Choose affordable temporary protection through term insurance or permanent lifetime coverage through whole life or universal life insurance.
Many families use a combination: term insurance for large temporary obligations and permanent insurance for lifetime protection and legacy planning.
You pay premiums throughout the chosen term. The policy provides a death benefit if the insured person dies while coverage is active.
Some whole life policies allow premiums to be completed over 20 years while coverage continues for life. Universal life funding structures differ and must be reviewed carefully.
| Feature | Term Insurance | Permanent Insurance |
|---|---|---|
| Coverage period | Selected term, such as 10, 20 or 30 years | Designed for lifetime coverage |
| Premium approach | Paid throughout the chosen term | May be paid for life or through a limited-pay option such as 20 years |
| Initial cost | Generally lower | Generally higher |
| Cash value | None | May be available, depending on the product |
| Investment component | None | Universal life may include investment account options |
| Best suited for | Mortgage, income replacement and temporary obligations | Legacy, estate, business and long-term planning |
| Tax treatment | Death benefit is generally paid tax-free to a named beneficiary | Death benefit is generally paid tax-free; policy values and access may have tax consequences |
The right amount and type of insurance depends on your income, debt, family responsibilities, existing savings and long-term goals.
Universal life combines permanent life insurance with a policy investment account. Costs, guarantees, investment choices and premium flexibility vary significantly by contract.
Coverage can remain in force for life when sufficient premiums and policy values are maintained.
Many universal life contracts allow premium flexibility within minimums, maximums and tax-exempt limits.
Options may include fixed-interest, indexed or market-linked accounts, depending on the insurer.
Policy values may grow on a tax-advantaged basis while the policy remains exempt under Canadian tax rules.
Cash value may be accessed through withdrawals, policy loans or collateral borrowing, subject to tax and contract rules.
The death benefit can help transfer wealth to beneficiaries and provide liquidity for estate obligations.
Whole life generally provides level premiums, lifetime coverage and guaranteed values. Participating whole life may also receive dividends, but future dividends are not guaranteed.
With a true 20-pay policy, scheduled premiums end after 20 years while coverage continues for life.
Guaranteed death benefits and cash values are shown in the policy contract and illustration.
Participating policies may receive dividends that can be used in several ways, including purchasing additional insurance.
Useful when the goal is to leave money to children or other beneficiaries regardless of age at death.
May support shareholder agreements, key-person protection, corporate succession and estate liquidity planning.
Can provide liquidity for taxes, debts, equalization among heirs or charitable giving.
May be considered after reviewing emergency savings, debt, TFSA, RRSP, FHSA and other priorities.
Can secure long-term insurance and build policy value over time, subject to suitability and family priorities.
Policy value may support future planning, but access can reduce benefits and create tax consequences.
Universal life and whole life policies are not regular savings accounts. Insurance costs, fees, investment performance, withdrawals, loans and premium changes can affect policy values and coverage. Universal life is not always fully paid after 20 years unless the contract specifically guarantees that structure. Review guaranteed and non-guaranteed values carefully before purchasing.
Consider income replacement, mortgage and debt, children’s needs, education costs, final expenses, existing savings and current workplace coverage.
Yes. Premiums are normally required throughout the selected term to keep coverage active. Renewal premiums may be much higher after the original term ends.
No. Only a contract specifically designed as a guaranteed 20-pay policy ends scheduled premiums after 20 years. Universal life policies use different funding and cost structures.
Many policies include a conversion option before a stated age or date, but available products, limits and rules depend on the insurer and contract.
It is the policy value remaining after insurance costs, fees, premiums, investment returns and transactions are applied. It is not the same as the death benefit.
Potentially, subject to policy terms. Withdrawals and loans can reduce cash value and death benefits, and may create tax consequences.
Not necessarily. Returns depend on the selected account. Fixed options may provide stated guarantees, while indexed or market-linked options may fluctuate.
Whole life generally emphasizes guarantees and simplicity. Universal life generally offers more flexibility and investment choice, but requires more monitoring.
Review your mortgage, income, family responsibilities, workplace benefits, long-term goals and budget in a focused complimentary insurance consultation.