Find the best whole life insurance quotes in Canada

Whole life insurance is one of the major categories of coverage in Canada, and anyone getting life insurance needs to give it some serious thought. However, whether whole life insurance is the right option for you is not a simple question.

When you need coverage for a limited period of time, such as the life of your mortgage, or until your children grow up, term life insurance is probably the best bet. However, if you want your family to receive a death benefit when you die, even in your old age, then whole life insurance is the way to go.

Here are two other reasons in which whole life insurance should be considered:

• Estate planning - One main use of whole life insurance is for estate planning. When someone dies in Canada without a partner, they are assumed to have disposed of all their worldly possessions at the market price, moments before they pass away. As a result, capital gains taxes will be payable, and their estate will need to submit a final tax return and pay these taxes. If you have sizeable assets that have increased in value, like shares in a business or an investment property, this gain in value will be taxed when you die. Without a life insurance death benefit, that could result in your family having to sell these assets in order to pay the tax bill. Whole life insurance can be the perfect product to protect your family from that occurring, allowing them to inherit the assets in full.
  
  
• Lifelong investing - Of course, whole life insurance also gives you a cash surrender value (CSV). This is how much you would be paid if you surrendered the policy, but it's also an asset you can borrow against, instead of taking out an unsecured line of credit – a useful feature you won't get from a term life insurance policy. However, if you are primarily thinking about whole life insurance as a way to make long-term investments for your family, it's highly recommended you look into universal life insurance as well. It won't always be a better option, but universal coverage has some serious advantages in this space.

As with all big financial decisions, the best thing you can do is educate yourself, and shop around. You've already done a lot of work on the education part, so the next step is to compare life insurance quotes and find the best rate for your coverage needs.

While term life plans can expire, whole life insurance does not expire, provided you continue making your regular payments on time. The policy will pay out to your beneficiaries upon your death. The policy remains enforced for your entire life, which is why it also referred to as permanent life insurance.

All of the dedicated life insurance companies offer some form of whole life insurance, but smaller companies, or insurance companies owned by a bank, may only offer term life insurance. Most whole life policies are sold by Canada’s big three life insurance companies: Sun Life, Canada Life, and Manulife. The big three life insurance companies also offer the most flexible whole life insurance products, as well as universal life insurance policies.

If you’re interested in the bank-owned providers, you may only be able to get a basic form of whole life insurance, like term-to-100 or guaranteed life insurance. Many of the banks – even the big five – don’t offer participating whole life policies, or even policies that accumulate a CSV. See our pages on BMO life insurance, RBC life insurance, and TD Bank life insurance to learn more.

The better option between term life insurance and whole life insurance is dependent on your own personal needs. Term life insurance is not as costly and can cover you during a critical period of your life. On the other hand, whole life insurance is more expensive, but it covers you all the way until death. Think about your beneficiaries and when they will need your financial support, but also think about when they will no longer rely on you financially.

You are typically able to access the cash in your whole life policy through a withdrawal, loan, or surrendering the policy. 

A withdrawal from the policy means you are taking out a limited amount of cash while taking out a loan means you are borrowing cash from the policy with interest. Surrendering the policy completely allows you to access the built-up cash and use the money as you see fit.  

Make sure to consider carefully as there can be disadvantages to accessing your cash value in a whole life policy. For example, withdrawals might not be tax-free if you go over your limit and you could be reducing your death benefit greatly. Loans might have high-interest rates while surrounding your policy early could have costly fees. Consider why you purchased the whole life policy in the first place and whether you still need the protection. 

It's not a simple answer and will depend on your risk tolerance and investment ambitions. It really depends on your budget and investment goals, as the low rates of return might not offset the high premiums. The main benefit is the policy does pay out a guaranteed return, but they’re expensive and not suitable for most people.

As an investment, a whole life policy provides you with coverage and earns you interest over time in a cash value account. This type of investment may best suit high net worth individuals and parents with lifelong financial dependents.

Yes, just like variable life and universal life insurance, a whole life insurance policy has a built-in cash value. Once you've begun accumulating cash value in your whole life policy, you could use the funds to:

• Pay your policy premium

• Take out a loan at a lower rate than banks offer

• Create an investment portfolio that maintains and accumulates wealth

• Supplement your retirement income

A whole life policy comes with a “guaranteed” cash value that will grow according to a formula the insurance company determines. The amount that is guaranteed will be calculated on your policy coverage amount. The bigger your premium, the larger the cash value.

Final expenses insurance is a type of coverage that is specifically designed to cover end-of-life expenses. These include funeral and burial costs, medical bills and tax liabilities. You can purchase a whole life policy with final expense coverage that would payout at your death to cover any related expense.

Yes, you can borrow against any permanent life insurance policy that builds an actual cash value. The process of borrowing against a life insurance policy is actually quick and easy way to access cash when you need it.

Essentially a policy loan is created that is borrowing against your death benefit, and your insurance company use your whole life policy as collateral for the loan. Keep in mind that this isn't an interest free loan, as your life insurance company will add interest to the balance, which accrues whether the loan is paid monthly or not.

It's best to ask your insurance company who the borrowing process works, including the repayment plan and interest requirements.