Good for you (and your family), you’ve decided that you’re ready to invest in a life insurance plan…but what is the difference between permanent/whole life and term life insurance, and how do you know which is right for you? There are distinct benefits to both whole life insurance and term life insurance plans. Before you make your selection, you should consider your current and potential future dependents, income, and savings.
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What is Term Life Insurance?
Term life insurance is less expensive than whole life insurance, as it only covers the insured for a set period of time (i.e. the term). Generally, protection is provided in 10 or 20-year terms, with some plans remaining in effect until age 100.
Once the selected term has ended, the policyholder must forgo coverage or potentially obtain new coverage, likely with different payments or conditions. However, many companies, like Canada Protection Plan offer term life insurance plans that may be renewed for additional terms.
Term life insurance is used primarily for income replacement in the event of the death of the insured. For example, a person may choose to purchase term insurance that expires near retirement age, working under the assumption that by the time they’re ready to retire, the individual would have the financial means to provide for their dependents when they pass on.
What is Whole Life Insurance (Permanent Life Insurance)?
Whole life insurance (also known as permanent life insurance) covers the insured for their lifetime, with a benefit paid out upon the policyholder’s death. Once an individual purchases a whole life insurance plan, premiums are generally paid every year into the policy, as the policy remains in effect for their entire life. However, Canada Protection Plan has whole life insurance plans that allow premiums to be paid over 20 years, or to age 100.
Because the insurance benefit is guaranteed upon the death of the policyholder, whole life insurance policies are often used in estate planning, or by those who wish to make a significant donation to charity after their death. Since the insured can be confident that their beneficiary will receive payment after they pass on, whole life insurance allows the policyholder to use other assets during their lifetime without having to worry about the financial security of their dependents.
What are the Benefits of Whole and Term Life Insurance?
Understanding the difference between whole and term life insurance is the first step towards securing a best-fit life insurance plan that safeguards your family well into the future.
The good news? Both are good options when deciding between life insurance plans. Whether you elect to purchase a term or whole life insurance plan, you can be assured that in the event of your passing, your loved ones will be provided with tax-free benefits to assist them with financial obligations such as:
- Education Costs or Debts
- Mortgage Responsibilities
- Ongoing living expenses
As part of your life insurance plan, you may also be eligible for a variety of exclusive member benefits! These benefits provide you with additional peace of mind when purchasing your life insurance plan to help improve the lives and well-being of our members. Check out our comprehensive guide to learn more about each benefit and the eligibility requirements.
What is the Difference Between Whole and Term Life Insurance Rates?
Premiums for term life insurance tend to be cheaper, as they are providing coverage for a temporary period of time (the term length). Whole life insurance plans, in contrast, will typically demand a higher premium, but provide lifetime coverage.
For a cost comparison of your options for whole and term life insurance, use our easy Quick Quote tool.
Term Life Insurance and Whole Life Insurance Plans with Canada Protection Plan
As a leading provider of No Medical life insurance plans, Canada Protection Plan has a variety of term and whole life insurance policies designed to meet the needs of all Canadians, as well as non-residents with a valid work or study permit – including those who are hard to insure, or have a fear of medical exams or needles. Whether you choose term or whole life insurance, all Canada Protection Plan life insurance plans include a 10-day money-back guarantee. Plus, all benefits are tax-free in Canada.
