Does past drug use affect life insurance?

Past drug use can impact life insurance in Canada, but the effect depends on several factors, including the type of drug, frequency of use, time since last use, and any related health issues.

While occasional marijuana use may not significantly affect rates, past use of harder substances like cocaine, heroin, or fentanyl can lead to higher premiums or even the denial of your application.

The good news is that options still exist. Some insurers offer coverage for individuals in long-term recovery, though at higher rates, while no-medical-exam policies provide an alternative for those with a complicated history. 

In this article, we’ll explore how different types of drug use affect life insurance, the potential cost implications, and the best options available for applicants with a history of substance use.

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Can I get life insurance if I’ve taken drugs in the past?

Yes, you may be able to get life insurance with a history of drug use but it can significantly impact your insurance application. Even if you’ve only used drugs once, insurers will ask about it during the underwriting process. 

When applying for life insurance, you’ll be required to disclose any history of drug use, including:

  • Marijuana
  • Cocaine
  • Methamphetamine
  • Heroin
  • Steroids
  • Psychedelics (Mushrooms, LSD)
  • Prescription drug misuse

However, past drug use doesn’t automatically mean you’ll be denied coverage or charged excessively high premiums. Insurers assess risk based on factors like:

  • The type of drugs used
  • How long ago they were used
  • Whether you are still using drugs
  • If you have sought treatment for substance use

If you are a recovering addict, you may qualify for standard policies after maintaining sobriety for 3-4 years. You can even get better rates after 6+ years of sobriety.

How do insurance companies assess drug use?

Insurers evaluate drug use because it increases the risk of health complications or premature death. Active users are typically classified as high-risk applicants, leading to policy denials or higher premiums through a process called “rating.”

Each insurer has different criteria, but most will ask about drug use over a set period. Here’s a general guideline on how past drug use affects eligibility for life insurance:

Time since last use Likely underwriting decision
Used within the last 12 months (even once) Declined
Used over 3 years ago (one-time use) Higher premium (rated)
Used over 5 years ago (one-time use) Lower premium (mild rating)
Frequent or ongoing use Declined

If you’ve used drugs in the last year, traditional life insurance may not be an option. However, alternatives like simplified issue or guaranteed issue policies (which do not require medical underwriting) can provide coverage at a higher cost.

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Can I get life insurance if I smoke marijuana?

Yes, you can get life insurance if you smoke marijuana. However, regular marijuana use can lead to higher premiums. If you use marijuana more than three times a week, you’ll likely face rates that are higher than non-smokers, as insurers classify regular cannabis use similarly to tobacco smoking.

Even if you only consume marijuana occasionally, any use in the current month could trigger smoker’s rates. If you’re a daily marijuana user, obtaining traditional life insurance may be challenging, as insurers may view the risk as higher.

In such cases, non-medical life insurance, which doesn’t require a full medical exam, might be an option. However, keep in mind that premiums for these policies can be significantly higher than for fully underwritten policies.

Weed and life insurance

Can you get life insurance if you take methadone?

Yes, you can get life insurance if you’re on methadone for opioid addiction recovery. Insurers typically require at least two years of stable treatment and proof of sobriety from illicit drugs.

For instance, a 40-year-old on methadone for three years with clean urine tests might qualify for coverage, though premiums would be higher than someone with no addiction history.

Does medication affect life insurance? 

Yes, the type of medication you take can influence life insurance premiums. Insurers assess the underlying health condition being treated. 

For example, someone taking antidepressants for well-managed depression may pay slightly higher premiums than someone with no mental health history. However, long-term use of painkillers like opioids for chronic pain could lead to a significant increase in premiums.

Does depression medication affect life insurance? 

Yes, taking depression medication can affect life insurance premiums. For example, someone with well-managed depression (no hospitalizations) may face a small increase in premiums, compared to someone without a history of mental health issues. The longer the condition remains stable without relapse, the less impact it will have on premiums.

Do insurance companies do drug testing? 

Yes, insurance companies require drug testing for medically underwritten policies. Blood and urine tests are used to screen for illicit drugs, including cocaine, meth, opioids, and THC. Some provinces may also verify prescriptions through databases like PharmaNet.

If you disclose drug use, premiums will reflect the associated risk. However, undeclared use may lead to your policy being cancelled if drugs are detected during testing.

Can I get life insurance if I’ve been to rehab?

Yes, you can get life insurance if you’ve been to rehab. While it can be more challenging, insurers assess your drug use history when determining risk. They consider factors such as when you started using drugs, how long you’ve used them, and whether you’re still using drugs.

Many insurers require a medical exam or additional information about your drug use before offering coverage. Depending on the type of drug and how long it’s been since you last used it, the insurer may offer coverage at higher premiums or deny your application.

If you’re currently in rehab, getting life insurance may be tougher. Insurers typically want to see that you’ve completed treatment and maintained sobriety for a period of time. They might advise waiting until you finish treatment, or you could explore guaranteed acceptance or no-medical-exam options.

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Life insurance for drug users in Canada

If you have a history of drug use, you may still be eligible for standard term or permanent life insurance, depending on your health and the specifics of your drug use. 

However, if your relationship with drugs is more complex than occasional use, you might want to explore other types of life insurance policies that bypass extensive medical questionnaires, exams, or drug tests.

No-medical life insurance

No-medical life insurance is an option for those who prefer to avoid detailed medical assessments. With this type of coverage, you may only need to answer a few basic medical questions or sometimes none at all, depending on the policy type. 

These policies come in two main forms: simplified issue and guaranteed issue. However, since the insurer is assuming more risk by not conducting a thorough underwriting review or asking about your full medical history, the premiums for no-medical life insurance tend to be higher than for medically underwritten policies.

Simplified issue life insurance

Simplified issue life insurance requires you to answer a few questions about your medical history instead of undergoing a complete physical exam. While some companies may still request certain medical tests, the overall application process is less invasive.

For those with a history of drug use, simplified issue policies tend to have more lenient requirements regarding how long it’s been since your last instance of drug use, compared to traditional medically underwritten policies. This makes it a viable option for those with a past of occasional or past drug use who are seeking quicker, more accessible coverage.

In Canada, these options can be particularly useful for individuals who may have struggled with addiction or used drugs in the past but have since maintained sobriety.

While premiums may be higher, the flexibility of no-medical life insurance policies provides an opportunity for those with a complex history to obtain coverage.

Guaranteed life insurance

Guaranteed issue life insurance is another option for individuals with a history of drug use, as it requires no medical questions or medical underwriting. 

Regardless of your health status, you will qualify for coverage, making it an appealing choice for those with an extensive history of drug use, drug-related health issues, or anyone looking to avoid urine or blood tests and medical exams.

However, while guaranteed issue policies offer broad access to coverage, they are typically the most expensive type of term life insurance. Additionally, the coverage amounts tend to be lower compared to traditional policies. 

This type of policy is often best suited for those who have difficulty qualifying for other types of insurance due to health concerns or past drug use but still want to secure a basic level of life insurance.  

Which insurance companies offer life insurance for past drug users? 

Canadian insurers such as Assumption Life, iA, UV Insurance and a few others offer life insurance for past drug users. 

Insurers you can consider as someone with a history of drug use

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Can I get life insurance as an active drug user?

Yes, it is possible to get life insurance as an active drug user, but it can be challenging. If you’ve used any drugs (other than marijuana) in the last 12 months, traditional policies will likely be unavailable to you. 

However, you may still qualify for simplified life insurance options, although the coverage will be more limited. For example, instead of qualifying for up to $5 million in coverage with a standard policy, you may only be eligible for coverage of up to $50,000 with a simplified policy. 

Should I disclose drug use on a life insurance application?

Yes, you must disclose any drug use, even if it was just one time. If the insurer later discovers that you withheld this information, they may deny your application or refuse to pay out a claim when your family files it. 

Insurance companies have a two-year window, known as the contestability period, after issuing a policy to void coverage or adjust premiums if they find any errors or omissions in the application.

Does life insurance cover overdose death?

In most cases, life insurance policies do cover overdose deaths, provided the policy is in good standing. If the policyholder dies from an accidental overdose, the beneficiaries are typically entitled to the death benefit. 

However, if the death is ruled as a suicide, particularly within the first two years of the policy, it will not be covered. In Canada, most insurers do pay out for suicides within the first two years of coverage, but after that period, suicide is generally covered.

Does alcohol impact life insurance?

Like drug use, excessive alcohol consumption raises the risk of premature death, which life insurers consider when assessing risk. Insurers typically ask about alcohol consumption habits, including frequency and quantity. 

A history of excessive drinking or treatment for alcoholism may lead to higher premiums or make it more difficult to obtain coverage. According to the Canadian Centre for Substance Use and Addiction, here are some guidelines:

  • 0 drinks per week – Not drinking offers various health benefits, including improved sleep and better overall health
  • 2 drinks or less per week – This is generally considered a safe level, with minimal risk for alcohol-related consequences
  • 3-6 drinks per week – At this level, the risk of certain cancers, such as breast and colon cancer, increases
  • 7 or more drinks per week – This level significantly increases the risk of heart disease and stroke

Does smoking affect life insurance?

Yes, due to the higher health risks associated with smoking, life insurance premiums for smokers are typically 50-100% higher than for non-smokers. Smokers are considered to be at greater risk, and this is reflected in the cost of their insurance.

You are classified as a smoker if you’ve used or consumed any of the following in the past 12 months:

  • Cigarettes
  • E-cigarettes
  • Cigars
  • Cigarillos
  • Chewing tobacco
  • Recreational marijuana (more than 3 times a week)
  • Nicotine products
  • Vapes
Learn more about getting life insurance for smokers.

How can I apply for life insurance as a drug user?

If you’re a drug user and looking to apply for life insurance, it’s important to understand that while it may come with challenges, it’s still possible to get coverage.

Life insurance providers typically assess your health history, including any drug use, to determine eligibility and premiums.  

After honestly disclosing your drug use, you can consider insurers who specialize in policies for high-risk individuals. Here’s how you should approach the process of applying for life insurance as a drug user:

  1. Full disclosure: We recommend you to be transparent about your drug use. Failing to disclose this information can result in the denial of coverage or claims being rejected in the future
  2. Health assessments: Many insurers require a medical examination. Be prepared for tests that may assess your general health, including the effects of drug use on your body. Some insurers may request additional information from your doctor
  3. Consider the type of drug use: The impact on your application will vary depending on the type of drug use (prescribed medication vs. recreational use), frequency, and duration. Some companies may offer policies to people who have used substances in the past but have since quit
  4. Look for specialized insurers: Some insurance companies specialize in offering policies to individuals with higher health risks, including those with a history of drug use. These companies may charge higher premiums but can provide coverage
  5. Higher premiums or exclusions: If your application is approved, you must be aware that you may face higher premiums or policy exclusions related to conditions caused by drug use
  6. Term vs. permanent coverage: You may have more success applying for term life insurance, as it is generally less expensive and might be more flexible for individuals with a history of substance use
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Frequently asked questions

Do I need to take a drug test to get life insurance?

Yes, with traditional life insurance, you will be required to undergo a medical test that includes a blood and urine sample. These tests are designed to assess your overall health, such as kidney function, blood sugar levels, cholesterol, and liver function, and will also detect substances like tobacco, alcohol, and drugs in your system. While insurers don’t specifically test for drugs, any drug in your system will be identified through the blood or urine test.

Can I buy life insurance as a recovering addict?

Yes, it’s possible to buy life insurance as a recovering addict. However, the process may be more complex, and you may be asked to provide additional details about your recovery. Insurers will want to know the length of your sobriety, the type of treatment you received, and whether you are involved in ongoing support or therapy. 

If you’ve used substances in the last 12 months, you may be denied traditional life insurance. However, simplified issue life insurance or guaranteed life insurance could be alternatives, even if you’re in recovery.

Can you get life insurance if you take steroids?

Yes, you can get life insurance if you take steroids, but it may affect your premiums. Anabolic steroids, which are used for muscle growth and athletic performance, carry health risks such as liver damage and cardiovascular disease. Due to these risks, insurance companies may increase your premiums to reflect the potential impact on your health.

Can I get life insurance with mental health issues?

Yes, you can get life insurance if you have mental health issues. Your eligibility will depend on the nature of your condition, its severity, and how well it’s managed. Conditions like depression, anxiety, or bipolar disorder won’t automatically disqualify you from coverage, but insurers will evaluate your treatment plan and overall stability to assess any associated risks.

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Best Life Insurance Companies in Canada 2025: Reviews, Ratings & Buyer’s Guide

The best life insurance company in Canada depends on your insurance needs. However, with the number of players offering life insurance products, making the right choice can be hard. Each company has their own benefits and features that can suit different needs.

That’s why our licensed life insurance experts have reviewed and rated the top providers to bring you our list of the 16 Best Rated Life Insurance Companies in Canada.

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Which are the best life insurance companies in Canada?

The best life insurance companies in Canada include Manulife, Canada Life, Desjardins, Empire Life, BMO, RBC, and more.

After careful research, our expert insurance advisors have created a list of the best companies for term life insurance in Canada. We have years of experience profiling and analyzing the best of what the industry has to offer. In this article, our team of experts have provided real insight on different life insurance providers and how they can meet your needs.

The following list of the top life insurance companies in Canada will help you to expertly compare and choose your best term life insurance options.

Top life insurance companies in Canada

The best life insurance company for you depends on your unique needs. But, if you’re looking for term life insurance coverage, our team recommends:

Top 16 life insurance companies in Canada: Ratings
Company Best for… AM best financial strength rating PolicyAdvisor rating
Assumption Life Simplified issue A- 5
Beneva Combo coverage A 4
BMO Affordability A 5
Canada Life Financial strength A+ 4
Canada Protection Plan Non-medical NA 5
Desjardins  Stability NA 4
Empire Life Personalization A 5
Equitable Life Families NA 4
Foresters Giving back NA 4
Humania Quick issue NA 4
Industrial Alliance Flexibility A+ 5
Ivari Layering A+ 3
Manulife Digital innovation A+ 5
RBC Value for money A 5
Sun Life Buying in-person A+ 5
Wawanesa Price A 4

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Choosing the right insurance company

While choosing a life insurance company, some of the factors that you should keep in mind are the underwriting, claims process, riders and optimizations, policy costs, and customer service.

Make sure to also look at the ratio of claims settled versus claims received. A high settlement ratio is a good indicator.

Detailed ratings and reviews of the top life insurance companies in Canada

Read our ratings and reviews below to discover the best Canada life insurance companies.

Best for Simplified Issue: Assumption Life

PolicyAdvisor Rating

Best for Simplified Issue

AM Best Rating A-

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Our Assumption Life rating and review:

We’ve given Assumption Life Insurance Company 5 stars and rated them as the best life insurance provider for Simplified Issue policies. These policies do not ask you to do a medical exam, but may have some simple medical questions on the application.

Assumption Life offers 4 different types of non-medical policies, making them a great option for people who may have health issues. You can also get bigger amounts of coverage if you opt for full underwriting.

Assumption Life pros and cons

Pros Cons
Multiple term coverage options Wide range of options can be confusing
Simplified, non-medical issue options available High policy fees and rider fees on non-medical policies
Quick, easy electronic process
Decreasing option available for mortgage coverage
Online access to account
Digital e-policy
Exchange and conversion options to convert to longer term products or permanent coverage

Read our full Assumption Life Insurance review

Best for Combo Coverage: Beneva

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Best for Combo Coverage

AM Best Rating A

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Our Beneva rating and review: 

We’ve given Beneva Life Insurance 4 stars and rated them as the top provider if you want combined coverage. Their insurance products, riders, and features let you get a lot of different types of insurance in one place.

Beneva is rare in that they include an Extreme Disability Benefit for free in all of their life insurance plans. You get double the coverage than usual, and that’s unique!

Beneva pros and cons

PROS CONS
Built-in Extreme Disability Benefit (rare in the market) Longer turnaround times for policy approval
Options to add critical illness and monthly disability indemnity for comprehensive financial protection
Several optional riders: accidental death and dismemberment and children’s term coverage
Preferred rates available starting at $250,000
Online access to account
Digital e-policy
Top 10 largest insurance company based on annual premiums

Read our full Beneva Life Insurance review

Best for Affordability: BMO Insurance

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Best for Affordability

AM Best Rating A

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Our BMO Insurance rating and review:

We’ve given BMO Insurance 5 stars and rated them as the best company if you’re looking for affordable coverage. Most of their policies have good prices and can be used for multiple purposes.

BMO’s term life insurance is a great option for just about anyone individuals, couples, or business owners. On top of their great pricing, their plans cover most of the standard features expected in a life insurance plan in Canada.

BMO Insurance pros and cons

PROS CONS
Great value for cost No online account
Multiple term coverage options Only issues paper policies, no digital option
Can exchange 10-year term into longer term products Longer-term life insurance policy (25 and 30-year) not renewable
Compassionate benefit program death benefit advance in event of terminal illness
Options to convert into permanent coverage
Electronic contract delivery
Multi-policy discount available
Top 10 largest insurance company based on annual premiums

Read our full BMO Life Insurance review

Best for Financial Strength: Canada Life

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Best for Financial Strength

AM Best Rating A+

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Our Canada Life Insurance rating and review:

We’ve given Canada Life Assurance Company 4 stars and rated them as the top choice for financial strength. Which is to be expected considering they’re the biggest insurance companies in Canada.

Canada Life earns billions in annual premiums, with $396 billion in assets and a financial strength rating of A+ from A.M. Best. They’re extremely stable, and they have great life insurance policy options to boot.

Canada Life Insurance pros and cons

PROS CONS
Multiple term coverage options (5-50 years) Minimum $100,000 coverage or $500 annual premium required
Multiple rider options for single and joint policies Limited access to online account features
Options to convert into permanent coverage
Digital e-policy
Top 10 largest insurance company based on annual premiums

Read our full Canada Life Insurance review

Best for Non-Medical Policies: Canada Protection Plan

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Best for Non-Medical

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Our Canada Protection Plan rating and review:

We’ve given Canada Protection Plan 5 stars and rated them as the best provider for No-Medical policies. These plans do not ask you for a medical test or have medical questions, but usually cost a bit more.

Like Assumption Life, Canada Protection Plan also gives you great options if you’re looking for life insurance coverage without doing medicals. They have both simplified or guaranteed insurance policies available.

Canada Protection Plan pros and cons

PROS CONS
Multiple products offering simplified, no-medical coverage Premiums can be more expensive than competition
Most products available through an easy online application without any medical tests Max. coverage of $1 million
Multiple term coverage options Coverage ends at age 80 (most other Canadian providers end at 85)
Affordable premiums, including no-medical policies
Available to temporary residents such as those on a student or work visa
Most plans offer life protection
Customers can pay annual premiums by credit card
Options to convert into permanent coverage
Decreasing term option available (ideal for covering mortgage debt)
Digital e-policy

Read our full Canada Protection Plan Life Insurance review

Best for Stability: Desjardins Insurance

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Best for Stability

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Our Desjardins Insurance rating and review:

We’ve given Desjardins 4 stars and rated them as the best company for stability. Saying that they’re a well-established company would be putting it too mildly.

Desjardins is one of Canada’s top ranked life insurance companies and financial groups, one of the biggest and oldest providers, and one of the world’s 50 safest banks and financiers. Their term life products can meet a wide range of needs.

Desjardins pros and cons

PROS CONS
Several optional riders and benefits Limited term options
Robust suite of critical illness, disability, and permanent life insurance available Premiums can be more expensive than competition
Allows multiple applicants on the same policy; 1 policy can cover the needs of an entire family
Options to convert to permanent coverage
Multi-policy discount available
Digital e-policy
Top 10 largest insurance company based on annual premiums

Read our full Desjardins Life Insurance review

Best for Personalization: Empire Life

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Best for Personalization

AM Best Rating A

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Our Empire Life rating and review:

We’ve given Empire Life 5 stars and rated them as the best insurer for personalization. They give you a lot of leeway to choose the options that work best for you.  This is flexible and affordable coverage that can suit many Canadians perfectly.

Their Solution series offers 10-year, 20-year-, or 30-year term insurance, or permanent insurance that covers you up to age 100. Or you can get an annual renewable term that lasts for 1-year increments.

Empire Life pros and cons

PROS CONS
Some of the most versatile coverage options in Canada Limited term options
Options to exchange into longer term coverage Max. annual renewable term coverage of $499,999
Instant approval possible
Highly competitive premiums
Comprehensive rider options
Solution 100 term policy has cash value (rare in the market)
Online access to account
Digital e-policy

Read our full Empire Life Insurance review

Best for Families: Equitable Life

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Best for Families

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Our Equitable Life rating and review:

We’ve given Equitable Life 4 stars and rated them as the best company for families.  They make it easy for you to add coverage for multiple people on one policy. This helps families save on fees and put some cash back in their wallets.

It’s also great for a strategy called laddering”, where you only pay for coverage as you need it. This is another way Canadians can save a little bit more on their life insurance coverage.

Equitable Life pros and cons

PROS CONS
Options to add critical illness insurance and other term life riders Limited term options
Options to convert into permanent coverage, regardless of health Moderate premium costs
Preferred clients automatically qualify for EquiLiving critical illness insurance Limited term offerings
Can create family plan by adding child term rider
Online access to account
Digital e-policy
Top 10 largest insurance company based on annual premiums

Read our full Equitable Life Insurance review

Best for Giving Back: Foresters Financial

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Best for Giving Back

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Our Foresters Financial rating and review:

We’ve given Foresters Financial 4 stars and rated them as the best company for giving back. Many of their products come with a unique perk: a charitable benefit feature where they will donate to a charity of your choice on your behalf.

Foresters is also a great choice if you have changing needs. Their term insurance is simple and straightforward, but they also have options that give you better coverage if your needs change in the future and you need insurance to match that.

Foresters pros and cons

PROS CONS
Multiple term coverage options Premiums can be more expensive than competition
Simplified and quick fulfillment options available No online access to policy details
Options to convert to permanent coverage, including participating and non-participating
Unique community membership benefits
Digital e-policy

Read our full Foresters Life Insurance review

Best for Quick Issue Options: Humania

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Best for Quick Issue

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Our Humania Assurance rating and review:

We’ve given Humania Assurance 4 stars and rated them as the best company for quick issue policies. Their main term life insurance product is designed to make it easy for you to get approved fast.

Humania’s policies usually don’t have many requirements. Most are done online and can be approved on the spot. They also let you choose coverage for multiple terms, up to a maximum of 30 years or until age 80.

Humania pros and cons

PROS CONS
Competitively priced premiums No preferred pricing available clients in better health
Multiple term coverage options Conversion only available until age 65
Options to exchange into longer term products No online access to policy details
Simplified and quick fulfillment options available Term coverage only available until age 80
Digital e-policy
Non-medical coverage options available
Automatic approval for critical illness and debt disability coverage for those with standard health

Read our full Humania Life Insurance review

Best for Flexibility: Industrial Alliance

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Best for Flexibility

AM Best Rating A+

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Our iA Financial Group rating and review:

We’ve given Industrial Alliance (iA) 5 stars and rated them as the best for flexibility. They’re one of the few insurers that lets you customize your term length with their unique Pick-A-Term product.

You can pick anywhere between 10-40 years for term coverage with iA Financial Group, letting you match your term insurance with any specific number of years, like if you’re using life insurance to cover your mortgage.

Industrial Alliance pros and cons

PROS CONS
Flexible plans allow personalized coverage Premiums can be more expensive than competition
Pick-a-term feature (rare in the market)
Both level and decreasing options
Optional disability rider — can be used with decreasing coverage for mortgage protection
Non medical coverage options: simplified and guaranteed
Online access to account
Digital e-policy
Underwriting can be more accommodating than competitors
Top 10 largest insurance company based on annual premiums

Read our full Industrial Alliance Life Insurance review

Best for Layering: ivari

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Best for Layering

AM Best Rating A+

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Our ivari rating and review:

We’ve given ivari 3 stars and rated them as the best provider if you want to do a layering strategy. Laddering is when you buy multiple term life policies that end at different times. You can terms of 10, 20, or 30 years with this company.

ivari makes it easy for you to get multiple policies that overlap, so you can create custom coverage that is just perfect for you. You can get just one term life policy, or you can combine policies with more terms or different types of insurance.

Ivari pros and cons

PROS CONS
Several optional riders, including children’s insurance Premiums can be more expensive than competition
Multiple term coverage options Limited flexibility for term length
30-year term has flexible options upon maturity
Online access to account
Digital e-policy

Read our full ivari Life Insurance review

Best for Digital Innovation: Manulife

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Best for Digital Innovation

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Our Manulife rating and review:

We’ve given Manulife 5 stars and rated them as the best for digital innovation. This company almost needs no introduction. It’s one of the biggest insurers not just in Canada but in the entire world — an industry leader in every sense.

Manulife was one of the first companies to take more of the life insurance process online in Canada. Their underwriting uses advanced technology to approve up to $2 million in life insurance without needing a medical exam.

Manulife pros and cons

PROS CONS
Offers a fully electronic, digital fulfillment Limited term options
Digital e-policy Premiums can be more expensive than competition
Offers cash advance in event of terminal illness
Options to exchange into longer term products
Option to increase coverage up to 5th anniversary of certain term policies (rare in the market)
Top 10 largest insurance company based on annual premiums

Read our full Manulife Life Insurance review

Best for Value For Money: RBC Insurance

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Best Value for Money

AM Best Rating A

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Our RBC Insurance rating and review:

We’ve given RBC Insurance 5 stars and rated them as the best company if you want value for money. They have some of the most competitive premiums in the Canadian life insurance market.

RBC Insurance offers a best-in-class term life insurance product. They already beat the competition on price alone. And you can choose from different term lengths and coverage amounts.

RBC pros and cons

PROS CONS
Affordable premiums among the most competitive in the industry Only available to Canadian citizens and permanent residents
Max. coverage of $25 million
Flexible term lengths and coverage amounts
Pick-a-term feature (rare in the market)
Flexibility allows for insurance laddering
Multiple rider options
Renewable term life policies
Quick, easy application process: just 10 questions for coverage under $1 million
Online access to account
Digital e-policy
Top 10 largest insurance company based on annual premiums

Read our full RBC Life Insurance review

Best for In-Person Purchase: Sun Life Financial

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Best for In-Person Purchase

AM Best Rating A+

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Our Sun Life Insurance review and rating:

We’ve given Sun Life Insurance 3 stars and rated them as the best for buying in-person. Their products are most often sold in-person through a professional like an insurance broker or advisor.

Sun Life’s term policies have standard features and optional benefits that can compete in the market. But their premiums may cost more than some other companies charge.

Sun Life pros and cons

PROS CONS
Multiple rider options Limited term options available (only 4)
Multiple options to convert to permanent coverage up to age 75 (most competitors stop at age 70 or 71) Limited flexibility for term length
Non-medical coverage options available Premiums can be significantly more expensive than competition
Max. coverage of $1 million for anyone legally living in Canada — not just citizens and permanent residents Stricter underwriting process for pre-existing health conditions
Online application process
Digital e-policy
Top 10 largest insurance company based on annual premiums

Read our full Sun Life Insurance review

Best for Price: Wawanesa

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Best for Price

AM Best Rating A

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Our Wawanesa rating and review:

We’ve given Wawanesa 4 stars and rated them as the best for price. Their premiums are often among the lowest in the industry, and you get your pick of either term policies from 10-30 years or up to age 80.

Wawanesa can also be a good option if you want to layer your coverage. You can get a base term plan then add up to four term life insurance riders with different term lengths. You can do this all in one policy.

Wawanesa Life pros and cons

PROS CONS
Multiple term coverage options Longer turnaround times for policy approval
Affordable premiums — among the most competitive in the industry Policies can only be converted into non-participating permanent products
Range of coverage options allows for insurance laddering
Renewable term life policies
No policy or rider fees
Coverage up to $500,000 approved without medical exam for those under age 45
Digital e-policy
Top 10 largest insurance company based on annual premiums

Read our full Wawanesa Life Insurance review
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Methodology: How did we rank life insurance companies?

Our life insurance company rankings were the result of in-depth research into key factors like:

  • Coverage amounts: We evaluated the maximum and minimum coverage offered to ensure a range suitable for various financial needs
  • Term lengths: Term lengths were assessed to give an overview of the variety of different company’s offerings
  • Premium rates: We compared the cost of premiums to identify the most affordable options for consumers
  • Application process: Analyzed the ease and convenience of applying for a policy, including underwriting requirements
  • Online access: Reviewed the availability and functionality of online tools and account management features
  • Rider options: Considered the range and flexibility of additional riders that can customize and enhance the base policy
  • Key features: We have highlighted unique or standout features that add value to the policy.
  • Financial strength rating: Examined the company’s financial stability and ability to meet its long-term obligations
  • And more

Our team of licensed insurance advisors worked together to carefully assess the different policies available in Canada. Using this, we narrowed down a list of the best insurance company for life insurance products that meet diverse needs.

How much does life insurance cost?

The cost of life insurance depends on factors such as your age, smoking status, gender, medical history, coverage amount, and policy type.

Term life policies normally cost a lot less than whole life. This is because it usually doesn’t last as long and doesn’t have extra features like cash value and dividends.

Average term and whole life insurance rates for smokers and non-smokers

Age Group Term Life – Nonsmokers Term Life – Smokers Whole Life – Nonsmokers Whole Life – Smokers
Male / Female Male / Female Male / Female Male / Female
25-34 $15 / $13 $30 / $25 $275 / $250 $350 / $300
35-44 $20 / $18 $45 / $35 $350 / $300 $475 / $400
45-54 $50 / $40 $100 / $80 $500 / $425 $700 / $575
55-64 $100 / $80 $180 / $150 $750 / $625 $1,100 / $900
65+ $200 / $150 $350 / $300 $1,200 / $1,000 $1,800 / $1,500

*Representative values based on average monthly costs of term and whole life premiums for $100,000 in coverage from Canada’s best life insurance companies.

Looking for affordable life insurance?

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What’s the best type of life insurance?

The best type of life insurance policy again depends on your own circumstances, needs, and goals. It will be different for everyone. For example:

1. Term life insurance 

This is the best option for you if you are relatively young and have short-term financial needs or obligations, such as paying off a mortgage or supporting young children. 

Many Canadians prefer this type of insurance because it offers substantial coverage for a lower premium over a specified term, typically ranging from 10 to 30 years.

2. Whole life insurance 

This type of insurance is ideal if you are looking for lifelong coverage that not only protects your beneficiaries but also allows you to accumulate savings over time. 

Whole life insurance policies come with an investment component that builds cash value, which you can borrow against or use during your lifetime for various financial needs.

3. Universal life insurance 

Consider this option if you desire the lifelong coverage provided by a whole-life policy but with more flexibility in managing the investment component. 

Universal life insurance allows you to adjust your premiums and death benefits while giving you control over how the investment portion is allocated, potentially maximizing your policy’s value based on your financial strategy.

4. No-medical life insurance 

This type of policy is most suitable if you have existing health issues or prefer not to undergo extensive medical examinations and answer detailed health-related questions. 

No-medical life insurance offers the convenience of quicker approval and can provide peace of mind for those who might otherwise have difficulty qualifying for traditional life insurance policies.

If you’re unsure, book some time with one of our licensed advisors to get expert advice on which type of policy would best fit your needs.

Compare types of life insurance
Learn more about the different types of life insurance in Canada

Market changes and innovations

The Canadian life insurance sector is rapidly evolving, driven by digital innovation and shifting consumer expectations. Insurers are enhancing customer experiences through mobile applications, allowing policyholders to manage policies, access benefits, and use financial tools seamlessly. 

Sun Life, for example, uses predictive analytics to tailor insurance plans to individual needs, improving coverage relevance. Data-driven underwriting is also transforming risk assessment, enabling faster approvals without traditional medical exams. 

New policy types are reshaping the market to meet diverse consumer needs. Philanthropic life insurance programs, such as “J’assure ma cause,” enable policyholders to support charities through their policies. 

Additionally, mental health coverage is also gaining traction, with insurers like Sun Life expanding benefits to include mental health support, reflecting a broader focus on holistic well-being.

How to get the best term life insurance Canada?

You can find the best insurance policies for your needs on PolicyAdvisor.com. Check out our recommendations below then use our platform to compare quotes from Canada best life insurance companies in under a minute.

Our platform lets you shop the best prices from more than 30 of the country’s best providers. Compare policies at a glance, so you can easily make the best choice for your family.

Or, if you prefer to speak to a professional, book a call with one of our licensed insurance agents. We’re happy to help and you have no obligation to buy!

Need help?

Call us at 1-888-601-9980 or book some time with our licensed experts.

Frequently asked questions

Which is the top insurance company in Canada?

The top 5 life insurance companies in Canada are Canada Life. Manulife, Sun Life, Industrial Alliance (iA), and Desjardins if you’re looking at size and financial strength alone.

In our ratings, we looked at more than just financial strength, though. Other policy details matter when you’re figuring out which ones are the best Canadian life insurance companies.

What’s the cheapest life insurance in Canada?

Term life insurance is the cheapest type of insurance policy in Canada. Premiums are lower because coverage is temporary, and the policies don’t have extra options like a savings & investment component — the way whole life insurance does.

Life insurance premiums depend on your personal details as well as your policy details. In general, you’ll get the lowest life insurance rates if you are:

  • Young
  • Healthy
  • Non-smoker
  • Female

What’s the best amount of life insurance to buy?

You should get enough life insurance to cover your family’s needs. The general rule of thumb is to get 10-12 times your annual income. But you may need more.

The best way to find out how much life insurance you should buy is to use our life insurance calculator. It will ask you some questions and then tell you the best amount for your needs.

How to get the best quotes for term life insurance?

You can find the best quotes for term life insurance on PolicyAdvisor.com. Our online platform lets you easily customize your plan and compare quotes from leading providers in under a minute.

Save time and money when you shop and compare online. Click the button below to get started now.

What are the best life insurance options for Canadians with pre-existing conditions?

Canadians with pre-existing conditions have several life insurance options, depending on their health status and coverage needs. Simplified issue life insurance requires no medical exam but may include a short health questionnaire. Guaranteed issue life insurance is available without medical questions but often comes with higher premiums and lower coverage amounts. Some insurers also offer rated traditional policies, where coverage is granted with adjusted premiums based on medical history.

Can non-residents buy life insurance in Canada, and what are the requirements?

Yes, non-residents can buy life insurance in Canada, but eligibility depends on factors like residency status, country of citizenship, and medical history. Most insurers require applicants to be in Canada during the application process and undergo medical underwriting.

Some policies may have additional restrictions for applicants from high-risk countries. Proof of ties to Canada, such as property ownership or financial interests, may also be necessary.

What should parents know about buying life insurance for their children?

Parents can purchase life insurance for their children as a way to secure future insurability and provide financial protection. Child life insurance policies typically offer lifelong coverage with fixed premiums and the option to build cash value over time.

Some policies allow children to convert coverage into larger amounts without medical exams when they become adults. Riders on a parent’s policy can also provide affordable coverage for children.

What are the tax implications of life insurance payouts in Canada?

In Canada, life insurance death benefits are tax-free for beneficiaries. However, if the policy has a cash value component, any withdrawals or loans taken against it may be taxable. For business-owned policies, taxation depends on how the proceeds are distributed. Additionally, life insurance can play a role in estate planning, helping to offset potential taxes on assets passed to heirs.

Can life insurance policies be bundled with other types of insurance for better rates?

Yes, some insurers offer bundling discounts when life insurance is purchased alongside other policies such as home, auto, or critical illness insurance. Bundling can simplify policy management, reduce premiums, and provide enhanced benefits. 

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What is asked on a life insurance application and how to prepare?

Insurers in Canada collect personal details, health related information, and financial information on a life insurance application to assess risk and determine an applicant’s eligibility. While the application itself is straightforward, the process and the steps involved can often seem overwhelming. 

It is essential that you provide accurate and complete information while filling out a life insurance application. Failing to do so can lead to the insurer declining your application, or denying a claim that you make later. 

If you’re feeling a little anxious about what to expect on your life insurance application, we’ve got you covered. We’ll go over how you can prepare for your life insurance application, what to bring, and how to make sure the process goes super smooth!

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What is on a life insurance application?

A life insurance application typically includes basic identity questions, and some health and lifestyle information as well. This won’t involve a full interrogation about what you were doing on the second Thursday in March last spring. It’s just a basic, getting-to-know-you introduction to make sure that you meet the insurance company’s specific qualifications for coverage. 

Health information on a life insurance application

One of the major factors that determines life insurance coverage and eligibility is your health status. Pre-existing conditions are taken into consideration and the underwriting process is usually stricter for those who have health issues. 

Insurers assess the likelihood of a payout based on your health. To ensure that the policy works in your favour and will let them sustain their business, they may ask about some of the following factors: 

  • Your family’s health history: History of diseases that caused premature death. Information regarding frequency of cancers, strokes, diabetes, and other conditions
  • Your health history: This includes the name dosages for any current medications and a list of diagnosed physical health conditions. They will also want to know about mental health diagnoses such as anxiety, depression, or bipolar disorder. If you have had previous conditions, they will ask about your doctor and any medical procedures or surgeries that you may have had in the past 10 years or more

Most life insurance applications require a follow up medical exam with your doctor to verify this information. This might also involve an additional tele-application as well. We’ll get more into that below. 

Lifestyle details on a life insurance application

While it’s understandable to want to keep details about how you live your life private, insurance companies need to know if you’re engaging in activities that may potentially shorten your lifespan or lead to premature death. The riskier your lifestyle, the greater the risk the insurance companies will have to pay out sooner rather than later (when they’ve had a chance to collect premiums from you). 

You may be asked: 

  • About your travel history in the last 2 years and any upcoming travel plans 
  • Your driving history (if you’ve been charged with reckless driving, suspended license etc).  
  • History of drug, smoking (including marijuana), or alcohol offenses (and general drug/alcohol history) 
  • If you’ve been found guilty of any crimes or if there are criminal charges pending
  • If you engage in skydiving, racing, parachuting, scuba diving, mountain climbing, backcountry skiing, or any other high-impact/high risk activity
  • If you’ve flown as a pilot or student pilot 

About your occupation/income

At this stage of the application, the insurance company doesn’t need to see all your backtaxes from the last 10 years, but they do need to have some idea of how you handle your finances to make sure you can pay your premiums. They also need to know if the job you’re doing puts you at higher risk of being in harm’s way. 

You may be asked: 

  • What your general occupation is 
  • If you’ve declared bankruptcy
  • Information about collecting EI or CPP

Key sections of a life insurance application

The key sections in a life insurance application are typically to do with personal information, health and lifestyle details, policy details, and financial information. Here’s a detailed look at each:

  • Personal information: Name, date of birth, address, phone number, and Social Insurance Number (SIN)
  • Beneficiary details: Naming primary and contingent beneficiaries
  • Policy type: Whether you’re applying for term or whole life insurance and the coverage details
  • Health information: Detailed medical history with present and past health conditions, if any
  • Lifestyle and occupation: Smoking, alcohol, and drug use, and income along with occupational risk assessment
  • Financial information: Income details and net worth

How to apply for life insurance

Step 1 – Get a quote 

Before you even get to the application process and paperwork, you want to make sure that you’re given a quote for the coverage that you’re looking for. The best place to begin is getting an instant, online quote at policyadvisor.com. You just have to enter a few basic details about yourself and our quoting tool will search across 20+ of Canada’s best insurance providers to find prices. You can then compare prices, adjust coverage, and select a quote that looks best for you.

Step 2 – Discuss the quote with an advisor

The next step is to speak to one of our licensed insurance advisors. Our team of experts has years of experience to guide you towards a policy that works for you and your family’s financial goals and needs. For some, this means choosing a policy that has lower premiums and for others, it might mean choosing a policy with a little higher premium with greater investment opportunities. Either way, we want to find a policy that works for you—we won’t upsell you on products you do not need! 

Step 3 – Schedule your application call

After this open conversation with our advisor team, you decide which company and policy you want to go ahead with. The advisor will then schedule you for an application call. Because we are an online brokerage, there’s no need to come down to an office or make travel arrangements—we’ll help you through the process in the comfort of your own home either via video chat or phone call. We do have to verify your identity though, so we will require a video call to check that you match your ID. 

What to bring to the application call?

While your advisor should already have some basic information about your health and lifestyle from the initial quote, you may need to provide some more detailed information about your history. Some of the information you may know off the top of your head, but you’ll need to come prepared with some documents as well. 

Here’s what you’ll need to bring to your appointment: 

  • Your driver’s license to verify your ID 
  • Your Social Insurance Number 
  • Citizenship documents 
  • Policy documents from other insurance policies (we want to make sure we’re not overinsuring you) 
  • Income details

In some cases, we may ask for photos of ID documents to verify your identity. If you are a non-resident of Canada, you can still apply for life insurance coverage but may have to provide additional documentation of your work permit, study permit, or refugee status. However, each application will be different and have different requirements, depending on which insurer you go with.

What happens next graphic

Can you avoid a life insurance application interview?

No, if you want life insurance you have to complete the application form and interview process. This is the case for both term life insurance and permanent life insurance. In order to place coverage, the insurance company needs to know information about you and your life to know if it’s in their best financial interest to insure you. 

Do I have to tell the insurance company everything on a life insurance exam?

The short answer is yes—you have to answer all questions honestly. If it’s the case you leave something out or you lie on your application, a claim could be denied, which could be devastating to your family. For example, if you forgo information about a previous cancer diagnosis, and end up dying of cancer later in life, your insurance company may deny your beneficiaries from the death benefit, meaning you paid years of premium for nothing. 

Life insurance underwriting process

Life insurance companies need to manage risk—they need to ensure that they can calculate the likelihood of your demise and when and if they might have to payout the death benefit. It does sound dark but it is necessary for insurers to calculate an accurate premium for you. They do this through an underwriting process where they factor in the following:

  • Your age: The younger you are, the better. Young people are healthier and expected to live longer. Hence they get lower premiums compared to older individuals
  • Health and lifestyle: If you smoke or have a pre-existing condition, your premiums will be higher since you’re at a risk of developing further issues that can be life threatening
  • Gender: Women, on average, live six to eight years longer than men (source: World Health Organization). So, women generally see lower rates for life insurance
  • Occupation: Jobs such as police officers, firefighters, construction workers, oil drillers, and loggers are among a long list of those who face more risks than others resulting in higher premiums. However, with increasing studies (National Library of Medicine) linking stress to higher mortality rates, having a high-stress office job may also affect your coverage
  • Foreign travel: Frequent travelling or upcoming trips to dangerous countries can lead insurers to suspect a higher risk of death.
  • Previous ratings: If you previously applied for life insurance and received a life insurance rating, your current application may consider this initial rating.
  • Hobbies: Dangerous hobbies can mean higher insurance rates. Activities such as bungee jumping, paragliding, or skydiving may not be the best idea.
  • Driving history: In 2018, Canada saw over 1,900 deaths as a result of motor vehicle accidents (source: government statistics). A poor driving record can, therefore, indicate a higher risk to the insurer

Life insurance medical exam

Once the insurance company knows a bit about your medical history, they’ll want to confirm everything with your doctor with a medical exam. During this exam, they may take your blood pressure, take blood samples, and record other information about your weight, height, medications.

A medical professional will administer these sample collections as well go through a detailed medical questionnaire that is administered by a life insurance provider. The doctor may call the provider to go through this tele-application and answer any further questions the insurance company has. 

While a full medical exam is not mandatory by federal or provincial insurance laws, it may be an underwriting requirement, depending on the insurance company you’re going ahead with. If you’re feeling unsure about the hands-on portion of the application process, there are other policies—they involve fewer needles and ask a bit more questions than the standard medical life insurance, but you get less coverage at a higher cost. This type of insurance is called “no-medical” insurance or simplified life insurance.

Other than those who want to skip the needles, no-medical life insurance is also great for those who are declined because of pre-existing conditions or those with high-risk lifestyles who wouldn’t qualify for traditional life insurance.

If you’re short on time and want to skip the needles AND most of the medical questions, some carriers offer what is known as “guaranteed coverage.” However, it’s again usually more expensive and offers lower coverage amounts than traditional policies. 

Read more about the difference between simplified and guaranteed life insurance.

Schedule a call

Whether you’re just toying around with the idea of a policy and are looking for quotes or are ready to jump right in, we’d love to chat with you. Our licensed insurance experts at PolicyAdvisor are available to assist you through the whole life insurance application process. We’ll answer questions, provide recommendations for coverage, and work to get you the best coverage at the best price from one of Canada’s top life insurance providers.

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Frequently asked questions

What are the most important sections to focus on when filling out a life insurance application?

All the sections on a life insurance application should be carefully filled, especially when it comes to your personal and health related information. If you fail to provide accurate information, it might get flagged during the underwriting process. This could potentially lead to your application being declined. If you do get coverage and the insurer finds that your information was inaccurate during the application process, they will deny or delay payouts to your beneficiaries. 

What should I do if I have a pre-existing medical condition when applying for life insurance?

If you have a pre-existing medical condition, you should be honest and inform your insurance advisor. There are life insurance plans that are specifically designed for those who have a pre-existing medical condition. 

How can I ensure my beneficiaries are properly listed on the application?

To ensure your beneficiaries are properly listed on your life insurance application form you should provide accurate information such as their names, contact details, and your relationship with them. You should also assess your policy details periodically and update the beneficiary information if required. 

What are the typical questions asked during the underwriting process?

During the underwriting process insurers will ask you about your health condition, lifestyle, occupation, previous insurance coverage details, financial information, and beneficiary information. 

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Return of Premium in Critical Illness Insurance: What You Need to Know

A return of premium (ROP) rider in critical illness insurance is an optional add-on that refunds the premiums you’ve paid if you don’t make a claim during the policy term or under specific conditions, such as surviving the term or passing away.

If you’re considering critical illness insurance, adding an ROP rider can help you feel more secure about your investment. This rider ensures that even if you never need to use the coverage, you’ll still benefit financially.

In this article, we’ll explain how the return of premium rider works and benefits your finances.

How does a return of premium work?

In critical illness insurance, return of premium riders are available usually as an add-on. With this rider, you pay your monthly premiums as usual, and the policy provides coverage for critical illness or disability claims.

However, if no claim is made or under specific conditions, the insurance provider refunds a portion or all of the premiums you’ve paid.

There are three common types of ROP:

  • Upon death (Return of premium on death – ROPD): If you pass away while the policy is active, the insurer refunds all eligible premiums to your appointed beneficiary
  • At the end of the contract (Return of premium on expiry): If the policy term ends without a claim, the insurer refunds the premiums paid
  • On cancellation or surrender (Return of premium on cancellation/surrender): Some insurers offer partial or full premium refunds after a set number of years or at specific ages, like 65 or 75

Each provider has unique rules about how premiums are refunded and under what circumstances. To ensure you choose the right option for your needs, we recommend that you schedule a call with our experienced advisors.

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Call 1-888-601-9980 to speak to our licensed advisors right away, or book some time with them below.

Can I get a return of premium with critical illness insurance?

Yes, you can get a return of premium (ROP) rider with critical illness insurance. This optional add-on allows you to receive a refund of the premiums you’ve paid if no claim is made during the policy term, on the expiry of the policy or death. 

Since critical illness coverage pays out a lump sum if you’re diagnosed with a covered condition, the ROP rider ensures your investment isn’t lost even if you remain healthy.

What are the benefits of return of premium riders?

Return of Premium (ROP) riders provide peace of mind by refunding premiums, adding value to your insurance, offering flexible refund options, and reassuring risk-averse policyholders.

A return of premium rider:

  • Ensures that you get a refund of premiums if no claim is made 
  • Turns your policy into a savings tool with either coverage or a payout
  • Offers reassurance for those worried about losing their investment
  • May offer refunds on expiry, surrender, or death, depending on the rider

What are the disadvantages of return of premium riders?

The disadvantages of return of premium riders are that they come with higher premiums, require long-term commitment, may exclude certain fees from refunds, and could limit potential investment opportunities.

  • Higher premium costs: The rider significantly increases your policy premiums
  • Long-term commitment: Requires maintaining the policy for the full term to benefit
  • Limited returnable premiums: Refundable premiums may exclude certain fees or add-ons
  • Opportunity cost: Extra premiums could be invested elsewhere for potentially higher returns

Which critical illness insurance providers offer return of premium riders?

Many Canadian insurance providers such as Beneva, Sun Life, RBC, Industrial Alliance, Desjardins, Manulife, Canada Life, and Empire Life offer return of premium (ROP) riders. 

These riders are offered with different options like Return of Premium on Death (ROPD), Return of Premium on Expiry (ROPX), Return of Premium on Cancellation (ROPC), and other flexible refund features.

Insurers offering return of premium riders with critical illness plans

Insurance Provider ROP Options
Beneva  ROPD, ROPX, ROPC
Sun Life  ROPD, ROPX, ROPC
RBC  ROPD, refunds all premiums if the policyholder dies while the policy is active
Industrial Alliance ROPD and flexible ROP options that vary by term
Desjardins  ROPD, ROPX, ROPC
Manulife  ROPD, ROPX, Return of Premium on Surrender (ROPS), with partial/full refunds based on term
Canada Life Various ROP options included in critical illness plans; specifics depend on the plan
Empire Life Return of Premium on Surrender or Maturity, offering percentage refunds if no claims are made

Learn more about the best critical illness insurance companies in Canada
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What is the cost of a return of premium rider in critical illness insurance?

The cost of adding a return of premium (ROP) rider in a basic critical illness policy costing $79.65 per month could be $117.99 per month.

A return of premium rider significantly increases your critical illness insurance premiums, typically by 30–50%, depending on the rider type, insurer, and your policy details.

These costs also differ based on the type of return of premium rider:

  • Return of premium on death (ROPD): Lower additional cost since it refunds premiums only if the insured passes away during the policy term
  • Return of premium on expiry (ROPX): Higher cost as it guarantees a full refund of premiums if no claim is made by the end of the term
  • Return of premium on surrender (ROPS): Costs are similar to ROPX but allow partial refunds if the policy is canceled early

Additionally, long-term policies like term-75 or lifetime coverage tend to incur higher premiums for ROP riders due to extended refund commitments.

Is a return of premium on critical illness taxable?

No, the return of premium (ROP) benefit on critical illness insurance is generally not taxable in Canada. When you purchase a critical illness insurance policy, you pay your premiums using after-tax dollars, meaning the money you use to pay for the policy has already been taxed. 

Therefore, when you receive a refund of those premiums through an ROP rider whether upon expiry, surrender, or death, it is treated as a return of your personal contributions, not as income.

Comparison of return of premium riders with traditional critical illness insurance

Return of premium riders enhance critical illness policies by offering premium refunds, unlike traditional plans that provide coverage only. Here’s how these differ:

Premium refunds:

  • ROP riders: Refund premiums if no claim is made (on expiry, death, or surrender)
  • Traditional CI plans: Do not refund premiums regardless of claims

Cost:

  • ROP riders: Typically 30–50% more expensive
  • Traditional CI plans: More affordable but lack refund benefits

Flexibility:

  • ROP riders: Allow refunds under specific conditions (expiry, death, surrender)
  • Traditional plans: Offer no such options

Best suited for:

  • ROP riders: Ideal for risk-averse individuals seeking financial security
  • Traditional plans: Suitable for those focused on lower premiums
Critical illness riders vs Critical illness insurance: Read more!

How do I get a return of premium coverage?

You can add a return of premium rider to your critical illness insurance policy while purchasing the plan or during eligible upgrade periods.

To get ROP coverage, you need to consult with your insurance provider to explore available rider options. Typically, a return of premium rider is added when purchasing a long-term critical illness policy. The process may involve assessing your eligibility based on age, health, and other criteria.

To qualify for ROP coverage, you must meet specific insurer requirements regarding age, policy type, and health status.

  • Age requirements: Most insurers offer ROP riders to individuals aged 18–65
  • Policy type: ROP is typically available on long-term critical illness policies, not short-term plans
  • Health status: Eligibility may require passing a medical exam or meeting the insurer’s health guidelines
  • Consistent premium payments: Some insurers mandate a history of timely premium payments
  • Insurer-specific rules: Each provider may have unique conditions for adding ROP, such as coverage amount or policy terms
Read more about when to get critical illness coverage.
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Frequently asked questions

What happens to my return as a premium rider if I cancel my policy early?

If you cancel your critical illness insurance policy early, the impact on your return of premium (ROP) rider depends on the specific terms of the rider. Policies with a Return of Premium on Surrender (ROPS) option may provide a partial refund based on how long the policy was active.

For example, you might receive 50% of your premiums back after 20 years, with the percentage increasing the longer you keep the policy. However, not all ROP riders include this option, so it’s important to review your policy details.

Can return of premium riders be added to existing critical illness policies?

In most cases, return of premium (ROP) riders cannot be added to an existing critical illness insurance policy. ROP riders are usually selected at the time of purchase and integrated into the policy from the start. If you are interested in this feature, you may need to apply for a new policy that includes an ROP option. 

How does a return of premium rider affect my overall premium rates compared to standard policies?

Adding a return of premium (ROP) rider to your critical illness insurance policy can significantly increase your premium rates—typically by 30–50%. The exact increase depends on the type of ROP rider (e.g., on expiry, death, or surrender), the policyholder’s age, and the duration of the policy. 

For instance, a standard premium of $79.65 per month could rise to $117.99 with an ROP rider, reflecting an additional $33.84 monthly. While the cost is higher, the rider offers added financial security and peace of mind.

Are there any age restrictions for purchasing a return of premium rider with critical illness insurance?

Yes, there are generally age restrictions for purchasing return of premium (ROP) riders, and these vary by insurer. Most providers allow ROP riders for policyholders up to a specific age, such as 60 or 65, since the rider often involves long-term commitments or payouts tied to policy maturity.

Additionally, age impacts the cost, as older policyholders typically face higher premiums for adding an ROP rider. Be sure to check the eligibility criteria with your insurer.

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Should I get life insurance if I’m covered through work?

Getting individual or private life insurance to supplement your group life insurance plan is usually recommended to ensure you have adequate coverage. Almost 39% of life insurance policies in Canada are through group term insurance. With such a large number of Canadians covered through their work, many are under the impression that it’s enough coverage for their family too.

However, group life insurance plans have limitations and restrictions, and offer limited coverage. Read on to know more about group and individual life insurance plans, their advantages and disadvantages, and more.

What is life insurance?

Life insurance is an agreement between you and an insurance company that in the event of your demise, they will pay a lump sum, tax-free death benefit to someone you choose (your beneficiaries). In exchange, you agree to pay a premium to the insurance company. 

There are two main types of life insurance plans that an individual can choose from:

  • Term life insurance that lasts for a specific period of time, generally 10, 20, or 30 years
  • Permanent life insurance which covers you for your entire life and generates a cash value component. Some policies also pay dividends depending on your plan type

Life insurance can be bought by an individual (personal life insurance) or offered by an employer as part of a group plan. 

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What is group life insurance?

A group life insurance is  a contract or an agreement that promises to pay an employee’s dependents a tax-free lump sum amount in the event of their demise. It is offered by an employer to a “group” of people—the employees. A group life insurance policy helps soften the financial impact that comes with losing an earning member of a family. 

Most group life benefits are offered as term life insurance that is renewed annually by the insurance provider. Unlike whole life insurance which covers an individual for their entire lifespan, term life policies provide coverage for a certain “term” or fixed period of time. 

Read about group life insurance in our comprehensive guide

Do I need individual life insurance if I am covered through work?

Yes, supplementing your group life insurance with individual life insurance coverage is highly recommended. Group life insurance plans generally payout up to one or two years of your salary. This may not always be enough for your family after you pass away. 

To ensure your family’s living expenses, your funeral fee, your children’s education costs, and other expenses, are covered, you need to get individual life insurance. When you buy an individual life insurance plan, you also get the option to get a participating whole life insurance policy. This type of policy gives you a cash value component and dividends, both of which can be accessed while you’re alive or after your demise. 

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What is the difference between group and individual life insurance?

Group life insurance is offered by an employer to a group of people (the employees), while individual life insurance only covers the primary policyholder. Group life insurance plans offer limited coverage and the plan details are designed based on the employer’s budget and recommendations. Individual life insurance policies are customized to fit the needs of the policyholder. It lets policyholders choose their coverage amount, duration, and add additional riders to their core plan. 

Difference between group and individual life insurance

Feature Group life insurance Individual life insurance
Coverage type Usually offered as a term life insurance plan to all group members Individual policyholders can choose between term and permanent life insurance plans depending on their financial requirements
Premiums Lower premiums since the insurer’s risk is spread in a larger pool Typically more expensive since the policies are customized for an individual
Portability Coverage is tied to employment—if you leave your job, you are likely to lose coverage Coverage lasts for as long as you pay your premiums or your policy’s duration
Flexibility Limited Highly flexible 
Tax implications Tax benefits are generally limited to premiums paid by the employer, and employees may not receive additional tax deductions Premiums paid can often be deducted from taxable income under certain conditions, providing potential tax advantages

Life insurance through work
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What type of life insurance do employers offer as a group benefit?

Most employee life insurance is term life insurance. Although other types of permanent life insurance are also sometimes offered.

With group term life insurance plans, the death benefit is offered as a flat dollar amount, as a multiple of an employee’s annual salary (such as one or two times your annual salary), or a mix of both.

Do employers pay for group term life insurance?

Most private employers will pay for a substantial, if not the entire, portion of the premiums for group life insurance. The only thing to note: the coverage offered is typically basic. This means there is no customization or riders built in. The cost of additional supplementary coverage is usually paid for by the employee.

What are the benefits of group life insurance?

There are a number of benefits of group life insurance that make it an attractive option for those who are offered it through work or a professional association.

Affordability: An employer often pays for most – if not all – of the life insurance premium so there is very little or no cost to the member of the plan. If you do need to pay a portion of the premiums, they are usually less expensive. This is because the insurance company prices it on the basis of the underlying risk profile of the entire group as a whole rather than as an individual insurance applicant.

Convenience: It’s easy and convenient to sign up with only a small amount of paperwork and no individual underwriting. The payments are usually through payroll deduction, so no worries about policy lapsing because you missed your premium payments.

Limited underwriting: Most group term life contracts do not require any medical exam to be administered to the individual plan members. Members may be automatically or voluntarily enrolled in the overall group life insurance plan. However, an eligible employee may be required to go through medical underwriting, to establish good health in special circumstances such as when seeking an amount higher than the group coverage or when trying to rejoin the plan, after initially declining coverage.

What is the main disadvantage of group life insurance?

The main disadvantage of group life insurance is the one-size-fits all approach that assumes that every member of the group is likely to need the same amount of coverage. This is not always the case and life insurance coverage should be customized to individual needs. 

Other disadvantages of a group life insurance policy are:

Lack of control: Another disadvantage is that the plan sponsors (i.e. the employer or the organization) or even the insurance company can change the plan anytime they choose or even discontinue it altogether. Because you are sharing a plan among others in a group, it cannot be tailored to meet your own unique needs. There may be exclusions for medical conditions that you may have.

Limited portability: Group life insurance is dependent on an individual’s affiliation with the group. Just because one particular job includes insurance, there’s no guarantee that the next one will. If you find yourself in a position where you need to purchase life insurance once you make a career change, your premiums are likely to be much higher by then as you are a little older and more expensive to insure from an underwriting perspective.

Taxation: Lastly, depending on how your employer structured the benefit fees, you might need to pay taxes on the payout.

What happens to my group life insurance coverage if I leave my employer?

Employer-offered life coverage is linked to your employment. This means it covers you and your dependents until your employment period ends—whether you quit or you’re fired by the employer.

Many employer-offered plans include an option to convert the group coverage to an individual policy, upon leaving the employer. However, the cost of conversion from group to individual coverage is significantly higher and most people tend to get new individual coverage at that time. 

Typically, only those individuals who may have pre-existing health conditions, and may find it hard to get individual coverage based on a medical exam, will take advantage of this conversion option.

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Frequently asked questions

Does life insurance cover job loss?

No, life insurance does not cover job loss. It pays your beneficiaries a lump sum of money in the event that you, the employee, pass away. Job loss insurance is a separate insurance product. Disability insurance provides income replacement (usually 60-80%) in the event that you are injured or ill and can no longer work. 

Does group life insurance end at retirement?

Yes. Group life insurance is dependent on your continued employment; therefore, at retirement, your group life insurance also expires. However, as mentioned above, you will typically have the ability to convert the group plan into individual coverage, without providing any evidence of good health. The conversion has to be requested within a limited period of time, usually 31 days. The conversion option is much more expensive since no evidence of good health is provided.

Are my dependents covered through employer life insurance?

Sometimes. Most employer-offered life insurance plans will allow an employee to extend coverage to also include their dependents, such as married or common-law spouse and dependent children up to a certain age, such as 21 years. But that’s not always the case, so check your policy documents!

Is group life insurance a taxable benefit?

Yes, employer-paid life insurance is considered a taxable benefit. With group term life insurance paid by the employer in Canada, the premiums appear on your T4 slip and are reported on your tax return as a taxable benefit.

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Is Life Insurance Taxable in Canada? What to Know in 2025

Let’s face it: tax returns can be confusing. Come tax season in April, you have to collect all your tax slips, plug them into a reporting system, and either hope you did them right or pay someone to make sure they’re done right. 

After receiving a life insurance payout, your beneficiaries may be worried that the money is taxable. They may have other questions too. Is the life insurance payout taxable? Are whole life policies subject to taxes? Are premiums on life insurance deductible? 

Life insurance payouts are generally not taxable in Canada. Death benefits made directly to named beneficiaries are tax-free, and beneficiaries don’t need to report the money as additional income. But like many things related to tax or life insurance, there are always exceptions! Policies that generate interest or dividend income, flow through an estate, offer a policy loan, or offer cash withdrawals can lead to tax consequences.

Proper structuring of your policy can help your loved ones continue living their lives with minimal tax consequences. In this article, we’ll help you figure out what you need to know about taxes when purchasing a life insurance policy. These tips will help your family receive the most money without the tax burden.

Is a life insurance benefit taxable for a beneficiary?

Beneficiaries do not pay tax on life insurance payouts in Canada. If you name your spouse, child, or any other individual or entity (like a charity) as a beneficiary on your life insurance policy, the proceeds will be tax-free when paid to them. The beneficiary does not have to declare the proceeds as taxable income on their annual CRA returns. 

Appointing a beneficiary in your life insurance policy has several advantages:

  • Proceeds are paid-tax free
  • Proceeds do not have to go through probate
  • Proceeds do not become a matter of public record

You should always appoint a beneficiary on your policy to ensure that the proceeds from your life insurance policies go to the beneficiaries of your choice, rather than directly to your estate or creditors. If you choose not to appoint a beneficiary, then your estate will automatically be designated as the beneficiary.

When this happens, the life insurance funds become a part of the pool of estate assets. The life insurance money can then be used to cover any outstanding debts on the estate and may be subject to other administrative fees and probate taxes—meaning less money for your family.

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When can life insurance become taxable?

Life insurance can become taxable in several scenarios in Canada:

  • Policy surrender or lapse: If you surrender your policy or it lapses with an outstanding loan, the loan amount may be taxable
  • Policy transfers: Transferring ownership to someone other than a spouse or qualifying trust can trigger taxes on accrued gains
  • Excess withdrawals: Withdrawals exceeding the amount of premiums paid are subject to income tax
  • Policy loans: If a policy loan is not repaid and the policy lapses, the loan amount may be taxable

Taxes on policy loans, cash withdrawals, collateral assignments

During your lifetime, you can access your permanent life policy’s cash value in three ways: a policy loan, withdrawal, or collateral assignment. Each method has different tax consequences. 

1. Policy withdrawals

Permanent life insurance can grow in cash value and provide you with a potential source of future funds. Most policies with cash values allow you to withdraw some or all of the cash value (for a fee).

However, these withdrawals are generally taxable. This withdrawal will be taxed whenever the amount withdrawn exceeds the policy’s corresponding Adjusted Cost Basis (ACB).

Policy details Value
Policy cash value $100,000
Adjusted Cost Basis (ACB)  in policy $75,000 (ACB is 75% of the policy’s cash value)
Policy withdrawal  $20,000
Amount of withdrawal treated as ACB $15,000 (75% of $20,000)
Withdrawal amount that is taxable $5,000 ($20,000-$15,000)

2. Policy loans

A policy loan is a borrowing from the insurance company secured by the cash value of the policy. Think of it like taking an advance on your policy’s death benefit. It’s different from a withdrawal in that, you can repay this loan, so your death benefit doesn’t take a hit.

Policy loans amounts that are equal to or less than the policy’s ACB are non-taxable. But policy loans taken in excess of the policy’s ACB will be taxable. In such a case, the insurance company will issue a T5 slip to report the taxable gain. 

Policy details Value
Policy cash value $100,000
Policy loan $80,000
Adjusted Cost Basis $75,000
Taxable gain (same as the amount in excess of ACB) $5,000

3. Policy as collateral

A policy owner can take a loan from a third-party institution, such as a bank, using the cash value as collateral on the loan. Generally, loans will be structured as a line of credit and the loan proceeds will be received tax-free.

Upon the death of the insured, the proceeds from the life insurance policy are used to pay off the line of credit and any unpaid interest on the loan. If you repay the policy loan during your lifetime using your own funds then there will be no tax impact.

Difference between policy withdrawal, policy loan and collateral assignment

Features Policy withdrawal Policy loan Policy as a collateral assignment
Access to cash value (%) Up to 100% (minus any surrender fees) Up to 90% 50-90%
Taxable Only amount in excess of the policy ACB When loan exceeds ACB, whole loan amount is taxed Tax-free
Considers what you’re using the money for No No Yes
Uses your credit score to determine loan amount No No Yes
Reduces death benefit Yes Yes, if you don’t repay the loan Yes

Taxation of life insurance premiums and contributions

In Canada, life insurance premiums are generally not tax-deductible. Here’s how this works:

  • Tax deductibility: In Canada, premiums paid for personal life insurance policies are generally not tax-deductible on personal income tax returns. This means individuals cannot claim these premiums as expenses to reduce taxable income
  • Business-owned policies: There are exceptions for business-owned life insurance policies where premiums may be deductible as a business expense, depending on the purpose and structure of the policy

Tax-deferred growth: While premiums are not tax-deductible, the cash value within the policy grows tax-deferred. This means any earnings on the policy’s cash value are not taxed until they are withdrawn from the policy

Is death benefit taxable in Canada?

In Canada, life insurance death benefits are generally not taxable. Beneficiaries receive the full amount tax-free, making life insurance an effective tool for financial protection. 

However, if the death benefit is paid to the estate rather than a named beneficiary, it may be subject to probate fees and used to cover the estate’s debts. Additionally, in rare cases, any interest earned on delayed payouts may be taxable. 

What happens if you withdraw money from a permanent life insurance policy?

If you withdraw money from the cash value of a permanent life insurance policy, such as whole life or universal life, you may have to pay taxes. The taxable amount depends on the policy’s adjusted cost basis (ACB)

The ACB represents the total premiums paid into the policy minus any previous withdrawals. If the amount withdrawn exceeds the ACB, the difference is considered taxable income and must be reported on your tax return. 

Withdrawals within the ACB limit are generally tax-free. To minimize tax liabilities, it’s wise to consult a financial advisor before making a withdrawal.

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Taxation of life insurance cash values and withdrawals

The cash value accumulated in a life insurance policy grows tax-deferred in Canada, meaning you do not pay taxes on the gains as they accrue. When you decide to withdraw or take a loan against the cash value, the tax treatment varies. 

Withdrawals are generally tax-free up to the amount of premiums paid into the policy. Any amount withdrawn over the premiums paid is considered taxable income. 

Additionally, policy loans are not taxable as long as the policy remains in force. However, if the policy lapses or is surrendered, the outstanding loan balance may be subject to tax, so careful planning is essential.

Taxation of life insurance policy transfers

Transferring a life insurance policy can have significant tax implications in Canada. If you transfer ownership of a life insurance policy, the transfer may be considered a taxable event, depending on the circumstances. Here’s how the taxation works:

  • Taxable transfers: Transferring ownership of a life insurance policy to another individual or entity can trigger tax consequences
  • Tax-free transfers: Transfers to a spouse or a qualifying trust are typically tax-free, preserving the policy’s tax-deferred status
  • Taxable gain: If the policy has accumulated cash value and is transferred for consideration (e.g., sale), any gain may be subject to capital gains tax
  • Consultation recommended: Consulting with a tax professional is advisable before transferring a policy to understand and mitigate potential tax liabilities

Can I claim life insurance premiums on my income tax?

The tax deductibility of life insurance premiums is complex. In most cases, premiums aren’t tax-deductible for individuals or businesses. But there are some exceptions. For instance, if you use your policy as loan collateral or borrowed money through a policy loan and then use the loan proceeds in business activities, premiums could be deductible. This is possible whether it’s a personally-paid life insurance policy or a corporate-paid policy. 

The following criteria must be followed to claim your premiums related to a policy loan:

  • Policy must be collaterally assigned for a loan from a “restricted financial institution” as defined by the Income Tax Act (this includes a bank, trust company, insurance company, or credit union); 
  • Interest payable on the loan must be otherwise deductible from the policyholder’s income;
  • Policyholder must be the borrower; and, 
  • Assignment of the death benefit must be made to the lender as collateral for the debt.

It’s important to note that assigning the death benefit to the lender does not trigger a tax consequence. Additionally, the policyholder can deduct the lesser of the premiums they actually pay for the Net Cost of Pure Insurance (NCPI), an amount that the insurance calculates for tax purposes.

Claiming your personally paid life insurance

Suppose you have a permanent life insurance policy with a cash surrender value of $500,000. A financial institution might offer to loan you $450,000 based on your policy’s value. During this time, you still need to make premium payments on the life insurance policy. 

After taking the loan, you use the $450,000 to purchase, renovate, and flip a property. Profits from this business venture are taxed as business income on your personal tax return. 

In this situation, your life insurance premiums are likely deductible because you’re using the loan proceeds for business activities or property.

You may also be able to a tax credit if you donated your policy to a charitable institution and kept making the premium payments to keep the policy in force. 

Claiming your business or corporate paid life insurance

A corporation can also deduct life insurance premiums when it uses a policy as loan collateral, assuming that all the other criteria listed above are met. 

In addition, businesses can deduct premiums where it pays premiums on behalf of their employees. These costs are deductible and are treated as payments to employees, like health and dental benefits, or disability insurance. 

A corporation can pay its shareholder’s life insurance premiums, suggesting that the shareholder is also an employee, and the premiums are paid in the shareholder’s capacity as an employee. 

What happens if you name your estate as the beneficiary?

If you name your estate as the beneficiary of your life insurance policy, the death benefit may be subject to probate fees and could become part of the estate’s taxable assets. Probate is the legal process of validating a will and distributing the estate, and in some provinces, the fees can be significant. 

Additionally, naming the estate as the beneficiary could expose the death benefit to creditors if the estate has outstanding debts. To avoid these issues, it’s often recommended to name specific individuals or entities as beneficiaries instead of the estate.

Can life insurance help reduce taxes for my estate?

Yes, life insurance can play a significant role in reducing taxes for your estate. Upon death, your estate may face taxes on capital gains, RRSPs, or other taxable assets. 

The death benefit from a life insurance policy can provide the liquidity needed to cover these taxes, ensuring that your heirs do not have to sell off assets like a family home or investments to pay the tax bill. 

Additionally, since the death benefit is tax-free, it allows more of your wealth to be preserved and passed on to your loved ones.

Can I claim life insurance premiums on my income tax?

The tax deductibility of life insurance premiums is complex. In most cases, premiums aren’t tax-deductible for individuals or businesses. But there are some exceptions. For instance, if you use your policy as loan collateral or borrowed money through a policy loan and then use the loan proceeds in business activities, premiums could be deductible. This is possible whether it’s a personally-paid life insurance policy or a corporate-paid policy. 

The following criteria must be followed to claim your premiums related to a policy loan:

  • Policy must be collaterally assigned for a loan from a “restricted financial institution” as defined by the Income Tax Act (this includes a bank, trust company, insurance company, or credit union); 
  • Interest payable on the loan must be otherwise deductible from the policyholder’s income;
  • Policyholder must be the borrower; and, 
  • Assignment of the death benefit must be made to the lender as collateral for the debt.

It’s important to note that assigning the death benefit to the lender does not trigger a tax consequence. Additionally, the policyholder can deduct the lesser of the premiums they actually pay for the Net Cost of Pure Insurance (NCPI), an amount that the insurance calculates for tax purposes.

Claiming your personally paid life insurance

Suppose you have a permanent life insurance policy with a cash surrender value of $500,000. A financial institution might offer to loan you $450,000 based on your policy’s value. During this time, you still need to make premium payments on the life insurance policy. 

After taking the loan, you use the $450,000 to purchase, renovate, and flip a property. Profits from this business venture are taxed as business income on your personal tax return. 

In this situation, your life insurance premiums are likely deductible because you’re using the loan proceeds for business activities or property.

You may also be able to a tax credit if you donated your policy to a charitable institution and kept making the premium payments to keep the policy in force. 

Claiming your business or corporate paid life insurance

A corporation can also deduct life insurance premiums when it uses a policy as loan collateral, assuming that all the other criteria listed above are met. 

In addition, businesses can deduct premiums where it pays premiums on behalf of their employees. These costs are deductible and are treated as payments to employees, like health and dental benefits, or disability insurance. 

A corporation can pay its shareholder’s life insurance premiums, suggesting that the shareholder is also an employee, and the premiums are paid in the shareholder’s capacity as an employee. 

When can I claim my life insurance on my tax return?

The rules around reporting your life insurance premiums and payouts on your tax returns depend on how you are using your insurance and the kind of policy you have. For example, a life insurance death benefit payout is not reported as taxable income. However, if you receive the interest or dividends as cash,  you need to report the cash received as income on your personal tax return. Similarly, any gains on policy withdrawals or loans have to be reported. 

If a policy loan OR withdrawal is part of corporate-owned life insurance (COLI), the taxable income is reported on the corporation’s tax return instead. 

It’s ideal to speak with a tax professional to learn exactly how your life insurance proceeds are taxed.

How can I avoid paying taxes on life insurance?

As mentioned before, life insurance payouts aren’t taxable. However, working with an experienced tax accountant or lawyer is the best way to avoid paying tax for any nuanced life insurance policies (such as ones that pay dividends). For most people, this might mean naming primary and contingent beneficiaries so that your death benefit won’t go through your estate and be subject to probate fees. 

However, if you take a policy loan, cash withdrawal, or use the cash value as collateral, significantly more complex tax consequences are at play. The same is true when dealing with corporate-owned life insurance. 

These transactions might generate numerous tax liabilities, so it’s best to speak to a tax professional and expert insurance advisor to understand your tax reduction options.

PolicyAdvisor’s licensed insurance experts can inform you what life insurance products are best for your situation and how to reduce the taxability of your death benefit. Book some time with us below to see how you can structure your life insurance needs in the most tax-efficient manner. 

How does life insurance help in tax planning?

Life insurance can be a powerful tool in tax planning in Canada. It offers various benefits, including tax-deferred growth of cash values, tax-free death benefits to beneficiaries, and the potential for tax-free withdrawals under specific conditions. 

Here are some things you must bear in mind about tax planning with life insurance:

  • Estate planning: Life insurance plays a crucial role in estate planning by providing tax-free death benefits to beneficiaries
  • Tax-deferred growth: The cash value growth within certain policies, like Whole Life or Universal Life, is tax-deferred
  • Estate tax mitigation: Life insurance proceeds can help cover estate taxes, ensuring assets are passed to heirs without undue tax burden
  • Flexibility: Policies can be structured to offer flexibility in premium payments and death benefits, optimizing tax efficiency based on individual financial goals
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Frequently-asked questions

Is life insurance payout taxable on death?

In Canada, life insurance payouts are generally not taxable when received by the beneficiary upon the insured’s death. The death benefit is typically tax-free and can be used for various purposes, such as covering funeral costs or paying off debts. However, if the policy has accumulated cash value, any taxable gains from that portion may be subject to tax. 

What is the tax implication of withdrawing cash from a life insurance policy?

Withdrawing cash from a life insurance policy in Canada may trigger tax implications. If the withdrawal exceeds the policy’s adjusted cost basis (ACB), the excess amount is considered a taxable gain and must be reported as income. This taxable portion is subject to the individual’s marginal tax rate. However, withdrawals within the ACB are tax-free. 

Are life insurance death benefits included in calculating an estate’s taxes in Canada?

Life insurance death benefits are typically not included when calculating an estate’s taxes, as they are generally paid directly to a named beneficiary and bypass the estate. However, if the estate is the beneficiary, the death benefit may form part of the estate’s value, potentially subjecting it to probate fees. 

Can I transfer ownership of a life insurance policy without triggering a taxable event?

Transferring ownership of a life insurance policy can trigger a taxable event if the policy has a cash surrender value (CSV). The transfer is treated as a disposition, and any gain (CSV exceeding the adjusted cost basis) is taxable. However, transferring the policy to a spouse or common-law partner may qualify for a tax-free rollover.

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Best Whole Life Insurance Companies in Canada (2025)

Looking for a reliable whole life insurance provider in Canada? With so many options available, finding the right one can feel overwhelming. Whether you’re seeking the best coverage for your family, added perks, or policies tailored for children, we’ve got you covered.  

Our expert advisors have carefully ranked the top 15 whole life insurance providers in Canada, including industry leaders like Manulife, BMO Insurance, Sun Life, and more. From performance to unique features, we break it all down to help you choose the perfect fit.  

Keep reading for our comprehensive ratings and reviews of the best whole life insurance companies in Canada!

What is whole life insurance?

Whole life insurance is a type of insurance policy that lasts for your entire life.

Whole life policies provide your beneficiaries with a tax-free death benefit, plus they have a built-in investment component that generates cash value you can use in your lifetime. Some policies also pay dividends.

Most people get whole life insurance to cover long-term needs like paying final expenses or managing future estate taxes.

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How does whole life insurance work?

Whole life insurance works by providing lifetime coverage, cash value component, access to funds, dividends, and more. Check out the details about how life insurance works:

  • Lifetime coverage: Whole life insurance provides coverage for your entire life, as long as premiums are paid, ensuring your beneficiaries receive a guaranteed death benefit when you pass away.
  • Cash value component: A portion of each premium payment goes into a cash value account that grows over time on a tax-deferred basis, offering a savings component alongside the insurance coverage
  • Access to funds: The accumulated cash value can be accessed through policy loans or withdrawals, providing financial flexibility for emergencies, education expenses, or retirement income
  • Dividends: Some whole life insurance policies pay dividends, which can be used to purchase additional coverage, reduce premiums, or be taken as cash, enhancing the policy’s value
  • Financial security: The death benefit is generally paid out tax-free to beneficiaries, covering funeral costs, and debts, and providing ongoing financial support, ensuring peace of mind and financial stability for your loved ones

What are whole life insurance living benefits?

Whole Life Insurance living benefits include cash value accumulation, policy loans, dividends, and accelerated death benefits. As you pay premiums, a portion of the money builds cash value, which grows over time and can be accessed through loans or withdrawals.

This cash value can fund a child’s education, cover emergency expenses, or supplement retirement income. Additionally, policy loans offer a flexible source of funds with typically lower interest rates and no credit check requirements, though unpaid loans reduce the death benefit.

Another key living benefit is the potential to receive dividends from the insurance company, which can be used to increase the policy’s cash value, reduce premiums, or be taken as cash.

Furthermore, accelerated death benefits allow access to a portion of the death benefit if diagnosed with a terminal illness, providing financial support for medical expenses or other needs during a critical time.

What are whole life insurance death benefits?

Whole life insurance death benefits guarantee a payout to beneficiaries upon the policyholder’s death, offering financial security and peace of mind.

The death benefit is paid out tax-free, ensuring that the full amount can be used for necessary expenses such as funeral costs, outstanding debts, or ongoing living expenses. This benefit provides a crucial safety net for your loved ones, ensuring they are not burdened with financial stress during a difficult time.

Additionally, whole life insurance can play a vital role in estate planning by covering estate taxes and providing liquidity to the estate, preventing the need to quickly sell valuable assets. The death benefit can be used to pay off debts like mortgages or car loans, relieving your family of these financial obligations.

It also serves as an income replacement, maintaining your family’s standard of living by covering everyday expenses, education costs, and other financial needs.

Is a life insurance benefit taxable?

No, life insurance benefits (death benefits) paid to beneficiaries are typically not taxable income. This applies whether the policy is term life insurance or whole life insurance.

The best whole life insurance in Canada 2024

The best whole life insurance companies include Assumption Life, Beneva, BMO, Canada Life, Desjardins and more. Our team at PolicyAdvisor has spent years studying the industry to bring you a list of top companies with the best offerings in different categories.

The following reviews are a must-read for anyone thinking about purchasing whole life insurance. They will help you decide the best options for you and your family.

Best whole life insurance in Canada

Company Best for AM best financial strength rating PolicyAdvisor rating
Assumption Life Quick issue A- 3.5/5
Beneva Complimentary additional features A 3.5/5
BMO Non-participating plans A 4/5
Canada Life Charitable giving A+ 4/5
Canada Protection Plan Non-medical NA 4/5
Desjardins Paying off premiums early NA 4/5
Empire Life Balanced performance A 5/5
Equitable Life Mutual company NA 5/5
Foresters Smokers A 4.5/5
iA Health accommodation A+ 4/5
Manulife Overall performance A+ 5/5
RBC Children’s plans A 3.5/5
Sun Life High net-worth individuals A+ 4.5/5
UV Long-term growth NA 3.5/5
Wawanesa Guaranteed benefits A 4.5/5

How to choose the right whole life insurance policy?

Selecting the right whole life insurance company is a significant decision and involves several considerations such as premiums and charges, customer support, claims handling, policy flexibility, and more. Here are some important things for you to check out: 

  • Premiums and charges: Compare plans to find affordable options and check for additional fees, such as administrative costs 
  • Customer support: Assess the efficiency of claims processing, service availability, and overall client feedback 
  • Claims handling: Choose insurers known for a fast and hassle-free claims process during critical times
  • Policy flexibility: Prioritize providers offering add-ons and customization to tailor coverage to your needs
  • Underwriting requirements: Review medical exam or health questionnaire requirements and explore no-exam policies, keeping in mind potential higher premiums 
  • Company standing: Research the company’s claims settlement ratio and ethical track record to ensure reliability
The Best Whole Life Insurance Companies in Canada
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Reviews: Our top-rated whole life insurance companies

Find the top Canadian life insurance companies for whole life coverage using our ratings and reviews. Read them below.

PolicyAdvisor Rating

Best For Quick Issue

AM Best Rating A-

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1. Assumption Life whole life insurance review

Canada’s best whole life insurance for: Quick-issue policies

Assumption Life is a top choice in Canada for quick-issue policies, offering fast coverage without the need for medical exams or tests. Whether you’re looking for a simple plan or one with dividend options, Assumption Life provides flexibility and convenience to suit various needs.

Key features

  • Quick-issue policies: No medical exam is required for ages 18-45, up to $999,999 in coverage; up to $50,000 for ages 46-69
  • Participating and non-participating policies: Choose between dividend-earning options or simpler plans
  • Dividend flexibility: Five payout options with annual adjustment capability
  • Optional riders: Add extra coverage for more comprehensive protection
  • Non-medical plans: Available for those who prefer no medical questions
Read our Assumption Life Term Life Insurance review
Assumption Life Whole Life Insurance Product Details
Product name:

Assumption Life ParPlus (participating)

Assumption Life ParPlus Junior (participating)

Essential Whole Life (non-participating)

Limited pay:

20 years or until age 100 (participating policies only)

Dividend options:

Cash dividends, cash accumulation, enhanced coverage, premium reduction, paid-up additions

PolicyAdvisor Rating

Best for Complimentary Additional Features

AM Best Rating A

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2. Beneva whole life insurance review

Canada’s best whole life insurance for: Complimentary additional features

Beneva stands out for its complimentary additional features, making it a great choice for those seeking extra benefits beyond standard whole life insurance coverage. With flexible payment options, coverage for multiple lives, and added protection at no extra cost, Beneva offers well-rounded solutions for long-term financial security.

Key features

  • Multi-life coverage: Cover up to 5 lives under one plan
  • Complimentary benefits: Includes Extreme Disability, Disability Waiver of Premium, Accidental Death & Dismemberment, and Accidental Fracture benefits
  • Optional riders: Add Critical Illness Insurance or Child Rider for extra coverage.
  • Flexible payment options: Pay off premiums early if desired
  • Simplified or guaranteed plans: No medical exam is required for qualifying policies
  • Universal life option: Permanent coverage with dividends, though higher risk compared to standard plans
Read our Beneva Term Life Insurance review
Beneva Whole Life Insurance Product Details
Product name:

Whole Life 20

Whole Life 100

T-100

Limited pay:

Life pay, 20-pay

Dividend options:

N/A

PolicyAdvisor Rating

Best for Non-Participating Plans

AM Best Rating A

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3. BMO whole life insurance review

Canada’s best whole life insurance for: Non-participating plans

BMO is ideal for those seeking whole life insurance with cash value but without the need for dividends. Their non-participating plans offer a unique feature—a yearly Performance Bonus—providing flexibility and financial growth opportunities similar to dividends.

Key features

  • Non-participating policies: No dividends but include cash value and a yearly Performance Bonus
  • Premium flexibility:
    • Premium switching: Adjust your payment period as needed
    • Premium offset: Stop paying premiums by using the policy’s paid-up cash value
  • Additional payments: Boost your death benefit and cash value by paying extra premiums
  • Policy loans: Borrow against your cash value for financial flexibility
Read our BMO Term Life Insurance review
BMO Whole Life Insurance Product Details
Product name:

Estate Protector

Wealth Accelerator

Limited pay:

Life pay, 10-pay, 20-pay

Performance bonus options:

Paid-up additions (automatic), premium offset

PolicyAdvisor Rating

Best for Charitable Giving

AM Best Rating A+

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4. Canada Life Insurance whole life insurance review

Canada’s best whole life insurance for: Charitable giving

Canada Life’s My Par Gift is designed for those passionate about charitable giving. This unique whole-life policy allows you to make a lasting impact through a one-time, tax-advantaged premium, ensuring the charity benefits during your lifetime and beyond.

Key features

  • Charity-focused plan: Specifically designed to support charitable donations
  • Single premium payment: Pay a one-time lump sum of $10,000 for lifetime coverage
  • Cash value and dividends for charity: The charity can access the policy’s cash value and dividends during your lifetime
  • Full death benefit: Upon your passing, the charity receives the entire death benefit, extending your legacy
Read our Canada Life Term Life Insurance review
Canada Life Whole Life Insurance Product Details
Product name:

Wealth Achiever Plus

Estate Achiever Plus

Canada Life My Par Gift

Limited pay:

Life pay, 10-pay, 20-pay

Dividend options:

Cash dividends, premium offset, paid-up additions

PolicyAdvisor Rating

Best For Non-Medical Plans

AM Best Rating N/A

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5. Canada Protection Plan whole life insurance review

Canada’s best whole life insurance for: Non-medical coverage

Canada Protection Plan (CPP) is the top choice for those seeking non-medical whole life coverage. These straightforward, affordable policies offer a minimum of $10,000 in coverage and are ideal for individuals with health issues or those looking for funeral insurance.

Key features

  • Non-medical coverage: No medical tests are required, making it accessible to a wide range of applicants
  • Non-participating policies: Simple plans without dividends
  • Funeral insurance option: Covers end-of-life expenses like funeral costs and debts
  • Flexible for health issues: Broad range of coverage options for individuals with medical conditions
  • Quick approval for healthy applicants: Streamlined process for those in good health
Read our Canada Protection Plan Term Life Insurance review
CPP Whole Life Insurance Product Details
Product name:

Guaranteed Acceptance Life

Deferred Life

Deferred Elite Life

Simplified Elite Life

Preferred Life

Preferred Elite Life

Limited pay:

20-pay, pay-to-100

Dividend options:

N/A

PolicyAdvisor Rating

Best for Paying Off Premiums Early

AM Best Rating N/A

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6. Desjardins whole life insurance review

Canada’s best whole life insurance for: Paying off premiums early

Desjardins stands out for its flexible limited pay options, allowing you to pay off your whole life insurance policy early while still enjoying lifetime protection. With plans offering cash value growth, annual dividends, and various additional benefit options, Desjardins provides both convenience and comprehensive coverage.

Key features

  • Limited pay options:
    • Pay off your policy in 5, 10, 15, or 20 years, or until age 100
    • Lifetime protection with no further payments after the chosen period
  • Cash value and dividends: Enjoy growth in cash value and annual dividend payouts
  • Flexible plans: Choose from basic non-dividend plans or dividend-earning options
  • Senior-friendly policies: Special permanent life plans for  senior individuals aged 50+ with no medical exam required
  • Add-on benefits: Enhance coverage with optional riders for added protection
Read our Desjardins Term Life Insurance review
Desjardins Whole Life Insurance Product Details
Product name:

Desjardins Basic Permanent Life Insurance

Estate Enhancer

Accelerate Growth

5 Pay Par

Limited pay:

Life pay, 5-pay, 10-pay, 20-pay (par plans)

Life pay, 10-pay, 15-pay, 20-pay, pay-to-65 (non-par plans)

Dividend options:

Paid-up additions, deposit with interest, cash dividends, premium reductions, enhanced coverage

PolicyAdvisor Rating

Best for Balanced Performance

AM Best Rating A

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7. Empire Life whole life insurance review

Canada’s best whole life insurance for: Balanced performance

Empire Life offers balanced performance through its EstateMax and Optimax plans, making it an excellent choice for long-term wealth building and secure growth. While not the highest in cash values, their policies provide steady, reliable benefits that appeal to individuals seeking financial stability and flexibility.

Key features

  • EstateMax plan: Ideal for long-term wealth growth and increasing life insurance payouts
  • Optimax plan: Designed for near-retirees, offering access to cash value within the first 20 years
  • Steady growth: Provides secure, consistent growth over time
  • Affordable premiums: Compared to some term-to-100 policies, they offer great value
  • Popular and trusted: A top choice for Canadians seeking whole life coverage
Read our Empire Life Term Life Insurance review
Empire Life Whole Life Insurance Product Details
Product name:

Empire EstateMax

Empire Optimax Wealth

Solutions 100 with Cash Values

Limited pay:

Life pay, 8-pay, 10-pay, 20-pay

Dividend options:

Annual premium reduction, cash accumulation, cash dividends, enhanced coverage, paid-up additions

PolicyAdvisor Rating

Best Mutual Company

AM Best Rating N/A

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8. Equitable Life whole life insurance review

Canada’s best whole life insurance for: Mutual values

Equitable Life is Canada’s best choice for those seeking mutual values in their insurance provider. As a mutual company, it’s owned by policyholders rather than shareholders, allowing for a customer-focused approach and potentially more competitive rates.

Key features

  • Mutual company: Policyholders share in ownership, avoiding market-driven pressures
  • Dividend-earning policies: All whole life policies offer dividends for long-term cash value growth
  • Competitive rates: Often provides better rates due to the mutual business model
  • Strong cash value growth: Ideal for building wealth over time
  • Top mutual insurer: Outshines other mutual companies like Beneva and Wawanesa in this category
Read our Equitable Life Term Life Insurance review
Equitable Life Whole Life Insurance Product Details
Product name:

Equitable Equimax

Estate BuilderEquitable

Equimax Wealth Accumulator

Limited pay:

Life pay, 10-pay, 20-pay

Dividend options:

Annual premium reduction, cash accumulation, cash dividends, enhanced coverage, paid-up addition

PolicyAdvisor Rating

Best for Smokers

AM Best Rating A

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9. Foresters Financial whole life insurance review

Canada’s best whole life insurance for: Smokers

Foresters Financial is the best choice for smokers looking for life insurance. Their Quit Smoking Incentive Plan rewards your commitment to quit with lower rates, offering a unique way to save on premiums. Additionally, Foresters’ plans provide cash value growth and the potential for dividends, making them a solid option for those seeking long-term financial security.

Key features

  • Quit smoking incentive: Lower rates if you stop smoking within 2 years
  • Cash value and dividends: Most plans offer cash value growth, with some also paying dividends
  • Health-friendly options: Offers a wide range of life insurance plans for individuals with health issues
  • Affordable for smokers: Competitive rates compared to traditional policies for smokers
  • Long-term protection: Lifelong coverage for you and your family
Read our Foresters Term Life Insurance review
Foresters Whole Life Insurance Product Details
Product name:

Foresters Non-Par

Advantage Plus

Limited pay:

10-pay (Advantage Plus only), 20-pay, pay-to-100

Dividend options:

Paid-up additions, cash, deposit, premium reduction, enhanced coverage

PolicyAdvisor Rating

Best for Health Accommodation

AM Best Rating A+

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10. Industrial Alliance Whole Life Insurance Review

Canada’s best whole life insurance for: Health accommodation

If you have health issues, you should seriously consider Industrial Alliance (iA) for your insurance needs. They have something called a Superior Risk Tolerance Program, where you’re more likely to get approved even if your health isn’t in peak condition.

You can get a participating or non-participating plan, and they give you a lot of flexibility. You have options like:

  • Limited pay options to pay off your premiums early
  • Cover up to 9 people under the same policy
  • Optional life insurance riders and benefits to add to your coverage
  • Pay premiums semi-annually, instead of monthly or yearly like most providers

Of course, many Canadian companies also offer no-medical insurance — which we rated Canada Protection Plan as the best in. But if you want standard coverage despite health concerns, iA is a great choice too.

Read our iA Term Life Insurance review
iA Whole Life Insurance Product Details
Product name:

Whole Life Insurance

iA Par

Child Life & Health Duo

Life and Serenity 65

Limited pay:

Life pay, 10-pay, 20-pay, pay-to-65

Dividend options:

Paid-up additions, cash dividends, deposit with interest, annual premium reduction

PolicyAdvisor Rating

Best for Overall Performance

AM Best Rating A+

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11. Manulife Whole Life Insurance Review

Canada’s best whole life insurance for: Overall performance

Manulife is a top choice for those seeking overall performance in their whole life insurance. As one of North America’s largest and most successful life insurance providers, their plans offer reliability, flexibility, and a robust range of benefits, making them an excellent all-around option.

Key features

  • Participating and non-participating plans: Choose between dividend-earning or non-dividend plans
  • No medical exam options: Available for those seeking quick and easy approval
  • Standard whole life benefits: Includes cash value growth, lifelong coverage, and more
  • Flexible payment options: Change your payment method if needed
  • Affordable: Competitive pricing for comprehensive coverage
  • Reliable coverage: A trusted provider with strong financial backing
  • Robust investment options: Offers solid investment potential for your policy
  • Good coverage amounts: Adequate coverage for your needs with growth potential
Read our Manulife Term Life Insurance review
Manulife Whole Life Insurance Product Details
Product name:

Manulife Par

Manulife Par with Vitality Plus

Performax Gold

Limited pay:

Life pay, 10-pay, 15-pay, 20-pay, pay-to-90

Dividend options:

Paid-up additions, cash dividends

PolicyAdvisor Rating

Best for Children's Plans

AM Best Rating A

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12. RBC Whole Life Insurance Review

Canada’s best whole life insurance for: Children’s plans

RBC Insurance stands out as the best choice for children’s plans with their unique Juvenile Guaranteed Insurability Benefit. This feature ensures that your child or grandchild can expand their coverage later in life without needing to pass medical exams or face approval hurdles. This benefit is included for free, making RBC a top pick for securing your child’s financial future.

Key features

  • Juvenile Guaranteed Insurability benefit: Allows children to buy additional coverage or a new policy later without medical tests
  • Free benefit: Unlike many competitors, RBC includes this benefit at no extra cost
  • Ideal for estate and long-term financial planning: Great for securing a child’s future and managing family wealth
  • Reliable coverage: Offers comprehensive life insurance options for other needs, including estate planning
  • Strong provider: RBC is one of Canada’s leading financial institutions, ensuring trust and stability
Read our RBC Term Life Insurance review
RBC Whole Life Insurance Product Details
Product name:

RBC Growth Insurance

RBC Growth Insurance Plus

Limited pay:

Life pay, 10-pay, 20-pay

Dividend options:

Paid-up additions, cash dividends, premium reductions, dividends on deposit, enhanced coverage

PolicyAdvisor Rating

Best for High Net-Worth Individuals

AM Best Rating A+

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13. Sun Life Insurance whole life insurance review

Canada’s best whole life insurance for: High net-worth individuals

Sun Life Insurance is the best choice for high net-worth individuals, offering large coverage amounts and flexible policy options. With a minimum coverage of $250K, they cater to those who need substantial life insurance. Their plans provide both non-participating options (with cash value) and participating options (with cash value and dividends). They also offer no-medical exam plans for those with health concerns.

Key features

  • High coverage limits: Minimum coverage starts at $250K, ideal for high-net-worth individuals
  • Participating and non-participating plans: Choose from plans with or without dividends
  • No-medical exam options: Available for those with health issues or who prefer a simplified application process
  • Reliable provider: Sun Life is one of Canada’s largest and most trusted life insurance providers
  • Cash value growth: Plans come with the potential for long-term financial growth
Read our Sun Life Term Insurance review
Sun Life Whole Life Insurance Product Details
Product name:

Sun Spectrum Permanent Life Insurance II

Sun Permanent Life

Sun Par Accelerator

Sun Par Protector II

Sun Par Accumulator II

Limited pay:

Life pay, 8-pay, 10-pay, 15-pay (Sun Permanent Life only), 20-pay

Dividend options:

Cash dividends, cash accumulation, enhanced coverage, premium reduction, paid-up additions

PolicyAdvisor Rating

Best for Long-Term Growth

AM Best Rating N/A

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14. UV whole life insurance review

Canada’s best whole life insurance for: Long-term growth

If you want an insurance policy that can give you a LOT of growth over years, UV just might be the right pick for you. They just came out with a new Whole Life High Values plan in 2022 (fairly recent for insurance!) that promises your patience will pay off.

If you keep the plan until you’re 65, your cash value growth could be as much as 50% of what your original coverage amount was with this high-performance plan. That’s no small figure!

Key features

  • High cash value growth: The Whole Life High Values plan offers up to 50% growth on your coverage amount by age 65
  • Non-participating plans: No dividend payments, but strong cash value accumulation
  • Life insurance for health issues: This insurance is available even to those with health concerns
  • Recent plan launch: New options will be introduced in 2022 for enhanced long-term performance
Read our UV Term Life Insurance review
UV Whole Life Insurance Product Details
Product name:

Whole Life High Values

Whole Life Pay to 100

Adaptable

Limited pay:

Life pay, 20-pay, pay to age 25, 35, 45, 55, 65, 75, or 85 (non-par only)

Dividend options:

N/A

PolicyAdvisor Rating

Best Value for Guaranteed Benefits

AM Best Rating A

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15. Wawanesa whole life insurance review

Canada’s best whole life insurance for: Value for guaranteed benefits

Wawanesa is an excellent choice for those seeking value for guaranteed benefits. Their whole life insurance policies offer high cash values with the potential to break even or even exceed the amount paid in premiums within 20 years. They also offer affordable premiums, making them one of Canada’s most cost-effective whole life insurance options.

Key features

  • High cash value: Opportunity to exceed premiums paid in as little as 20 years
  • Affordable options: One of the most competitively priced whole life insurance plans in Canada
  • Participating and non-participating policies: Choose the option that suits your needs
  • No medical exam options: Available for those who prefer a simplified application process
  • Guaranteed benefits: Provides guaranteed value and coverage
Read our Wawanesa Term Life Insurance review
Wawanesa Whole Life Insurance Product Details
Product name:

Wawanesa Whole Life

Limited pay:

Life pay, 20-pay

Dividend options:

Paid-up additions

Methodology: How did we come up with the rankings?

We determined the top-ranking whole life companies in Canada based on industry knowledge, the hands-on expertise of our advisors, and factors such as policy details, coverage amounts, cash value growth potential and more:

1. Financial strength ratings

We prioritize stability and reliability by looking at financial strength ratings to ensure the insurer can consistently pay claims and dividends

We review ratings from multiple agencies and only recommend insurers with strong and stable ratings, ensuring your investment is secure

2. Policy details

Each whole life insurance policy has unique terms and conditions that must match your specific needs and goals

We analyze the fine print, including premium payment periods, cash value accumulation, and riders, to present policies offering tailored flexibility and benefits

3. Key features

Additional features and riders can significantly enhance a policy’s value and relevance to your circumstances

We compare features like accelerated death benefits, waiver of premium riders, and guaranteed insurability options, ensuring policies include valuable extras for security and flexibility

4. Premium costs

Affordability is crucial, so premiums must fit within your budget while providing the necessary coverage and benefits

We gather and compare premium quotes from various insurers to find policies offering the best value for your money, balancing cost with comprehensive benefits

5. Coverage amounts

The coverage amount should protect your loved ones and meet your financial goals, aligning with your long-term objectives

We help determine the appropriate coverage amount based on your needs and compare policies to ensure sufficient coverage at competitive rates

6. Cash value growth potential

The cash value component can grow over time, providing financial flexibility through loans or withdrawals

We analyze the cash value growth potential, considering interest rates and dividend performance, ensuring strong growth prospects for your investment

7. Dividend options

Dividends can enhance a policy’s value by providing additional cash value, reducing premiums, or being taken as cash

We assess the dividend history and options of different insurers, preferring companies with a strong track record of paying reliable dividends for added benefits

We’re all about helping Canadians get the coverage they need. Use this list as a guide to which whole life insurance is best for you and your family, based on your specific needs.

You can find Canada’s best whole life insurance quotes on our website in minutes. Or, contact us and let our experts help you out one-on-one.

How do whole life insurance policies compare to term life insurance in Canada?

Whole life insurance provides lifelong coverage with a cash value component that grows over time, making it ideal for long-term financial planning. Unlike term life insurance, which only provides coverage for a specific period, whole life policies offer permanent protection and can accumulate cash value that can be borrowed against. 

While whole life insurance is typically more expensive than term life, it offers more stability, which is why companies like BMO and Empire Life are popular choices.

What is the difference between a participating and non-participating life insurance policy?

Participating policies allow policyholders to share in the insurer’s profits through dividends, which help to reduce premiums or can be taken as cash. Non-participating policies do not provide dividends.

Difference between participating and non-participating life insurance

Feature Participating life insurance Non-participating life insurance
Definition Offers policyholders a share in the insurer’s profits through dividends Does not provide dividends; only offers guaranteed death benefits
Premiums Higher due to the potential for dividends and additional benefits Lower as it only includes guaranteed benefits and no profit-sharing
Dividends Policyholders may receive dividends No dividends are paid to policyholders
Cash value growth Cash value grows faster Cash value grows at a fixed rate
Suitability Suitable for individuals seeking long-term growth  Ideal for those wanting a straightforward, cost-effective policy

Why should I get permanent life insurance Canada?

There are three very good reasons why you should get permanent life insurance, including covering your final expenses, cash value growth and planning your estate:

  1. To cover your final expenses: You can use permanent life insurance to make sure your family doesn’t have to go into their pockets to pay for your final expenses in life. If you happen to pass away before paying any bills, your family can use your whole life policy to take care of it.
  2. To access cash value now/during retirement: Cash value grows over time, and you can use it in many ways — as supplemental income in retirement, as collateral for a loan to buy a home, or any number of other ways. Cash value is one of the key differences between term vs whole life insurance.
  3. To plan your estate: The best permanent life insurance policies can also be used to pass on your planned inheritance to your loved ones without them having to pay taxes. The death benefit or insurance payout is tax-free, so the final amount they get won’t be lower.

Of course, you don’t need to fit into just these categories to get permanent life insurance quotes. Most people can benefit from whole life insurance in Canada one way or another!

If you’re unsure, speak with an advisor or insurance broker to find out if a permanent plan can work for you.

Are there any alternatives to whole life insurance?

here are several alternatives to whole life insurance that cater to different financial needs and preferences:

  1. Term life insurance:
    • Overview: Provides coverage for a specific period (e.g., 10, 20, or 30 years).
    • Benefits: Typically more affordable than whole life insurance for the same coverage amount.
    • Considerations: Coverage ends at the end of the term, and it does not accumulate cash value.
  2. Universal life insurance:
    • Overview: Offers flexible premiums and death benefits, with a savings component linked to interest rates.
    • Benefits: Allows adjustments in coverage and premium payments over time.
    • Considerations: Premiums can vary based on market conditions, and policy performance affects cash value growth.
  3. Variable life insurance:
    • Overview: Combines death benefits with investment options in stocks, bonds, or mutual funds.
    • Benefits: Potential for higher returns on cash value compared to traditional whole life insurance.
    • Considerations: Investment risk is borne by the policyholder, and cash value can fluctuate with market performance.
  4. Indexed universal life insurance:
    • Overview: Offers flexible premiums and death benefits, with cash value growth tied to a stock market index.
    • Benefits: Potential for higher cash value growth than traditional universal life insurance, with downside protection.
    • Considerations: Returns are capped, and policy performance depends on index performance.
  5. Guaranteed universal life insurance:
    • Overview: Provides lifetime coverage with fixed premiums and a guaranteed death benefit.
    • Benefits: Offers permanent coverage without the investment risks associated with other types of permanent insurance.
    • Considerations: Limited or no cash value accumulation, and premiums are typically higher than term life insurance.

Choosing the right insurance type depends on your financial goals, risk tolerance, and budget. Each alternative offers distinct features that may better suit your specific needs compared to traditional whole life insurance.

Get the best whole life insurance quotes in Canada

We hope our ratings and reviews of the Best Permanent Life Insurance Canada were helpful to you. If you have any questions or need any help, don’t hesitate to contact us!

Book some time with our licensed advisors to make sure you’re getting the right plan for you and your family’s financial security.

Need insurance help?

Give us a call at 1-888-601-9980 or book some time with our licensed experts.

Frequently asked questions

Is whole life insurance payout taxable?

The death benefit paid to beneficiaries is typically not taxable, and the cash value growth accumulates tax-deferred. Policy loans are generally not taxable as they are considered loans, not income.

Can you borrow money from a whole life policy?

Yes, you can borrow money from a whole life insurance policy through policy loans. These loans typically have lower interest rates compared to traditional loans. However, unpaid loans may reduce the death benefit and cash value available to beneficiaries.

What is the best age to buy whole life insurance?

The best age to buy whole life insurance is typically younger. Purchasing at a younger age locks in lower premiums and ensures longer-term coverage. It also allows more time for the policy’s cash value to accumulate and grow.

How long does a whole life insurance policy last?

A whole life insurance policy lasts for your entire life as long as you continue to pay premiums. It provides lifelong coverage, unlike term life insurance which covers a specific period (e.g., 10, 20, or 30 years). This permanence ensures the policy remains in effect and the death benefit is paid out to beneficiaries whenever the insured passes away, regardless of age.

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Best Life Insurance for Seniors in Canada 2025 – Top Picks & Tips

Most people assume that life insurance for seniors is either not worth it or impossible to get approved – but, it is not true! Even those aged 60 or over can take comfort in knowing they can still get life insurance coverage.

Read on to find out what your coverage options are and how you can secure the protection you need in retirement age.

Can seniors get life insurance in Canada?

Yes! The maximum age seniors can apply for life insurance in Canada is 85 years old. Your age will affect whether you are approved, the type of coverage you can get, and how much your yearly or monthly premiums will cost. But rest assured, you still have options.

Whether you should get term or whole life insurance depends on your needs.
Schedule a call for visitor insurance
Need insurance answers now?

Call 1-888-601-9980 to speak to our licensed advisors right away, or book some time with them below.

Why do seniors need life insurance?

Seniors need life insurance to give their family financial security and peace of mind, especially as they approach retirement. Some major reasons seniors buy life insurance include paying off mortgage, and outstanding debts, providing for the surviving spouse and dependents, and leaving behind a legacy.

  • To pay off the mortgage: Not every Canadian has paid off their mortgage by the time they’ve reached their 50s or 60s. A death benefit payout from the insurance policy would enable surviving loved ones to handle it
  • To pay off any outstanding debts: Similarly, beneficiaries can use the payment to cover any other leftover debt such as credit card bills, personal or business loans, and more
  • To cover funeral arrangement expenses: Life insurance can also give surviving loved ones the space to grieve without worrying about how they can afford to pay for burial costs
  • To cover medical debt: Some life policies come with benefits you can use now, to help pay for costs like long-term care and prescriptions, or to give an advance on the payout in the event of a terminal illness
  • To provide for a surviving spouse: Life insurance can help a surviving spouse maintain their same standard of living and keep up with daily expenses and bills
  • To provide for dependents: Seniors who take care of family members with special needs can make sure the money from their life insurance is used to keep providing for those loved ones
  • To supplement retirement savings: Many older Canadians use the money they get from a whole life policy’s cash value to supplement their pension and help give them some extra cash
  • To leave an inheritance for children and grandchildren: Life insurance is a fantastic estate planning tool that helps seniors leave money behind for children, grandchildren, and other family members
  • To leave a legacy for a charity of choice: Similarly, life coverage gives seniors a way to leave a gift behind for a charity or cause they care deeply about
  • To ensure protection: In Canada, there is no government life insurance for seniors. Any older people who want this kind of protection must buy it themselves

What are the benefits of Canadian life insurance for seniors?

Life insurance can give seniors:

  • Peace of mind
  • Financial protection
  • Access to extra savings through cash value
  • A reliable way to transfer assets and cover end-of-life expenses

What types of life insurance can seniors get in Canada?

Depending on their individual health and coverage needs, seniors many choose from traditionally underwritten life insurance or no-medical life insurance policies. Take a look at these options in detail:

1. Traditionally underwritten life insurance

Traditional policies are fully underwritten, which means applicants have to answer a lot of questions about their health history. They may also have to take a medical exam. Traditionally underwritten life insurance comes in two types:

  • Term life insurance
  • Whole life insurance

Term life insurance for seniors

Term life insurance policies cover you for a specific length of time, called a term. It pays a tax-free, lump-sum payment called a death benefit to your beneficiaries if you die within the term.

A healthy 60-year-old who needs life insurance for a temporary need like paying off their mortgage will find that a term policy is the best choice. It’s the most affordable type of policy and can take care of their needs.

Whole life insurance for seniors

Whole life insurance is a type of permanent insurance that covers you for your entire life. It’s best for final expenses like funeral costs, outstanding debts, and end-of-life medical costs. It also has the living benefit of a cash value component. This cash value may be accessed during your lifetime either by withdrawing or borrowing against it.

Whole life policies are generally more expensive than term. It’s also just one type of permanent insurance policy, aside from universal life insurance and Term-to-100.

Different types of life insurance

2. No-medical life insurance

No medical life policies have very few medical questions and do not require a medical exam. No medical insurance has two types: simplified issue life insurance, and guaranteed issue life insurance. They are best for people who: 

  • Have an underlying health condition or medical issue
  • Have hobbies or pastimes that are considered dangerous (like skydiving)
  • Need to get coverage quickly

Simplified life insurance for seniors

Simplified issue life insurance asks you a few questions about your medical history when you apply, instead of a full exam. But they tend to be more expensive and usually have limitations like:

  • A lower death benefit
  • Can have a waiting period of 1-2 years before coverage starts

Guaranteed life insurance for seniors

Guaranteed life insurance has NO health questions at all, so you’re guaranteed to get approved. But it comes with a lot of limitations, like: 

  • Maximum death benefit amount of $50,000
  • Almost always has a waiting period of 1-2 years before coverage starts

This is a last-resort insurance plan. It’s there for those who aren’t able to get traditional life insurance policies or simplified issue policies.

Learn more about the different types of life insurance in Canada.

Types of no medical insurance
Life insurance can be affordable!

Get the best life insurance quotes in Canada in 2025!

Which are the best life insurance companies for seniors in Canada?

Some of the best life insurance companies for seniors in Canada include Canada Life, Wawanesa, Industrial Alliance (iA), and Canada Protection Plan. Take a deep dive into their offerings and ratings:

Company Key features Best for Rating (Out of 5)
Canada Life Short 5-year term option, ideal for elderly individuals aged 80-85 Elderly individuals (ages 80-85) 4/5
Wawanesa Offers lower rates by using your actual age instead of your nearest birthday Individuals seeking lower premiums 4/5
Industrial Alliance (iA) Popular for guaranteed life insurance plans, with approval up to age 80 Those needing guaranteed coverage up to age 80 4/5
Canada Protection Plan (CPP) Known for guaranteed life insurance with no health questions required for approval Individuals with health concerns or pre-existing conditions 4/5

How much does life insurance for elderly people in Canada cost?

It depends on factors like age, type of policy, and more. Life insurance for seniors over 65 can be anywhere from $55 to over $100 a month for term life insurance. Or, life insurance for seniors 65 and over can be around $100 to start.

Life insurance for seniors over 50 in Canada

For those in their 50s, life insurance tends to be more affordable and accessible, ranging between $50 and $170 per month. Policies can be structured to offer a balance of coverage and cost, with the potential for both term and whole life insurance options.

Policy Type Cost (Approx.)
10-year term $35/month
20-year term $61/month
Whole life $111/month
Term-to-100 $179/month

Life insurance for seniors over 60 in Canada

Seniors over 60 see an increase in premiums due to age-related health risks. Policy prices can range between $50 to $240 per month. There is a wider range of policy options available, including term, whole life, and term-to-100 policies.

Policy Type Cost (Approx.)
10-year term $55/month
20-year term $108/month
Whole life $149/month
Term-to-100 $241/month

Life insurance for seniors over 70 in Canada

For those in their 70s, premiums are higher, reflecting increased health risks. Life insurance policies can range between $90 to $320 per month for individuals in their 70s. Policies like term-to-100 are designed to provide lifetime coverage, albeit at a higher cost.

Policy type Cost (Approx.)
10-year term $94/month
20-year term N/A
Whole life $99/month
Term-to-100 $313/month

Life insurance for seniors over 80 in Canada

Life insurance options for those over 80 are limited and come with high premiums, typically ranging between $200 to $450, due to the higher mortality risk. Policies mainly focus on final expense coverage rather than extensive financial planning.

Policy type Cost (Approx.)
10-year term $205/month
20-year term N/A
Whole life $131/month
Term-to-100 $441/month

*Quote for $100,000 in life insurance coverage for a non-smoking female resident of Ontario in good health. 20-year coverage not available past age 65.

What affects the cost of life insurance for older adults?

For seniors, just like for everyone, the cost of life insurance premiums depends on factors such as their age, health history, smoking status, sex and the type of policy that they have purchased.

  • Age: The older you are, the higher the premiums due to increased health risks and shorter life expectancy
  • Health status: Current health and medical history heavily influence premiums; chronic conditions can lead to higher costs or denial of coverage
  • Type of policy: Term life insurance generally costs less than permanent policies like whole life, which offer lifelong coverage and additional benefits
  • Smoking status: Smokers pay significantly more for life insurance due to the increased health risks associated with tobacco use
  • Gender: Women typically pay lower premiums than men because they have a longer life expectancy
  • Coverage amount: Higher death benefits mean higher premiums, as larger coverage amounts represent a greater financial risk for the insurer

Health is a major contributing factor for seniors especially, just because our health generally declines the older we get. Age and health are two of the biggest factors that will affect your cost, and whether you can get coverage at all as a senior.

Read more about the cost of life insurance

What is the most affordable type of Canadian life insurance for seniors?

Term life insurance is the cheapest type of life insurance for seniors and for Canadians in general. But be aware that seniors have limited options for term insurance, depending on your age. And, depending on your needs, it may not be the best option for you.

What is the best life insurance for older people in Canada?

The best life insurance policy for seniors varies based on each person’s unique needs and circumstances.

  • Term may be the best coverage for seniors in their 50s and 60s who still have short-term needs.
  • Permanent may be the best life insurance for seniors over 70 and those who have long-term needs.

In general, here’s a list of what our insurance experts might suggest for you based on how old you are. 

seniors life insurance

When is it not a good idea for a senior to get life insurance?

Having life insurance in old age can be useful, no matter what stage of life you’re at. Knowing that your family will be well-off financially brings peace of mind that is priceless, especially as we get older.

Here are some common circumstances where someone should or should not get insurance coverage as a senior.

You should get life insurance if you:

  • Have a lot of savings
    Even wealthy seniors who have a lot of savings and assets should still consider getting life insurance. Savings are not as reliable as a life policy is.
  • Have no children and no debt
    Seniors who do not have a lot of financial obligations can still benefit from a small life insurance policy. It can cover their funeral costs and any outstanding debt. And, they can leave some money behind for a special child, person, or charity in their life.
  • Have severe health concerns
    Someone with severe health issues should make sure they have plans in place to take care of their family should the worst happen. Your life insurance options will be more limited than if you were healthy, but it’s still not too late.

You should rethink life insurance if you:

  • Have limited funds or savings
    A senior with limited savings has all the more reason to buy life insurance to help their surviving loved ones. But, it will be important to rethink your budget and prioritize your daily living needs first.

Life insurance may not be for you if you:

  • Are older than 85
    As we’ve noted above, most Canadians cannot get life insurance coverage past age 85. If you’re already that advanced in age, life insurance may be off the table for you. But there are other ways you can provide for your family, such as with a will or other estate planning tools.

How to buy life insurance for seniors in Canada?

Seniors can easily buy life insurance in Canada once they have figured out their needs,. You can also look at policy marketplaces and apply via your phone to get the best rates. For a more customized experience, you can connect with our experts at PolicyAdvisor.

1. Figure out your needs

Start by thinking through your reason for buying life insurance and what you need to secure. This will help you determine what kind of coverage you need. 

If you’re not sure, try out our free life insurance calculator. It will help you decide. You can also contact one of our licensed insurance advisors for one-on-one help.

2. Get free life insurance quotes for seniors from PolicyAdvisor

Once you’ve decided what kind of policy and how much coverage you need, you can compare the lowest insurance quotes for seniors online. Our quoting tool searches the Canadian insurance market for you in seconds.

This lets you easily compare quotes from more than 30 of the best life insurance companies for seniors in seconds.

3. Apply online or over the phone

Select the quote you want and submit your application online by answering some personal questions. Or, contact us and let our agents go through the process with you, saving you time and money.

Need assistance?

Give us a call at 1-888-601-9980 or book some time with our licensed experts.

Frequently asked questions

How much life insurance do seniors need?

Normally, experts say you should get 10-15x your annual income in coverage. But Canadian life insurance for seniors is different — many are already retired and only want to help pay for final expenses or leave inheritance for their family.

How do pre-existing conditions affect life insurance for older people?

Pre-existing conditions affect:

  • What kind of life insurance you can get
  • Whether you will be approved for coverage
  • How much your life insurance rates will be

Many seniors in Canada already have health issues like cancer, high blood pressure, diabetes, and more. These are all considered pre-existing health issues that will affect their insurance options.

But, there are still options for seniors with health issues to coverage through no-medical policies. Seniors can still get insurance coverage even if they have bad health and even without taking a medical exam.

Can seniors convert or renew their life insurance policy?

While most term life policies can be renewed or converted into a permanent policy at the end of the term, not every senior may have these options. In general, most Canadian insurers will only let seniors renew or convert up until age 70 to 75.

What happens if my application is denied?

If your senior life insurance application is denied, you should contact our licensed insurance agents to help discuss how to move forward. We can help you take a look at why you may have been denied and see what the alternative options are.

What are the drawbacks of life insurance for older people?

The main downsides about life insurance are:

  1. Rates for seniors can be costly because of their age and health
  2. You may not be able to qualify for all types of life insurance policy
  3. Coverage amounts may be limited
  4. If you don’t use your cash value before you pass away, you will lose it

Is life insurance for seniors different from other types of insurance?

Life insurance for seniors tends to be more expensive and can have less coverage than other types of insurance. Because of their advanced age and likely health issues, their policies cost more. And because most seniors are only focused on end-of-life expenses, they may not need as much coverage as a 30-year-old with a mortgage and two young kids.

What age is considered a senior for life insurance in Canada?

Typically, people who are 50 years old and over are seen as seniors in the life insurance industry in Canada.

Can I buy a life insurance policy for my senior parents?

Yes. You can get a life insurance policy for your parents. You just need to meet requirements like:

  • Consent — They have to be aware that you are taking out a policy on them
  • Age restrictions — They have to be within the eligible age range, so you can’t apply for them just because they are 90 and you are younger
  • Insurable interest — You have to prove that if they pass away, you would be affected financially
  • Personal details — You will need to submit information like their health and financial details

Is there government life insurance for seniors?

No. There is no government life insurance for seniors in Canada like there are programs for health insurance. To get coverage, a senior must purchase life insurance privately. To find an affordable life insurance option for your financial goals, contact an advisor today!

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Manulife Whole Life Insurance Review – 2025

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A whole life insurance policy is a valuable and reliable tool for lifelong financial protection. This blog explores how Manulife’s whole life insurance can secure your family’s future while building a cash value that can be accessed as a living benefit. 

Learn about the key benefits of Manulife’s whole life insurance policy, and discover how it can play a role in your long-term financial planning.

What are the key features of Manulife whole life insurance?

Manulife’s whole life insurance plans start building cash value from the early years of the policy. The maximum issue age for Manulife whole life insurance is 80 years and they offer two dividend options: paid-up insurance and cash. 

Insured individuals can avail of policy loans up to 90% of the total cash value. However, non-repayment of these loans can lead to a deterioration in the policy’s overall value. With Manulife whole life insurance, policy holders can get additional riders including child protection, guaranteed insurability, term insurance, and total disability waiver. 

Key features of whole life insurance from Manulife

Category Details
Cash value accumulation Immediate
Premium payment frequency Monthly and annual 
Maximum issue age 18-80 years
Coverage amount range Coverage starts at $100,000 for 10 year, 20 year and pay to age 90 premium durations, and $500,000 for pay to age 100
Coverage options Single life or joint-last-to-die coverage options
Dividend options Paid-up insurance and cash 
Policy loan availability Yes, up to 90% of the total cash value
Additional riders Child protection

Guaranteed insurability

Term insurance

Total disability waiver

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What are the different Manulife whole life plans I can choose from? 

Manulife offers two participating whole life insurance plans—Manulife Par with Vitality Plus™ and Manulife Par. Both policies offer immediate cash value growth and guaranteed access to cash value in the early years. For 10-pay, 20-pay, and pay to age 90 plans, the coverage starts at $100,000. For pay to age 100, the coverage starts at $500,000. 

Manulife Par with Vitality Plus™ gives the insured individual access to the maximum-value benefits of Manulife Vitality—the company’s flagship rewards program. Manulife Par with Vitality Plus™ offers only single life coverage while Manulife Par offers single life and joint-last-to-die coverage options. 

Manulife Par and Manulife Par with Vitality Plus™: Key differences 

Feature Manulife Par Manulife Par with Vitality Plus
Coverage amount Starts at $100,000 for 10-year, 20-year, and pay-to-age-90 durations; $500,000 for pay-to-age-100 Starts at $100,000 for 10-year, 20-year, and pay-to-age-90 durations; $500,000 for pay-to-age-100
Policy fees No policy fees No policy fees
Payment duration options 10 years, 20 years, to age 90, or to age 100 10 years, 20 years, to age 90, or to age 100
Coverage options Single life or Joint last-to-die Single life only
Eligibility for Vitality benefits Access to Manulife Vitality Go™ benefits at no added cost Access to maximum-value Manulife Vitality benefits
Upgrade option Upgrade to Manulife Par with Vitality Plus before the 3rd anniversary (no underwriting required) Not applicable
Issue age 18-80 years 18-80 years
Monthly Vitality® charge Not applicable – $15 for pay 10 years

– $10 for pay 20 years

– $6 for pay to age 90

– $4 for pay to age 100

Optional add-ons – Add term life insurance

– Skip payments if disabled (conditions apply)

– Guarantee future eligibility for life insurance

– Protect children and guarantee their future life insurance coverage

– Add term life insurance

– Skip payments if disabled (conditions apply)

– Guarantee future eligibility for life insurance

– Protect children and guarantee their future life insurance coverage

Source: Manulife.ca  

What factors affect the performance of Manulife’s participating account?

Factors that influence the performance of Manulife’s participating account are mortality rates, policy cancellations, expenses and taxes, and investment returns. While a participating account is managed to ensure there is always enough money to pay death benefits and cash values, these factors do influence the account’s cash flow and performance. 

Let’s understand the factors influencing the participating account:

Mortality rates: The death benefits of whole life policies are paid from the participating account. Insurers typically plan for the number of death benefits that they may have to pay in a given year. They make this assumption based on Canada’s overall life expectancy. Higher death benefits than expected will deplete the participating account’s funds faster, lower death benefits will have the opposite effect. This is why mortality rates are a crucial factor in determining how a participating account performs fiscally.

Policy cancellations: Based on past consumer behaviour, Manulife makes pricing assumptions of the number of policies that will be cancelled every year. If the cancellation numbers are lower, the participating account may be adversely affected, and vice versa.

Expenses and taxes: Underwriting costs, issuing contracts, making policy changes, and other administrative and operating expenses play a role in the participating policy’s performance. Manulife allocates resources towards these expenses in a manner that is fair and reasonable to the policy holders. If the operating charges are less than the company’s estimates, the participating account’s performance will be positive. If not, the performance may be affected negatively. 

Investment returns: The expected returns on an investment play a key role in determining the profitability of a participating account. If the actual returns on an investment exceed Manulife’s pre-determined numbers, it positively affects the participating account. The latter is true if the returns are lower than anticipated. 

Factors that influence Manulife’s participating accounts

Factor Predictability Stability Impact on Performance
Mortality High High Low
Cancellations Medium Medium Medium
Expenses & Taxes High High Low
Investment Returns Medium Medium High

Source: Manulife Participating Insurance Insight, 2023

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Where does Manulife invest the participating account’s premiums?

Manulife invests the participating account’s funds in public bonds, real estate, public and private equities, mortgages, and private debt. This diverse investment portfolio ensures maximum returns and has historically proven to provide long-term growth to policy owners. It also helps Manulife navigate short-term market volatilities. 

What dividend options does Manulife offer?

Manulife offers two dividend options: paid-up insurance and cash. If you choose the paid-up insurance option, your annual dividends are used to automatically buy additional, fully paid-up insurance. This means that once your dividends have been used to purchase additional coverage, you do not need to make any further premium payments for the paid-up insurance. 

If you choose the cash option as your dividend strategy, the annual dividends you receive are paid directly to you. In this case, there may be some tax liability. 

How are Manulife’s whole life insurance dividends distributed?

Dividends are allocated to Manulife Par policyholders using a dividend scale. A dividend scale is a formula used by all insurance companies to fairly and equitably distribute the dividends among all the policy owners. The dividend scale is not guaranteed and usually increases or decreases based on the participating account’s performance. 

Manulife’s dividend scale for the past three years has been:

  • 2022: 6.10%
  • 2023: 6.35%
  • 2024: 6.35%
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What are the pros and cons of Manulife’s whole life insurance?

Manulife’s participating whole life policies offer a range of benefits such as immediate cash value growth, the option to choose the frequency and duration of premiums, and access to riders. Manulife also offers deposit option payments where the insured individuals can make direct premium payments and increase their protection. 

The downside with Manulife’s whole life insurance is that they do not offer non-participating plans and some policy owners may find the dividend and returns structure complex. 

Pros and cons of Manulife whole life insurance 

Pros Cons
Immediate cash value growth and guaranteed cash value in the early years Manulife does not offer non-participating whole life insurance plans 
Deposit option payments are available where policy owners can make additional premium payments to increase protection They offer only two dividend options while other insurers typically offer up to four 
Option to choose the frequency and duration of premium payments The company does not offer join-first-to-die coverage 
Variety of riders offered by Manulife for different life events and needs
Access to Manulife Vitality, a rewards and discounts program 

Read about the top whole life insurance companies in Canada

How to apply for Manulife whole life insurance?

To apply for a Manulife whole life insurance plan you would need to choose the plan type (Manulife Par or Manulife Par with Vitality PlusTM), choose your coverage options, fill in an application form, and submit. 

For the best Manulife whole life quotes, speak to our experts at PolicyAdvisor. Our licensed advisors will help choose a plan and coverage options that best suit your needs and budget. We will also support you with the application, making the entire process seamless and easy for you!

Need insurance help?

Give us a call at 1-888-601-9980 or book some time with our licensed experts.

Frequently asked questions

Is Manulife whole life insurance worth it?

Yes, Manulife’s whole life insurance helps build cash value and provide long-term protection at affordable rates. Their policies are designed to help build wealth with dividend options that can be used to either buy more insurance or policy owners can withdraw as cash. Manulife also offers exclusive benefits with their Vitality program, making their whole life insurance plans an ideal option for those looking for complete protection. 

Can you borrow against the cash value?

Yes, you can request for a cash loan which is typically subject to Manulife’s administrative policies. The maximum amount you may borrow is 90% of the total available cash value minus any policy loans that you may have already taken. In some situations, Manulife may ask you to complete a loan agreement. 

What happens if I stop paying premiums?

If you stop paying your premiums, Manulife gives you a 31 day grace period to pay the pending premiums. In case you do not do that your policy will lapse. You will lose your coverage and your cash value may be used to pay off your policy loans and other charges. 

Does Manulife offer participating policies with dividends?

Yes, Manulife Par and Manulife Par with Vitality PlusTM, both offer participating whole life policies with dividends. Dividends can either be used to buy more insurance or they can be withdrawn as cash. In case policy owners choose to withdraw the dividends, there may be some tax implications.   

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How to use whole life insurance to build wealth?

Whole life insurance is a powerful financial tool that combines lifelong coverage with a cash value component that can be used to achieve various financial goals. By leveraging the cash value policyholders can supplement their retirement income, plan their estates, and even grow their business. In this blog, we’ll answer a question many Canadians ask: how to use whole life insurance to create wealth.

Whether you’re looking to enhance your financial portfolio or secure your family’s future, a whole life policy can help you achieve both these goals. 

Why do you need life insurance?

Life insurance is essential for ensuring your loved ones are financially secure in the event of your unexpected passing. A life insurance policy can help cover expenses such as:

  • Funeral costs
  • Outstanding debts
  • Mortgages
  • Daily living expenses
  • Children’s education
  • Retirement planning 

A life insurance policy is a versatile financial tool that brings financial protection and peace of mind to you and your loved ones. 

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What is whole life insurance?

Whole life insurance is a type of permanent life insurance that offers lifelong coverage, has a death benefit, and a cash value component, all of which remain active as long as premiums are paid. With its investment component, a whole life policy offers a unique blend of stability, growth, and flexibility, making it a powerful financial product. 

The death benefit is the amount paid to beneficiaries upon the insured’s death, while the cash value is a savings feature that grows over time, offering guaranteed returns. 

Key features of whole life insurance

The features of a whole life insurance policy can be different based on whether it’s a participating or non-participating policy. Participating policies allow policyholders to receive dividends, which can be used to reduce premiums, purchase additional coverage, or be taken as cash.

These dividends are not guaranteed but depend on the insurer’s financial performance. In contrast, non-participating policies do not offer dividends but often come with fixed premiums and guaranteed benefits, providing more predictable coverage.

Both types offer lifelong protection and a cash value component, but the choice depends on individual financial goals and risk preferences.

Features of a participating vs. non-participating whole life policy

Feature Participating Life Insurance Non-Participating Life Insurance
Definition Offers dividends to policyholders based on the participating account’s performance  Does not provide dividends; only offers guaranteed death benefits
Premiums Higher due to the potential for dividends and additional benefits Lower as it only includes guaranteed benefits and no profit-sharing
Dividends Policyholders may receive dividends No dividends are paid to policyholders
Cash Value Growth Cash value grows faster Cash value grows at a fixed rate
Suitability Suitable for individuals seeking long-term growth Ideal for those wanting a straightforward, cost-effective policy

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How to use whole life insurance to build wealth?

A whole life policy can help build wealth because of the two key components it offers: cash value for both participating and non-participating policies, and dividends for participating policies only. Policyholders can leverage either of these two components to create a source of income for various financial goals, supplement retirement income, fund large expenses, and even invest in new businesses. 

The cash value component and dividends (for participating policies) can be accessed in different ways. The cash value can be:

  • Withdrawn 
  • Accessed as a policy loan
  • Used as a loan collateral

Withdrawing the cash value and taking a policy loan can be taxable if the amount exceeds the policy’s true value. When you use it as a loan collateral with a third party lender, it is not taxable. 

Accessing cash value and its implications

Cash withdrawal  Policy loan Collateral loan
Ideal for Policyholders who want a small amount of cash for immediate use, and who may not intend to repay it Policyholders who want a larger amount of cash and want to avoid a loan from a bank or other lender Policyholders who want a large amount of cash and are comfortable with debt 
Cash withdrawal/loan limit Limited to the available non-guaranteed cash value 90% of available cash value 100% of available cash value
Intention to repay Never Typically in the short-term At death
Tax implication Taxable if the withdrawal amount exceeds the policy’s true value Taxable if the withdrawal amount exceeds the policy’s true value Not taxable 

Dividends on the other hand can be used in two different ways:

  • Policyholders can reinvest the dividends into their policy (enhanced protection and paid-up additions)
  • Get paid in cash or hold on deposit 

When the dividends are reinvested into the policy, they are not liable to any taxes. If the policyholder chooses to get paid in cash or hold the dividend payout on deposit, it is subject to taxes. 

Accessing dividends and how it impacts the policy

Feature Reinvest dividends Receive dividends in cash or hold on deposit
Purpose Increase policy value through enhanced protection or paid-up additions Provide liquidity for immediate use or savings
Impact on policy Boosts the death benefit and cash value of the policy No impact on the policy’s value
Tax implications Not taxable when reinvested into the policy Subject to taxes if received as cash or held on deposit
Ideal for Policyholders looking for long-term growth and enhanced financial security Policyholders seeking additional income or liquidity
Flexibility Funds stay within the policy and contribute to future growth Offers immediate access to funds for any purpose

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Whole life insurance for estate tax funding

When you pass away, it is assumed that you have disposed of all your assets and an executor will be required to pay any taxes before your estate is distributed among your beneficiaries. These assets include any Registered Retirement Savings Plan (RRSPs), capital gains, and more. 

The substantial value of these assets are also subject to the highest tax rates. Paying off these taxes significantly reduces the value that your beneficiaries get. 

If you pass away with an active whole life insurance policy, your beneficiaries (such as surviving family members) receive a tax-free cash payout from your insurance company. This payout is not considered part of your income or your beneficiaries’ incomes and is not taxed as such when you pass. This is because you paid your life insurance premiums using funds on which you paid income tax as well.

The payout from your whole life insurance policy offsets the taxes on your estate and provides immediate liquidity to meet any other estate settlement costs. 

Learn more about estate planning with life insurance

Retirement planning with whole life insurance

While the primary purpose of a whole life policy is the death benefit, retired individuals can use the cash value component and the dividends to supplement their income. The cash value serves as an emergency fund that can be used for medical emergencies, paying off debt, travelling post retirement, children’s weddings or education, and more. 

The dividends can be reinvested in the policy to increase the death benefit and to buy additional coverage. This will enhance the legacy a policyholder leaves for their loved ones. Depending on the dividend strategy, policyholders can also access it as cash when required. 

Using whole life insurance for businesses

Whole life insurance offers several benefits for business owners, including key person insurance, funding a buy-sell agreement, and serving as collateral for a business loan. A whole life policy ensures the stability and continuity of business operations. Here’s how:

Using whole life insurance for a business

Aspect Purpose Benefit
Key person insurance Protects the business against financial losses that could

result from the death of a key employee or owner

Provides the business with a death benefit to cover the costs

of finding and training a replacement, offsetting lost revenue, and

maintaining business operations during the transition period

Funding buy-sell agreements Facilitates the smooth transfer of business ownership in the

event of an owner’s death

Ensures that the remaining owners can buy out the deceased

owner’s shares without financial strain

Collateral for business loans Provides a means to secure financing for business operations

or expansion

The policy’s cash value can be used as collateral to obtain

business loans, potentially at more favorable terms

Diversify your investment portfolio

A whole life insurance policy is a reliable way to diversify your investment portfolio. It offers stability and guaranteed cash value growth and death benefit, making it a more stable investment as compared to market-dependent assets. 

Whole life insurance keeps you protected against market volatility especially during downturns. 

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Whole life insurance vs other investment options

When compared to other investment options such as stocks, bonds, or real estate, whole life insurance proves to be a lower risk choice. This is because of the guaranteed cash value and dividends (in case of participating policies). 

Here is how whole life insurance compares to other investment options:

Whole life insurance vs other investments

Feature Whole Life Insurance Stocks Bonds Real Estate
Market dependency Not dependent on market performance Highly dependent on stock market performance Dependent on interest rate environment Dependent on real estate market conditions
Risk level Low risk High risk, subject to market volatility Low to moderate risk, depends on issuer Moderate to high risk
Cash value  Guaranteed, grows tax-deferred Potential for high returns, but with high volatility Fixed returns, generally lower than stocks Potential for appreciation, but can be unpredictable
Liquidity Moderate, can borrow against or withdraw from cash value High, can sell stocks quickly Moderate, can sell bonds, but may incur penalties Low to moderate, depends on market conditions
Tax implications Cash value grows tax-deferred; death benefit is tax-free Capital gains tax on profits Interest income taxed as ordinary income Capital gains tax on property sales; rental income taxed
Income generation Can borrow against cash value or withdraw for income Dividends, selling stocks Interest payments Rental income or profits from sale
Protection / Guarantee Death benefit is guaranteed No guarantees, subject to market risk Principal and interest typically guaranteed No guarantees, subject to market risk
Ease of Access Accessible via loans or withdrawals, but may reduce benefits Easily accessible, can trade on stock exchanges Accessible but may involve penalties for early withdrawal Low accessibility; selling property takes time

Can you make money on whole life insurance?

Yes, you can make money on a whole life insurance using the cash value and/or the dividends your policy generates. Both cash value and dividends are living benefits and can be accessed in different ways. 

While the cash value is technically a portion of your death benefit, accessing it as a policy loan that you repay will ensure your policy’s value remains intact. You can use your cash value to for any small or large financial needs such as:

  • Medical emergencies
  • Weddings 
  • Children’s education
  • Supplementing retirement income 
  • And more

The dividends can either be reinvested into the policy or taken as cash or deposit. If you take the dividends as cash or deposit, they may be subject to tax. Dividends can be used for similar purposes as cash value. 

Do wealthy people use whole life insurance?

Yes, wealthy people use whole life insurance to grow, protect, and transfer their wealth. The death benefit from a whole life policy is tax-free, making it an ideal inheritance for the wealthy. High-net worth individuals with a whole life policy that has a significant cash value component can use it to invest in their businesses, take out a collateral loan, plan their estates, and more.

Common misconceptions about whole life insurance

Whole life insurance is often misunderstood due to its complex nature and the different investment options it offers. Some of the common misconceptions about whole life insurance are:

  • It is too expensive: The high premiums of a whole life policy include the death benefit and the cash value or dividends. The investment components also grow in a tax-deferred manner, offsetting the high initial premium costs
  • Other investment options are better: Unlike stocks, bonds, mutual funds, and real estate, whole life insurance is not subject to market risks. It is a less volatile investment option
  • Whole life insurance is for the wealthy: This is a common misconception owing to the high premiums. But whole life insurance is for anyone who is looking for lifelong protection with guaranteed returns

How long does it take to build up money in a whole life insurance policy?

A whole life insurance policy typically starts building cash value after a few years, often around the second or third year of the policy. In the early years, most of the premium payments go toward covering the cost of insurance and administrative fees. 

The growth of cash value depends on the policy’s design, premium payments, and investment performance within the insurer’s portfolio. The timeline varies based on the policy structure and premium allocation.  

  • Early years: Some cash value is generated, but most of the premium amount goes towards administrative costs 
  • 3-5 years: Cash value begins accumulating meaningfully
  • 10+ years: Cash value growth accelerates, benefiting from compound interest

Start building wealth with whole life insurance 

A whole life insurance policy is more than just a safety net for your loved ones—it is a versatile financial tool that offers guaranteed growth while you are alive. If you want to build wealth with a whole life policy but are unsure of how to go about it, schedule a call with one of our licensed advisors. 

Build wealth with a whole life policy!

Give us a call at 1-888-601-9980 or book some time with our licensed experts.

Frequently asked questions

How can I use the cash value of my whole life insurance policy to fund my retirement?

The cash value of your whole life policy can supplement your retirement income and help meet immediate financial goals. It can be accessed through loans or withdrawals to maintain your lifestyle post retirement, travel, and more. 

What are the best strategies to create generational wealth with whole life insurance?

Whole life insurance can create generational wealth by providing a guaranteed, tax-free death benefit to your heirs. You can also use it to fund trusts or cover estate taxes, ensuring your assets are passed on intact. Additionally, reinvesting dividends and growing the cash value increases the policy’s long-term financial benefits, securing wealth for future generations.

How does whole life insurance compare to other investment options for wealth building?

Whole life insurance offers guaranteed returns, tax advantages, and lifelong coverage, making it a low-risk, stable component of a diversified financial plan. Unlike stocks or real estate, it is not subject to market volatility and provides a predictable way to build wealth.

Can I use whole life insurance to fund my children’s education expenses?

Yes, the cash value of a whole life insurance policy can be accessed to fund education expenses. You can withdraw or borrow against the cash value to pay for tuition, books, or other costs.

What are the tax implications of borrowing against the cash value of a whole life insurance policy?

Borrowing against the cash value is generally tax-free as long as the policy remains in force. However, if the policy lapses or is surrendered, the loan amount exceeding the adjusted cost basis may become taxable as income. 

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