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Permanent Life Insurance

In Canada, life insurance policies fall under one of two main categories:

  • Permanent (Whole) Life Insurance and
  • Term Life Insurance

Depending on what your goals and needs are the differences in rates and premiums can be surprisingly wide, and that’s why completing our life insurance quotes form is so useful. Simply answer the few basics questions and instantly you will be provided with life insurance quotes from many of the top life insurance companies in Canada.

Purpose of Permanent Life Insurance

These policies are designed to meet long-term insurance needs for things like:

  • Maintaining family lifestyle for the long-haul
  • Asset and estate protection
  • Saving on taxes
  • Retirement planning
  • Legacy planning
  • Charitable giving

Permanent insurance policies are essentially made up of the following four parts:

  1. Mortality Cost: the pure cost of the life insurance death benefit
  2. Administration Charge: the fee charged for administering the policy
  3. Savings or Investment: the amount left from your deposit after the Mortality Cost and Administrative Charge have been deducted from it. It is also referred to as the ‘cash value’, ‘fund value’, or ‘cash surrender value’
  4. Return on Savings: the amount of interest earned on the savings or investment

Types of Permanent Insurance

  • Whole Life Insurance
  • Universal Life Insurance

Whole Life Insurance

Designed to provide life-long insurance coverage coupled with a savings benefit. It has a level cost of insurance where the costs do not increase each year. What you pay for the first premium is the same as what you will pay for the last premium. However, whole life policies do not disclose the cost of insurance, the administration costs, or how they calculate the returns on the savings portion. You cannot choose where the money is invested and they do not disclose the return you are receiving. These types of policies pay out the amount of money you are insured for and additionally the cash value.

Universal Life Insurance

Designed very much like whole life insurance policies except that the mortality cost and the administrative charges are disclosed to you. You also have a wider range of investments that you can select to have the savings invested in. These types of policies pay out the amount of money you are insured for and additionally the cash value if any.

Purpose of Term Life Insurance

These policies are designed to meet short-term insurance needs for things like:

  • Maintaining family lifestyle or
  • Cover an unexpected sickness or
  • Drop in family income
  • Insuring a mortgage
  • School tuition for the children

The insurance only lasts for a certain period of time (10/20/30 years) and it becomes more expensive as a person ages and eventually is no longer available or affordable.

These types of policies only pay out the amount of money you are insured for.

Types of Term Insurance

  • 10, 15, 20, 25, 30, 35, 40 year terms
  • Available to age 65, 70, 75

Term to 100

Term to 100 provides life insurance coverage to age 100 similar to permanent insurance but has no cash value (whereas permanent insurance does) which makes it a cheaper alternative to permanent insurance.

Generally speaking a term life insurance policy is usually a more cost-effective solution for most people but there are also many occasions when a whole or universal life insurance policy makes much more sense, even though it may cost a bit more. Get yourself a quote to see the cost differences or speak to us, if you would like to get some free unbiased advice from an experienced, independent life insurance professionals.

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All product names, trademarks, and trade names are the property of their respective owners. The Insurance Council (BC, AB, SK, MB), Financial Services Commission (ON), Chambre de la Sécurité Financière (QC), The Superintendent of Insurance (NB, NL, PE, NS) are the provincial and federal authorities that regulate, supervise and enforce standards for life insurance professionals.

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