Par and non-par whole life plans
What whole life is for
Some obligations do not end. Final expenses, a tax liability triggered on death, a payment owed to a business partner, or simply the wish to leave something behind regardless of when you die. Term cannot cover those, because it expires and the risk does not.
Guarantees, in a market with few of them
A whole life policy typically guarantees the premium, the death benefit and a schedule of cash value. Those three do not move. For people who value certainty over return, that combination is the appeal.
Cash value you can use while alive
Value accumulates inside the policy over time and belongs to you. It can generally be borrowed against, and many contracts include an automatic premium loan that draws on it to keep the policy in force if a payment is missed — a useful safety net over a contract that may run fifty years.
Cover that cannot be taken away
Once issued, the policy stands regardless of later changes in your health. For someone whose family history suggests future insurability may be a problem, locking in permanent cover while healthy is the whole argument.
The difference between the two
Participating (par)
Your policy participates in the results of the insurer\’s participating account. Where results allow, the insurer declares a dividend, which you can take as cash, use to reduce premiums, or — most commonly — use to buy additional paid-up insurance, so the death benefit and cash value grow over time.
Dividends are not guaranteed. Illustrations showing decades of projected growth are projections, not promises, and the guaranteed columns are the ones to read first.
Non-participating (non-par)
No dividends and no participation in the insurer\’s results. What you are shown at the outset is what you get: a guaranteed premium, a guaranteed death benefit and a guaranteed cash value schedule. Simpler, more predictable and generally cheaper for the same face amount.
Which suits which purpose
If the policy exists purely to pay a known future cost, non-par usually does the job for less. If it is also intended to build value over decades — estate planning, intergenerational transfer, a corporate holding — par is where that upside lives, provided you understand the projections are not guarantees.
Read the guaranteed column, not the projected one. Whole life illustrations run for decades and show two sets of numbers. The projected figures assume dividend scales that may not hold; the guaranteed figures are what the insurer is contractually bound to. Judge the policy on the guarantees and treat anything above them as upside.
Permanent cover is a long commitment.
These policies can run for fifty years, and the structure matters far more than the first premium. Talk it through with a licensed advisor before signing anything — including whether permanent cover is the right answer at all, which sometimes it is not.
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Whole life questions
Term covers a set period and pays only if you die within it. Permanent cover lasts for life and builds cash value, and costs several times more for the same death benefit. They solve different problems — see term insurance.
No. Participating dividends depend on the insurer’s investment, mortality and expense results. They have been paid consistently by established Canadian insurers for a long time, but past scales are not a promise about future ones.
Generally yes, by policy loan or withdrawal. Both reduce the death benefit while outstanding, and a withdrawal may have tax consequences. It is a useful feature, not a savings account.
Many contracts include an automatic premium loan that pays it from the accumulated cash value, keeping the policy in force. That protects against an oversight, but it draws down value, so it is a safety net rather than a plan.
Often. Limited-pay designs let you pay for a set number of years — ten or twenty — after which the policy is fully paid up and cover continues for life. Premiums are higher while you pay, and many people prefer it for exactly that reason.
Planning an estate, or cover for life?
Call 437-428-2828 and talk it through with a licensed advisor. Mon–Sat, 9am–8pm ET. No obligation, and nobody will push you to buy on the call.
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TrueVisit Insurance Inc. is a licensed insurance agency in Ontario. Information on this site is a summary for general guidance only. Coverage, exclusions and limits are governed by the policy wording issued by the insurer. Premiums shown are estimates based on the details you enter and are confirmed at the time of purchase.