Permanent life insurance

Permanent life insurance covers you for your whole life, as long as premiums are paid, and pays a tax-free lump sum to the people you name whenever you die. On most plans, part of each premium pays for the coverage and the rest builds cash value you can borrow against or withdraw. You choose whether to pay for a set number of years or for life.

A child can be insured from shortly after birth, with an adult, such as a parent or grandparent, owning the policy. In most provinces, a young person can own a policy on their own life from age 16.

Permanent life insurance lasts your whole life, while term insurance lasts a set period, such as 10, 20 or 30 years, or to age 65 or 85. Both pay a death benefit, but term insurance pays only if you die during the term.

On participating whole life, cash value grows through guaranteed values plus any dividends. On universal life, it grows with the investments you choose. Term to 100 builds none. You can borrow against the cash value or withdraw from it, though either can reduce the death benefit. You can also cancel the policy and take its cash surrender value, but your coverage ends. Using your cash value may be taxable, so speak with us before you decide.

No. Permanent life insurance covers you for your whole life, as long as premiums are paid. With universal life, coverage lasts as long as the account inside the policy can cover the monthly cost of insurance and fees.

It depends on the plan. You can pay for life, or for a set period, such as 10, 15 or 20 years or to age 65, after which the policy is paid up and your coverage continues for life. With universal life, you can adjust what you pay, within limits, as long as the account covers the monthly cost. On participating plans, dividends may eventually cover the premiums, but that isn’t guaranteed.

Usually not. On most permanent life insurance, the premium is set when you buy the policy and stays the same for as long as you pay it. The exception is universal life with a yearly increasing cost of insurance: the monthly cost rises as you age, so your account, or what you pay in, has to keep up.

Yes, for most plans. You answer questions about your health and lifestyle, and for larger amounts the insurer may also ask for a medical exam, blood tests or a report from your doctor. This is called underwriting, and it decides whether you’re offered coverage and at what premium. Guaranteed issue plans ask no health questions, but they offer smaller amounts at a higher cost.