How Much Does Whole Life Insurance Cost? - PolicyAdvisor

How much does whole life insurance cost in Canada?


Whole Life Insurance is often misunderstood in Canada. Sometimes referred to as permanent life insurance, it is designed to protect you for the rest of your life, paying out a tax-free lump-sum of cash to your estate or your beneficiaries when you pass away.

This type of insurance also has a savings component included in the policy, which grows with time and can generate substantial cash value due to compounding over several years. While the cash value returns can be attractive, one has to remember that whole life insurance is foremost an insurance solution with potential for tax-free value accretion over time.

Because of the permanent nature of whole life coverage, it is often used to cover expenses that  occur after you die, like funeral expenses or meeting previous debt or tax obligations.

Read below to find out about how Whole Life Insurance works, what it costs at various ages and coverage amounts, and where to get it.

What types of whole life insurance are available?

Whether it is used for funeral expenses, meeting potentially large end-of-life debt or tax obligations, or investment purposes, there are a number of different types and options when it comes to whole life insurance. Very simply put, they are:

  • Life Pay Whole Life Insuranceinsurance that covers you for your entire life with a built-in savings component. You pay insurance premiums for this coverage for the rest of your life.
  • Limited Pay Whole Life Insurance the same coverage as above, but you only pay premiums for a set amount of time. Because of this limited pay period, the premiums are typically higher.

Beyond these types, there are also differentiators in how you participate in the policy payment:

  • Participating Whole Life Insurancewhere policyholders receive dividends – typically annually – on the premiums they give to their insurance provider. They “participate” in the providers investments and have some control over how the funds are handled.
  • Non-Participating Whole Life Insurancepolicyholders do not receive dividends and thus premiums are guaranteed, level, and generally lower.

For the purposes of this article, we are focusing on whole life insurance, but there are also other types of permanent life insurance like universal life and term to age 100 insurance.

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Should I get whole life insurance or term life insurance?

Besides the policy types we listed above, when comparing different life insurance options, shoppers are typically presented with two main choices: Term Life Insurance versus Whole Life Insurance.

Term Life Insurance offers protection for a set number of years (hence the “term”), usually in 10 or 20-year chunks or up to a certain age such as up to age 65. You pay a level premium over that term, and should something happen to you during that time, your beneficiaries or estate receive the benefit amount you agreed to with your insurer. 

We mention term life insurance, as it is generally the right type of financial protection product for those with temporary needs, such as mortgages, car loans, child-raising, and other adult obligations. Because of its temporary nature – it’s almost as if you are leasing life insurance – it is much less expensive than whole life insurance, which has a guaranteed payout when the policy enacts.

With that said, there are cases where you may want Whole Life Insurance and its elevated costs are not a deterrent. They include:

Covering funeral costs and other small debts

One of the most common uses for Whole Life coverage is to provide funeral insurance. A lump sum of cash is paid out on your death – this can cover funeral expenses and other arrangements your family has to make at that time. Your loved ones won’t have to worry about taking care of the cost or waiting for your estate to be settled to take care of the debt. 

In the same spirit, this sum can be used to take care of any debts (like credit cards or loans) that may be transferred to your family or consignees when you pass. 

Tax-efficient estate transfers

While this is a conversation best saved for your life insurance advisor and accountants, whole life insurance policies are also used to pass on your wealth to your loved ones in the most tax-efficient manner. Whole life payouts ensure that your dependents don’t lose a large chunk of their inheritance you intended for them to have. Some may use whole life insurance proceeds to help offset potential estate tax claims on their dependents while others may use it to transfer their wealth enriched by tax-free growth within the policy to their dependents.

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How much does whole of life insurance cost?

As we hinted above, Whole Life Insurance rates tend to be more expensive than those for Term Life Insurance because the payout is guaranteed at the end of your life and there is a savings component to the policy. 

Additionally, as with other types of insurance, Whole Life coverage costs more to buy the higher you age is. Not only are there the same risk factors as Term Life Insurance when it comes to insuring you, later in your life, insurance companies only have a short time to make up ground – so to speak – and collect enough premium to pay for the cost of insurance, before they have to make a guaranteed payment.

Let’s take a look at some numbers. For men – a $250,000 benefit amount can be obtained for only $60 per month if you have some financially savvy guardians at 5 years old. That number jumps to $161 in your mid-thirties – a big jump, but understandable given the time jump. At 80 years old that number hikes up to $1,810 per month!

Whole Life Insurance – Monthly Premiums As Age Progresses – Male

Average price of whole life insurance for men

Whole Life Insurance – Monthly Premiums As Age Progresses – Male

average cost of whole life insurance for men

The story is similar for women. A $250,000 death benefit amount can be obtained for a $53 monthly premium as you start kindergarten. That number jumps to $138 in your mid-thirties – again, a big jump, but not as drastic as that for men. At 80 years old that number goes up to $1,632 per month!

Whole Life Insurance – Monthly Premiums As Age Progresses – Female

average monthly premium of whole life insurance for women

Whole Life Insurance – Monthly Premiums As Age Progresses – Female

average price of whole life insurance for women

Wondering how much insurance you might need? The above numbers give you some idea what Whole Life Insurance might cost, but check out our life insurance calculator to get a full, holistic view of what it takes to solidify your financial security. There you can start comparing quotes and insurance plans for whole life coverage.

Should I get whole of life insurance?

Whether or not you need Whole Life Insurance depends entirely on both your personal choice and circumstances. There are other options – like we mentioned – that offer protection and coverage with less of a financial commitment. But, whole life insurance is not designed from a budget-first perspective – its heightened premiums exist as it meets a very specific need for some Canadians looking to accomplish different financial goals when planning their insurance profile. 

Head here to read about the top whole life insurance companies in Canada. If you need answers about whole life insurance right away, don’t hesitate to schedule a call with one of our licensed insurance advisors. They can answer any of your questions about whole life insurance, help you identify any gaps or shortfalls in your current coverage, and start you on the path to coverage if you so wish. In the meantime, calculate your life insurance coverage needs or get life insurance quotes online.

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By Jiten Puri
CEO & Founder, Insurance Advisor, LLQP

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