You need life insurance.
So you decided to do some research on your own.
Term life insurance is simple to understand but whole life is more complicated.
Some say they would never buy it while others must have it in their portfolio.
We know all this conflicting information might seem a little confusing at first. I will explain the core components of this policy and look at some uses for it.
My team has also posted some quotes so you can get an idea of the price of these policies.
These policies are very customizable. So, we are only including answers to the most common questions our customers have asked.
We hope this will help you make an informed decision when it comes time for you to get coverage.
Whole life insurance is a type of permanent life insurance. It pays a lump sum death benefit upon the death of the insured person. This happens as long as the payor pays the premiums due on the policy.
This type of policy also has a savings component where cash values can build up tax-free. The owner can access the cash while alive, by either withdrawing it or borrowing against it.
This policy is unique because you have little to no control over the investments. The insurance company makes the all the investment decisions for you. Your only responsibility is to pay the premiums due.
To show you how it works what we are going to examine:
- Premium Payment Terms
- Participating Vs Non-Participating Policies
- Common Dividend options
- Cash Values
- Death Benefits
- Whole life scenarios with Sample quotes
Let’s get started!
Premium Payment Terms
Wholelife insurance premiums will stay the same for the life of the insured. Some policies can be set up so that they can be paid-up in a shorter term.
Typical Quick Pay Options
Payment periods can be 8, 10, 20, or 100 years to have the insurance paid up. The term is set in the policy contract when you agree to the terms of the policy.
What does Paid-Up insurance mean?
For a policy to be as paid-up all the payments must have been made and the payer is free of all payment obligations. If paid-up the policy stays intact until the insured's death or termination of the policy.
Participating vs Non-Participating Whole Life Polices
Participating Policies
A participating policy receives dividend payments from the life insurance company. These dividends come from the surplus earnings of the life insurance company
Non-Participating Policies
Non-participating policies do not share in the surplus earnings. So it does not receive a dividend.
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Common Participating Wholelife dividend options.
Paid Up Additions
Dividends buy more participating life insurance on the life or lives insured. This additional participating life insurance earns dividends and cash values and is paid-up.
Enhanced Coverage
Dividends buy one year of term life insurance on the life of the insured up to a maximum. Any excess dividends buy paid-up additions. Term additions do not earn dividends and end one year after being purchased.
Cash Accumulation
Dividends are deposited into an account that will earn interest. Upon death of a life insured the accumulated value is paid to the beneficiary.
Annual Premium Reduction
Dividends pay the next annual premium due on the policy any deficiency is paid by the policy owner.
Cash Payment
Dividend is paid to the policy owner in a single lump sum.
Whole Life Insurance
Cash Values
A whole life policy builds cash values from dividends paid by the insurance company. This dividend is earned when the insurance company’s investments does well and it operates efficiently.
The rate of return you get is composed of a guaranteed part and a non-guaranteed part. The non-guaranteed part fluctuates based on the value of the underlying investments.
The insurance company agrees to the guaranteed part of the rate in the policy contract.
Accessing the cash values:
To use the cash values you can take out a
low-interest loan using the cash value as collateral. When the life insured dies the balance of the loan and any interest charges will be deducted from the death benefit and the rest of the benefit paid to the bes.
If you cancel the policy you are entitled to the cash value in the policy minus any loans or interest owing. You can surrender the entire policy or parts of it depending on the contract terms.
Death Benefit
As long as premiums are up to date or the insurance is paid-up the policy will pay the death benefit. Insurance providers add the coverage amount to the cash values. They minus any outstanding loan balances and interest charges. Any remaining cash value gets added to the death benefit and paid to beneficiaries.
Send us an email with your questions.
Whole life Policy Scenarios
with Sample Quotes
Wholelife for a young child.
Wholelife used for high income earners.
Wholelife used for estate planning.
Wholelife for a young child.
This policy is popular for parents and grandparents who buy it for young children. As the child gets older the premium increases so it is good planning to get it early.
Age | 2 | |
Coverage Amount | $50,000 | |
Payment Term | 20 years | |
Monthly Premium | $76.10 | |
Total Investment | $18,264 | |
Age | Cash Value | Death Benefit |
25 | $24,795 | $145,900 |
40 | $56,500 | $197,500 |
60 | $161,700 | $300,800 |
These illustrations are representative values only intended to provide help in understanding. We want to show you the most popular usage of the policies but each policy is based on their own circumstances. Premiums are representative assuming the displayed age, gender, coverage amount and regular health. Premiums are subject to individual underwriting by the respective insurance companies. Cash and Coverage values for future years are based on the current dividend scale of a Canadian insurer. These values are not guaranteed and are dependent on the value of future dividends.
Dividends may vary based on actual investment experience factors like:
- Mortality
- Expenses
- Lapses
- Claims experience
- Taxes
Please speak to us to get a product illustration tailored to your specific needs. Complete details will be available in the actual policy contract.
Wholelife used for high income earners.
This policy is for people who have high income and can afford higher initial premiums. They are interested in long term savings for retirement with some guarantees.
Age | 30 | |
Coverage Amount | $200,000 | |
Payment Term | 8 Years | |
Monthly (age 28) | $586.00 | |
Total Investment | $56,280 | |
Age | Cash Value | Death Benefit |
50 | $88,600 | $261,471 |
65 | $371,432 | $548,040 |
80 | $428,395 | $552,267 |
These illustrations are representative values only intended to provide help in understanding. We want to show you the most popular usage of the policies but each policy is based on their own circumstances. Premiums are representative assuming the displayed age, gender, coverage amount and regular health. Premiums are subject to individual underwriting by the respective insurance companies. Cash and Coverage values for future years are based on the current dividend scale of a Canadian insurer. These values are not guaranteed and are dependent on the value of future dividends.
Dividends may vary based on actual investment experience factors like:
- Mortality
- Expenses
- Lapses
- Claims experience
- Taxes
Please speak to us to get a product illustration tailored to your specific needs. Complete details will be available in the actual policy contract.
Wholelife used for estate planning.
Individuals who are nearing retirement use this policy as an estate planning tool. The benefit pays taxes and probate fees for people who have a lot of assets. Beneficiaries will not have to liquidate assets to pay assessments.
Age | 55 | |
Coverage Amount | 30,000 | |
Payment Term | Lifetime | |
Monthly Premium | $128.00 | |
Age | Cash Value | Death Benefit |
65 | $7,115 | $34,700 |
75 | $21,600 | $45,300 |
85 | $48,400 | $65,300 |
These illustrations are representative values only intended to provide help in understanding. We want to show you the most popular usage of the policies but each policy is based on their own circumstances. Premiums are representative assuming the displayed age, gender, coverage amount and regular health. Premiums are subject to individual underwriting by the respective insurance companies. Cash and Coverage values for future years are based on the current dividend scale of a Canadian insurer. These values are not guaranteed and are dependent on the value of future dividends.
Dividends may vary based on actual investment experience factors like:
- Mortality
- Expenses
- Lapses
- Claims experience
- Taxes
Please speak to us to get a product illustration tailored to your specific needs. Complete details will be available in the actual policy contract.
Popular Whole Life Providers
Gita Singh Insurance Services
Whole Life Insurance
Whole life insurance has been around for many years.
Changes to the policy over this time have helped it to keep pace with the changing needs of modern clients.
The problem is it has made this policy harder to understand that it needs to be.
So, in this post, we provided you with the answers to our client’s most asked questions about these policies.
We also presented some useful real-life situations where you can use these policies. There are also quotes from popular Canadian insurers so you can have an idea of the cost of this policy.
There are many other features and options that are unique to each provider that are too many to include.
You should understand each part of your policy contract before you accept any insurance offer.
We hope this demystifies the components and application of this policy for you.
We know that choosing a life insurance policy is a personal choice. I invite you to make use of my 35 years of experience to help you make the decision that’s right for you and your family.
