Compare permanent life insurance quotes in Canada
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- Tell us a bit about yourself
Life insurance is specific to you, so we'll need a few details to customize your policy.
- Speak with an insurance broker
We'll show you quotes from multiple providers, so a broker will be in touch to help you choose.
- Finalize your policy selection
You may need a medical exam to finalize your policy, but you'll be guided through the process.
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What is permanent life insurance?
Matt Hands, VP, Insurance
Permanent life insurance is exactly what it sounds like – a life insurance plan that covers you for you up until death. By agreeing to make regular payments (also known as premiums) to your insurance company, the provider agrees to pay a lump sum amount (also known as a death benefit) to whomever you designate. The funds can then be used for all different purposes, securing your loved ones' financial future.
This type of life insurance differs from term life insurance where coverage only lasts up to a certain period (e.g. 10 years, 20 years). With term life, if you don't pass away during the time frame, your coverage expires. Permanent policies, on the other hand, are guaranteed to pay out eventually upon your passing, provided you continue to make all the required premiums.
Most permanent policies also come with a cash value reserve – this is a tax-deferred investment fund that you can access during your lifetime and leverage for different purposes, such as retirement planning. The growth of your cash value is dependent on the type of permanent plan you choose, but there are generally three constant ways to access the funds: borrowing, withdrawing, or surrendering your policy entirely.
Common types of permanent life insurance in Canada
While life insurance is often broken down into the two categories of term life and permanent life, there are also several different types of permanent policies. Here, we provide an overview of the most common options in Canada.
Whole life insurance
Universal life insurance
Term 100 life insurance
Final expense insurance
The permanent life insurance market in Canada
According to the Canadian Life & Health Insurance Association (CHLIA), the breakdown between permanent life insurance and term life insurance in 2023 was 25% and 75%, respectively. Permanent policies consisted of 12% for individual whole life insurance and 13% for individual universal life insurance. On the other hand, the term life market was broken down between individual (40%) and group policies (35%).
12%
of policies in the life insurance market were individual whole life
13%
of policies in the life insurance market were individual universal life
Is permanent life insurance worth it?
For many Canadians, a term life insurance policy will suffice – for instance, you may only need coverage for a short-term mortgage or until your children are old enough to provide for themselves. However, permanent life insurance can be a strong financial planning tool for some individuals with special use cases. Below, we cover three different ways these policies can be leveraged to help determine whether it may be worth it for you – but as always, be sure to consult a licensed life insurance broker for more insight on your specific case.
Estate planning
Permanent life insurance is often used for estate planning as capital gains taxes on legacy properties (e.g. family cottage) may be passed on after death – the policy death benefit can be used to cover the amount owed.
Final expense planning
Because permanent policies are paid out eventually, it can be a great option for covering all final expenses – this includes the funeral, burial, and cremation.
Tax planning
For wealthier individuals who have maxed out their TFSA and RRSP, the cash value component of a permanent life policy can be a leveraged for its tax advantages – earnings here are generally tax-deferred.
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How much does permanent life insurance cost?
The cost of permanent life insurance depends not only on the policy you choose but also on the risk you bring as a policyholder. It's no surprise that the more risk you present, the more expensive your premium will be. For reference, here are three sample quotes for three hypothetical cases – but to find the exact cost you'll be paying be sure to compare personalized permanent life insurance quotes with us today.
- $3,577/year
Whole life policy with $500,000 coverage
for a 35-year-old, non-smoking male
- $3,697/year
Universal life policy with $500,000 coverage
for a 40-year-old, non-smoking female
- $4,645/year
Term 100 policy with $500,000 coverage
for a 45-year-old, non-smoking female
Factors that impact your permanent life insurance quote
Again, there is no one-price-fits-all when it comes to a permanent life insurance policy. Instead, insurers determine your rate based on the risk you present – and of course, more risk (along with more comprehensive coverage) leads to higher premiums. Below, we outline a few of the factors insurance companies look at.
- Age
Life insurance is always cheapest while you're young. However, be weary of locking yourself into a lifetime policy early on if you don't have the needs for it.
- Health status
Those with pre-existing conditions face higher premiums and may also have limited options for coverage. Plus, if you smoke, expect higher rates to accommodate for the added risk.
- Gender
Statistically speaking, females tend to live longer than males – this results in cheaper premiums for women due to the lowered risk.
- Lifestyle
Some hazardous occupations (e.g. fire fighting) or activities (e.g. sky diving) may be flagged as high risk to insurers, leading to costlier coverage.
- Policy type
Whole life and universal life have different payment structures. And while some permanent policies don't require premiums after a set period (e.g. pay off in 10 years), these can also come with much higher rates.
- Coverage amount
Of course, opting for a higher death benefit will lead to more expensive insurance premiums. The added protection for your loved ones doesn't come without a cost.
Term vs. permanent life insurance in Canada
Below, we break down the main differences between term life and permanent life insurance in Canada, including the coverage periods, costs, premiums, and more. This can help you make the most informed decision for your unique situation when choosing between the two plans.
|
Feature |
Term life insurance |
Permanent life insurance |
|---|---|---|
|
Coverage period |
Term life insurance lasts for a set period of time, based on the term you select (e.g. 20 years). |
Permanent life insurance lasts for your entire lifetime, so it’s guaranteed to pay out eventually. |
|
Cost |
Term life policies are much cheaper than permanent life policies. |
Permanent policies are a far more expensive option when compared to term policies. |
|
Premiums |
Premiums are typically fixed for the entire term. It’s quoted based on your profile at the time you purchase your policy. |
While premiums can be fixed for permanent policies, universal life policies come with flexible premiums. |
|
Death benefit |
The death benefit is a fixed amount you choose, and it’s paid out to your beneficiaries tax-free upon your passing. |
While the death benefit is typically fixed, it can be flexible in universal life policies. It’s also paid out tax-free. |
|
Cash value |
There is no cash value component in a term life insurance policy. |
Most permanent life policies accumulate cash value – a reserve of funds you can access during your lifetime (through loans or withdrawals). |
|
Medical exam |
You may be able to purchase select term life insurance plans without a medical exam. |
You may be able to purchase select permanent life insurance plans without a medical exam, but the options tend to be more limited. |
|
Purpose |
Term life insurance is ideal if you only need temporary coverage, such as to pay off a mortgage or to replace parental income. |
Permanent policies are ideal if you’re looking for lifetime coverage (e.g. for estate planning, business succession planning) or want to leverage cash value (e.g. for tax advantages) during your lifetime. |
Pros and cons of permanent life insurance
Again, permanent life insurance can be a good coverage option for select individuals, but it’s not for everyone. Here, we break down some advantages and disadvantages of a lifetime policy, so you can better evaluate whether it’s right for you.
Lifelong coverage – Permanent life insurance provides coverage for your entire life, as long as you pay the premiums. This ensures that your beneficiaries will receive a death benefit regardless of when you pass away.
Cash value accumulation – Permanent policies typically come with a cash value account which grows over time. This cash value can be borrowed against, withdrawn, or used to pay premiums, providing a financial resource during your lifetime.
Tax advantages – The cash value growth within a permanent life insurance policy is generally tax-deferred (which is especially helpful if you’ve maxed out your TFSA or RRSP contributions). And like all other types of life insurance, the death benefit is generally paid out tax-free to your beneficiaries.
Fixed premiums – More specific to whole life insurance, the premiums for the policy remain fixed, making it easier to budget. You can lock in a lower rate while you’re still young and healthy as it may be difficult to qualify for the coverage you need later in life.
Policy flexibility – For universal life insurance, you can be more flexible with your premium payment and death benefit to align them with any changing financial goals. You also have the ability to choose how you want your cash value invested, making it an ideal option if you prefer a more hands-on approach to your policy.
Potential for dividends – Some policies (i.e. participating whole life insurance) offer the potential for dividends to be paid out. This can then be used to offset your premium payments or increase your cash value amount.