Which Whole Life Policy is Best?

Posted on November 26, 2013 and updated December 2, 2013 in Life Insurance Canada News 2 min read
LSM helps readers between whole life insurance options
LSM helps readers between
whole life insurance options

Non-participating whole life policies are a form of coverage where there is a guaranteed cash value, but they do not pay out an annual cash dividend. These types of policies mainly have fixed premium rates, but recently, there has been a trend towards adjustable premium rates — with the adjustable premium rates tied to the interest rates.

If interest rates are low, premium levels would either stay the same or go higher. If interest rates go up, premium rates go down. While this can result in lower premium rates than other products, with the current low interest rate trend, consumers are more likely to see rates go up as well. Since most companies do not have a premium cap, there is no fixed limit to how high they can charge.

Participating whole life insurance products are often seen as more of an investment vehicle, because unlike non-participating they pay out an annual dividend as well as having a guaranteed cash value and life insurance.

Like any other financial product, it is important for Canadians to look at purchasing some form of life insurance. Whole life insurance policies offer many benefits well beyond just the death benefit, and they can help protect the financial futures of those who purchase them.

For more details on which whole life insurance policies are best, please contact us at 1-866-899-4849, or visit our whole life insurance quote page
 

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Teri
Teri

Still no answer to my question.

How can you most Whole Life are not sold based on the investment / money back concept.

Advisors sell Whole Life insurance based on the tax sheltering concept and how this money can be used for a rainy or to supplement your retirement. As mentioned The insurance companies themselves push this concept all the time

Syed Raza
Syed Raza

Solid points @Ami. I totally agree with your point on par-whole life dividends really just being over funded premiums being paid back to the policy holder. Carriers make it seem like premium payors are ‘sharing in their positive financial performance’ when really the dividend is simply a partial return of the premiums that were likely too high to begin with. If the dividends are used to buy paid-up additions or taken as cash there’s actually no investment element whatsoever. One good use of this type of policy I’ve seen is quick pay par-whole life with the paid-up addition dividend option… Read more »

Tim D
Tim D

In my years as a life insurance broker, I have yet to meet one person who, after quoting to me the once popular mantra of “buy term and invest the rest,” has actually gone on to invest the rest. In today’s economic interest rate climate, life insurance plans, especially whole life plans, remain at the top for wise investing on behalf of one’s beneficiaries. With all the death benefit claim cheques that I have delivered over the years, I have yet to hear one beneficiary express remorse that the premiums for the policy could have been better used/invested. A whole… Read more »

Ami Maishlish
Ami Maishlish

Frank Z/Teri:

Suze Orman’s recommendations relating to the importance of getting out of debt are worthwhile. However, I seriously question the efficacy of some of the “advice” she dispenses about life insurance. Also, keep in mind that commercial media plays the tune that is ordered by their paymasters. Also see: http://finance.yahoo.com/blogs/daily-ticker/don-t-money-advice-suze-orman-dave-ramsey-122754956.html

LSM Insurance
LSM Insurance

That’s an interesting video – I like the point about wholesale advice for millions of people is not always what it’s cracked up to be.

Frank Z
Frank Z

If you think I’m full of hot air look at Sue Orman http://www.youtube.com/watch?v=WzgtWfQngII enough says on the value of Whole Life Insurance there is no value

Ami Maishlish
Ami Maishlish

For now, I elect to ignore the postings by “Frank Z/Teri”, only to say one thing, and that is that I sincerely hope that consumers are given better and more educated advice then given though the postings by this agent. Moving onto some good news for consumers: As reflected in today’s December 2 update of LifeGuide, Empire Life has, as of today adjusted its premiums on its competitive Hybrid Solution 100 Interest Sensitive Whole Life product, reducing the premiums from the 2%-2.99% table to the 3%-3.99% table. This applies to existing as well as new policies. (see also my point… Read more »

LSM Insurance
LSM Insurance

Thanks for sharing the update on Empire Life.

LSM Insurance
LSM Insurance

@ Frank. Further to one of Ami’s point it’s simply not true that Whole Life policies are insurance companies most profitable products. In general terms Guaranteed Permanent policies are in fact much less profitable and for many companies loss leaders in today’s low interest rate environment.

Teri
Teri

Ami, how can you most Whole Life are not sold based on the investment component.

How many advisors sell Whole Life insurance based on the deferred deferred sheltering concept and how this money can be used for a rainy or to supplement your retirement. The insurance companies themselves push this concept all the time.

Frank Z
Frank Z

Two examples come to mind of where Whole Life policies have been ripping off the public for years One: Norwich Union / AIG / BMO Insurance Whole Life policy based on poor Patrick being sucked in to buy life insurance. Patrick didn’t got a good deal because he was paid to the commercials but everyone else got ripped off Two: The endless slew of companies sued for vanishing premiums and many of these lawsuits are still come. The premiums didn’t vanish but peoples money sure did. Why not buy a 20 year Term pay off your debt and save the… Read more »

Ami Maishlish
Ami Maishlish

To “Frank Z”. I’ve heard the slogan “Buy term and “invest” the difference. That slogan is almost as useful as an umbrella is for SCUBA diving! Even if I was to accept your unsubstantiated claim that whole life plans make insurance companies rich (which is not necessarily so as evidenced, for example by the withdrawal of WL plans by some companies). Could you please pleasure us with your explanation as to why would a for profit business discontinue (what you claim to be) their most profitable product line? Please keep in mind that all life insurance products have cash reserves.… Read more »

Frank Z
Frank Z

Who are you kidding Whole Life plans only make the insurance company company and their brokers rich – buy Term and Investment simple and easy. Don’t make insurance more complicated than it needs to be

Ami Maishlish
Ami Maishlish

Note: In order to follow my comments below, and to establish context, I would suggest that you first read the referenced article in full. Within the context of the article: 1. “Dividends” on “participating” life insurance policies: Please note that “dividends” on life insurance are NOT to be viewed in the same light as dividends on stock or MF investments. “Dividends” on so called “participating” life insurance policies are in fact a return of premium over-payments. Thus, “dividends” on “participating” life insurance policies are akin to “change” that you would receive if you paid for an $18 priced item with… Read more »