Some permanent life insurance plans also come with a cash value, a tax-preferred savings portion. Borrowing or withdrawing funds from your cash value may reduce your policy’s death benefit.
Last updated : March 21, 2024
What is permanent life insurance?
It’s a type of life insurance that gives you lifelong coverage to protect your loved ones. This means that your coverage never expires, no matter your age, health, or history. Your loved ones are guaranteed a death benefit whenever you pass away, provided you’ve paid your premiums. And over time, your policy can grow in value too.
Benefits of permanent life insurance
Cash value
Lifelong coverage
You’ll get lifetime insurance that never expires.
Tax-free death benefit
Your beneficiaries get the money from the death benefit to use in any way they want.
Premiums that won’t change
Most permanent life insurance premiums don’t increase from the time you first buy the policy. And some permanent insurance plans guarantee that you’ll only pay the premiums for a limited time.
What is permanent life insurance?
Simply put, all life insurance is designed to provide your loved ones with financial security when you die.
One of the most common types of life insurance is called permanent life insurance. It’s called “permanent,” because it covers you for as long as you live.
How does permanent life insurance work?
It provides coverage for your entire life.
With most permanent plans, your premiums (monthly or annual payments) remain the same, regardless of any changes to your health as you age. And, your beneficiaries will get a tax-free death benefit after you die.
The death benefit refers to the amount of money your beneficiaries get when you die. You can name your family or anyone you want as your beneficiaries.
Beneficiaries are the people or person you want to financially protect. The exact amount of money they get after you die depends on:
- how much life insurance coverage you buy, and
- the type of policy you have.
They can then use that money as they wish. For example, they can use it to cover the cost of:
- debts,
- mortgage or rent,
- child care,
- tuition,
- living essentials, and more.
Most permanent insurance policies also include a feature called cash value.
Cash value is a savings component that can grow over time. You can borrow against it or use it as collateral for a loan. You may also withdraw your cash value, but this may reduce your policy’s death benefit. There can also be tax consequences to accessing your policy cash value.
What’s the advantage of permanent life insurance?
As you age, or if your health deteriorates, purchasing a new insurance plan becomes much more costly. But with most permanent insurance, the premium stays the same for the life of your policy.
Plus, when you buy a permanent life insurance policy, the benefit is guaranteed for the rest of your life.
Permanent life insurance can provide you with the security of knowing your loved ones will have lasting, stable protection. It can offer peace of mind early, leaving you free to enjoy your life now.
For more tips and tools, visit sunlife.ca.
What are the different types of permanent life insurance?
There are 3 types of permanent life insurance plans: whole life insurance, universal life insurance and participating life insurance.
Each plan comes with unique features to meet your specific needs. Here they are at a glance:
| Features | Whole life insurance |
Universal life insurance |
Participating life insurance |
|---|---|---|---|
| Lifelong coverage | |||
| Tax-free death benefit | |||
| Chance to grow cash value | |||
| Premiums | Fixed | Greatest payment flexibility | Some payment flexibility |
| Option to grow savings on a tax-preferred basis | |||
| Choice of investment options based on your risk profile | |||
| Opportunity to earn policy dividends | |||
| More details | Learn about whole life insurance | Learn about universal life insurance | Learn about participating life insurance |
Get permanent life insurance
Find an advisor
Not sure what type of insurance you need? A Sun Life advisor can help you figure it out and can provide you with a customized quote.
Enter your postal code to connect with an advisor near you.
Buy permanent life insurance online
Looking for coverage up to $25,000? Then check out Sun Life Go Guaranteed Life Insurance. It’s a permanent life insurance plan you can get without having to provide any medical details.
You won’t need to answer any health questions or take any medical exams and are guaranteed to qualify regardless of your current health condition.
How much life insurance do you need?
Calculate how much life insurance you might need to help protect the people you love if you die.
Frequently Asked Questions
How does permanent life insurance work in Canada?
In Canada, permanent life insurance gives you coverage all throughout your life. Your beneficiaries will get a tax-free payment after you die. Some of our permanent life insurance policies can also help you build up a cash value.
How does cash value work in a permanent life insurance policy?
Cash value is a savings portion within your policy that earns interest. You can borrow or withdraw from it. But there may be tax implications if you withdraw or borrow from your cash value.
Can I get a quote online for permanent life insurance?
You can get a quote online for up to $25,000 with Sun Life Go Guaranteed Life Insurance.
Get a permanent life insurance quote
For life insurance policy that provides more than $25,000 in coverage, you can connect with an advisor to get a quote and apply.
How old do I have to be to apply for permanent life insurance in Canada?
Canadian residents can apply for permanent life insurance at age 16 (unless you live in Quebec).
Anyone under age 16 can still be named as an “insured person” under a policy. But the policy owner must be at least age 16 (unless you live in Quebec).
For example, a parent can buy a policy for their children.
What’s the difference between permanent and term life insurance?
The main difference is that permanent life insurance offers lifelong insurance coverage. Term insurance covers you for a specific number of years (e.g., 10, 15, 20, or 30 years).
Both term and permanent life insurance will give your beneficiaries a payment after you die. But with a term policy, your beneficiaries won’t receive any money if you die after your term policy expires.
Learn more about the differences between term and permanent life insurance
When can you take cash out of a permanent life insurance policy?
You have three options to take cash out of your permanent life insurance policy:
- Cancel your policy and receive any cash value, if any. Your life insurance coverage will end, and some or all the money you receive may be subject to tax.
- Withdraw part of your cash value at any time. This may reduce your policy’s death benefit meaning there will be less money for your beneficiaries after you die. There can also be tax consequences if you access your policy’s cash value.
- Borrowing against your cash value. If you take out a loan against your cash value, interest will be charged. You can repay the loan at any time. If you don’t, the loan amount plus interest will be deducted from the death benefit at the time of death.
Does permanent life insurance expire?
No, a permanent life insurance policy doesn’t expire and will last your entire life as long as your premiums are paid.
How long do you have to pay for permanent life insurance?
It depends on the type of permanent life insurance policy you get. Some policies give you the option to pay for life (age 100). Other policies require you to pay premiums only for a specific amount of time.
Will my premiums remain the same as I age?
With most types of permanent life insurance, your premiums are guaranteed to remain the same throughout your life.
Will I have to answer questions about my health when I apply for permanent life insurance?
Most of our permanent life insurance plans require you to answer health questions and provide medical information.
The only exception is Sun Life Go Guaranteed Life Insurance, which is a ‘no medical’ life insurance – this means you won’t have to answer any health questions.
Will I have to go through underwriting when I apply for permanent life insurance?
Most of our permanent life insurance plans require you to go through insurance underwriting, excluding Sun Life Go Guaranteed Life Insurance. There’s no underwriting or medical questions asked when applying for this product.
Submit a claim
Get step-by-step instructions on how to submit an insurance claim.
Register for my Sun Life
Already have a Sun Life product? Set up your online account by registering for my Sun Life.
Additional resources
Is permanent life insurance right for you?
Looking for financial protection for the people who depend on you that will last as long as you live?
Term vs. Permanent Insurance: What’s the difference?
Find out what’s right for you. Connect with an advisor to discuss all your options or get a quote for select products.
4 different types of life insurance explained (video)
What’s the difference between term, permanent, participating and universal life insurance policies?