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With life insurance being a crucial part of an effective financial plan, considering the coverage offered by whole life insurance works best for most Canadians. The insurance policy provides financial protection to you and your loved ones for your lifetime provided the policy is kept active.

At the same time, it helps you create wealth that can be accessed when you need it during your lifetime. With every premium paid, the insurance company takes a certain percentage for investment. You can use the investment returns as cash value. The cash value can be used as additional finances to your retirement income or for any other needs you may have

Generally, whole life insurance guarantees tax-free death benefits to your named beneficiaries with the inclusion of a guaranteed saving component in form of cash value. Whole life insurance is the traditional form of permanent insurance, where the insurer takes on both the risk related to death and the underlying investment risk. Although it is the original life insurance policy, it does not equal permanent life insurance.

Unlike term life insurance policy, whole life insurance provides lifetime coverage, its premiums are constant throughout and the death benefits are guaranteed to be paid to your beneficiaries upon your death.

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How does whole life insurance work?

When you decide on the right whole life insurance policy to purchase, you will need to keep your premiums updated. The amount of premiums is fixed and is based on the coverage amount which is determined by age, gender, lifestyle habits, profession, and financial goals. 

The premiums can be paid off monthly, annually, or the entire amount upfront. Each premium paid is divided into life insurance death benefits accumulation and investments in form of cash value. Cash value is an investment component that allows interest to accumulate on a tax-deferred basis. 

To increase cash value, the insured remits paid-up additions. The dividends acquired can be reinvested into the cash value to earn more interest.  The cash value can be accessed through making a withdrawal that amounts to the total paid premiums or requesting a loan against it with interest’s varying per the policyholder. Loans that remain unpaid are deducted from the death benefits. It is important to know that withdrawals reduce the number of death benefits paid to the beneficiary upon your death. 

Upon your death, your named beneficiaries receive the death benefits while the insurance company keeps the remaining cash value.


Term vs Whole Life Insurance compared 

When purchasing life insurance, we are often caught between the battle of which is better. However, the best insurance plan between the two depends on the current financial status, and financial goals. Either of the two could always be the best policy for you. Below is a brief comparison between term life and whole life insurance plans. 


Term Life Whole Life
  • The coverage is offered within a limited period usually 10 years, 20 years, or up to 65 years.
  • The coverage offered has no expiry date, it is for a lifetime. 
  • With each new term, the amount of premiums increases.
  • The guaranteed premiums never increase. 
  • The coverage provides works best for temporary needs such as mortgage coverage, and education fees.
  • The coverage is perfect for permanent planning like estate planning, and retirement liabilities 
  • It only guarantees death benefits in the event that it occurs before the term expiry date 
  • It guarantees a death benefit, alongside cash value that you can  borrow against or withdraw
  • The death benefits are constant throughout the term
  • The death benefits have the potential to grow. 
  • The initial term is characterized by lower premiums
  • Premiums are usually higher and don’t change. 


What are the advantages of a Whole Life Insurance plan 

When you are consistent with your premiums of whole life insurance in Canada, you won’t have to worry about coverage expiry. If you compare the two types of life insurance, term life, and whole life, you will find out that whole life insurance has a number of advantages over term life insurance It all narrows down to your financial state and goals. 

Below are some of the advantages of a whole life insurance policy:


  • Lifetime coverage 

The coverage provided by the plan will never expire provided the premium stays updated. 

  • Guaranteed constant premiums

Premiums do not change through the length of the policy

  • Accessible cash value 

With every premium paid, a portion is set aside as cash value. You can access the cash value by borrowing it or acquiring a bank loan for other liabilities like mortgage and tuition fees against it.

  • Access to Dividends 

When the cash value is invested, the policyholder may acquire dividends that can be used for other purposes or reinvested in the plan to increase overall coverage benefits. 

  • Tax-deferred benefits 

The coverage benefits given to the beneficiaries are tax-free while the growth of the cash is tax-deferred. 

  • Flexible-Premium payment 

The available cash value can be used to pay policy premiums.

  • Access to riders 

When policyholder purchases more riders, they acquire increased coverage for the potential risks like accidents and theft.

 What are the whole life insurance Riders

  • Waiver of premium
  • Accelerated death benefit 
  • Term life rider allows the purchase of more life coverage.
  • Guaranteed purchase option rider 


What is the cost of whole life insurance?

It’s general knowledge that a whole life insurance policy is more expensive as compared to term and other types of life insurance. This is because of the guaranteed death benefits and the availability of cash value. However, the price of whole life insurance depends on a number of things. 

Being a big investment, you have to understand all the factors that contribute to the number of premiums and the amount and type of discounts you may qualify for.  Age is the biggest factor when it comes to the cost of whole life insurance cost. The younger you are, the lower the number of premiums. This is because a younger has more time to make payments before cashing out. 

Another factor is gender. Women tend to acquire lower premiums because statistics state that women live five years longer than men.  When it comes to the lifestyle of the applicant, smoking, risky activities (mountaineering) and profession like motor racing can affect how high your premiums will be. We also have a family medical history as well as your driving record. 

Most insurance service providers customize their plans as per the result of the review and financial needs of the insured. 


How to use Whole Life Insurance?

 People have different needs when it comes to purchasing insurance policies. This is why insurers provide customized plans to ensure every insured meets their needs using an appropriate plan

Guaranteed protection of your dependents 

Whole life insurance can protect your family and their future especially if they depend on you for financial support. Whole life insurance replaces your regular incomes upon your death meaning your dependents won’t suffer. You should also consider that a person will be hired to manage the finances and how they are used.

Inheritance to heirs 

Whether you have other assets or not, you can decide to buy a life insurance policy and name beneficiaries to which the payouts will be made at the time of your death. This is a perfect plan for the insureds who desire to set their kids and loved ones for a solid financial future. 

Payment of outstanding debts and expenses 

Upon your death, your family may not have enough money to pay off outstanding debts like mortgage, credit cards, and loans. There will be also other liabilities and expenses like funeral and burial costs that can drain your loved ones financially. Whole life insurance can be used to reduce this financial burden by catering to all the outstanding debts and expenses. 

Increased financial security 

As a parent with young kids, you want to secure their future by ensuring they have enough finances for lifestyle stability and education when you are gone. Whole life insurance with additional coverage will be the best way to invest in your kids’ future.

Coverage against the uncertainties of life 

We all don’t know about tomorrow and when we will pass away. While no amount of money can replace who and what you are to your loved ones, but inclusive whole life insurance can help provide protection for the uncertainties in life. It could be getting a loan or making a withdrawal of cash value, or catering to the financial needs of your family upon your death. 

Cash value growth 

Whole life insurance allows you to pursue competitive cash value growth that is not subject to market risk. The cash value growth builds at a steady, dependable pace. With cash value, you can complement fixed-income investments in your portfolio, make a withdrawal or acquire a loan against it. 

Acquire Maturity Benefit of Term Insurance 

When term life expires, you are not entitled to any benefits. To avoid losses, you can purchase whole life insurance upon the expiry of your term life insurance policy that will continue to provide coverage for a lifetime. 

This makes whole life insurance long-term insurance plans where you can enjoy a sufficient life cover during your earning years as well as during retirement with a guaranteed death benefit.  You can best use this policy as a lifetime emergency backup plan for yourself and your family.


How much whole life insurance do I need?

The amount of whole life insurance depends on what you intend to use the benefits for and any other available assets. If whole life insurance is your only financial asset, you will need a whole lot more investments. However, if the coverage is for only a couple of life expenses, the amount will be more affordable. 

Nevertheless, it is quite simple to determine how much whole life insurance you will need in Canada. The rule that most people use to calculate the death benefit is multiplying the annual income by at least 8 or at most 10. For a more accurate estimation, take into account any outstanding debts, lifestyle expenses, future education needs for those with children or planning to have children as well as any other financial needs like donations.

Your insurance provider should be able to help you determine the right amount while putting into consideration all your financial status and goals. 


Best whole life insurance companies in Canada

The best whole life insurance companies are those that are experienced, have the knowledge and understanding of the insurance industry. Different companies offer different policies that range from the individual, group, and customized amount of benefits and premiums as per the needs. 

While Canada has a number of trusted insurance companies, Policyhub stands out as the best choice for most Canadians. This is because of their industrial connection with a wide range of investment and insurance companies as well as well-trained and experienced staff that will guide you throughout every step of your coverage. 

How do I get the quotes for disability insurance?

Our transparency and the need to help our customers on sport has made finding whole  life insurance policy quotes simple and instantly. Most compliant insurance service providers have made insurance quotations as easy as a click away.

You can use our online forms or reach out to us via email, and phone number. The quotations can be adjusted as per your financial situation and insurance needs.

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