the entire term of the policy, it makes good financial sense to purchase a policy sooner, rather than later. It’s the best way to get the cheapest life insurance rates.
The table below shows how premiums increase as you age:
Benefit amount | Sex | Age | Monthly premium |
|---|---|---|---|
| $250,000 | Male | Mid-30s | $161 |
| $250,000 | Male | Mid-40s | $266 |
| $250,000 | Female | Mid-30s | $139 |
| $250,000 | Female | Mid-40s | $221 |
Ready to find out how much life insurance will cost you and lock in a price now? Do it right here using our comparator below. Get over 20 personalized whole life insurance quotes in no time.
Compare the best life insurance companies
How much whole life insurance do I need?
Determining how much whole life insurance you need involves considering factors like your current and future financial obligations, including debts, funeral expenses, and income replacement for your dependents.
The HelloSafe whole life insurance calculator can help assess these factors and then get a customized coverage recommendation using our comparator. By inputting details such as your age, income, outstanding debts, and desired coverage, the calculator can estimate the appropriate coverage amount to ensure comprehensive protection for your loved ones.
What is whole life vs universal life insurance?
Whole life or universal life insurance are both types of permanent life insurance that will ensure the financial security of their beneficiaries. Let’s explore the benefits of whole life vs universal life insurance
| Insurance type | Whole Life Insurance Policies | Universal Life Insurance Policies |
|---|---|---|
| Permanent? | Yes. Beneficiaries receive a payout, no matter when the policyholder passes. | Yes. Beneficiaries receive a payout, no matter when the policyholder passes. |
| Fixed Premiums? | Yes. Premiums are set at the time of purchase and remain the same for the life of the policy. | No. Premiums vary depending on the type of investments chosen and their performance. |
| Investment Account? | Sometimes. Cash surplus value does not accrue interest, but participating policies may receive policy dividends if the insurance company's assets turn a profit. | Yes. The policyholder may invest in any way they like tying the value of the policy to the success of their investments. Cash savings will accrue interest, but losses are also possible. |
| Tax benefits | Yes. Dividend payments are tax-sheltered. | Yes. Market gains earned by investments are tax-sheltered. |
| Borrowing? | Yes. Many policies permit the policyholder to borrow up to 90% of the accumulated cash value of the policy. | Yes. Many policies permit the policyholder to borrow between 50 and 90% of the accumulated cash value of the policy. |
| Missed payments | Automatic premium loans are triggered by unpaid premiums. If loans surpass the cash surplus value, the policy will lapse. | The value of the account is instantly deducted for missed payments. If account value can't cover the payments, the coverage will cease. |
What is term vs whole life insurance?
The biggest difference between whole and term life insurance is that the former will pay a death benefit no matter when the policyholder dies. A term life insurance policy will pay a benefit only if the policyholder dies during the term of the policy.
Here's a look at the key differences.
| Type of life insurance | Term life | Whole life |
|---|---|---|
| Length | A set term: usually between 10 and 30 years | Lifetime coverage, assuming premiums are paid |
| Cost | Starts low and increases | More expensive, but offer level premiums |
| Dividends possible | ||
| Cash value | ||
| Complexity | Easy to understand | Can be confusing |
| Flexibility | Easy to cancel | Cancellation may incur a fee |
Now, let’s take a look at a few examples.
For example
In 1992, Frances purchased a term life insurance policy with coverage for the next 30 years. In March 2022, she renewed her policy for another three decades to make sure her children, aged 18 and 20, receive a benefit should something happen soon.
A whole life insurance policy, on the other hand, covers your entire life and ensures that your beneficiaries receive a benefit no matter when you pass away. Here's an example of how whole life insurance works:
For example
In 1974, Marc purchased whole life insurance to protect the financial well-being of his wife and young children should he, the sole breadwinner, pass away unexpectedly. He diligently paid his monthly premiums up until his death in March 2022. Marc’s wife predeceased him, however, his son and daughter will both receive benefit payments from his insurer.
What are the benefits of Canadian whole life insurance?
Given that any type of life insurance - whole, term, or universal - can protect your loved ones from financial hardship in the case of your death, it may seem as though they’re interchangeable.
From a financial planning and wealth creation perspective, whole life insurance offers unique benefits not available with other forms of life insurance. Thinking of whole life insurance as an investment can help clarify some of the most significant advantages.
- No expiration date. Provided you continue to pay the premiums, your loved ones will receive a benefit no matter when you pass away.
- Fixed premiums. While whole-of-life insurance may carry a higher price tag, the security of knowing that your premiums won’t dramatically increase from one year to the next can make it easier to plan financially.
- Cash value. The CSV of your policy, which amounts to the cash savings accumulated over time, can play an important part in your retirement planning. You can also withdraw money from this fund earlier for any reason, such as a downpayment on a home.
- Dividends. Many policies of this type pay cash dividends, which you can then reinvest in the policy or use to pay your premiums.
How do you get whole life insurance?
As with other types of life insurance policies, you can opt to purchase coverage directly from the insurer or through a qualified broker.
Researching and comparing plans means you can feel confident that the policy you purchase meets your needs and budget exactly. It can also, however, require a great deal of time and effort, as well as specialist knowledge.
Purchasing through a broker might seem more expensive due to fees, but can save you money in the long run. Most brokers and financial institutions can negotiate discounts and other advantages on your behalf, including lower premiums.
You could also simply use our free comparator below to compare plans yourself and get the best deals on various life insurance types and free personalized quotes right here.
Compare the best life insurance companies
What is the best whole life insurance Canada plan?
The "best" whole life insurance plan in Canada depends on individual needs, preferences, and financial goals. However, the most well-known and reputable insurance companies in Canada offering whole life insurance plans include:
| Insurance Provider | Product Name | Other Features | Action |
|---|---|---|---|
| Empire Life | Solution 100 |
| Get a quote from Empire Life |
| Sun Life | SunUniversalLife II |
| Get a quote from Sun Life |
| iA Financial Group | Genesis |
| Get a quote from iA Financial Group |
| RBC Insurance | Whole Life Insurance |
| Get a quote from RBC |
| Canada Life | Whole life insurance |
| Get a quote from Canada Life |
| BMO Insurance | Universal Life Insurance |
| Get a quote from BMO |
| Equitable life of Canada | Equation Generation IV |
| Get a quote from Equitable Life |
| ivari | Ivari life insurance | Equitable Life of Canada | Get a quote from Ivari |
What are FAQs on whole life insurance?
What is participating whole life insurance?
Whole life insurance is available in both participating and non-participating policies. Non-participating plans are the more common option.
With a participating whole life insurance policy, you participate in the company’s profits. When the insurer makes money they may pay out dividends. These policies are a more robust investment option and premiums are higher. Dividends are not guaranteed though, so evaluate your financial needs and risk tolerance before opting for a participating policy.
Expert advice
Participating whole life insurance policies can be a good option for investors who want fixed premiums and want to diversify beyond a TFSA, RRSP, and RESP.
How soon can I borrow against my whole life insurance?
You can start to borrow against your whole-life policy once it starts to build up cash value. Borrowing may be considered either a policy withdrawal or a policy loan if it’s from the insurer.
Alternatively, you may be able to use the cash value as collateral for a loan or line of credit from a third-party lender. In any of these cases, you will need to have accrued a significant enough sum to serve as collateral.
Expert advice
inform yourself of the tax implications before borrowing from your life insurance. Exceeding the policy’s ACB, or adjusted cost basis may be taxable.
How to cancel a whole life insurance policy?
You may decide to cancel your policy if your needs or situation changes. This could be because you found a better policy, because your dependents are now financially independent, or you because can no longer keep on top of the premiums.
Good to know
If you just took out your policy you may still be in the “free look” period. If so, may have the right to cancel and get a refund.
To cancel you will need to contact your insurer directly. This is usually done in writing, by phone or online.
If your policy has a remaining cash value, you can take some of that money with you. The cash value minus the fees is known as the cash surrender value. Early on, the fees can take up a significant percentage of the cash value, but it is less painful for an older policy.
Good to know
Cash surrender value = cash value - surrender fees
