Key takeaway
Term life provides a death benefit for a set period (e.g. 10, 20, or 30 years) at lower premiums; it has no cash value and expires at the end of the term. Whole life provides a death benefit for life and can build cash value; premiums are much higher. Most Canadians choose term for family and mortgage protection; whole life is often used for estate planning or when permanent coverage and cash value are desired.
Term life insurance in brief
Term life pays a death benefit only if you die during the term (e.g. 20 years). Premiums are level for the term and generally much lower than whole life for the same death benefit. There is no cash value; when the term ends, coverage ends unless you renew (at much higher rates) or convert (if the policy allows). It’s well suited to temporary needs: mortgage, children, income replacement during working years.
Whole life insurance in brief
Whole life lasts for your entire life as long as premiums are paid. Part of the premium can build cash value. Premiums are significantly higher than term — often 5–10× for the same initial death benefit. Whole life is used when someone wants lifetime coverage, cash value growth, or estate planning (e.g. tax-free death benefit, CDA for corporations).
Cost comparison
A healthy 35-year-old might pay about $30–$45/month for $500,000 of 20-year term. The same person might pay $250–$400/month or more for $500,000 of whole life. The gap reflects lifetime coverage and cash value in whole life. For most families, term delivers the needed death benefit at a fraction of the cost.
When to choose term vs whole life
Choose term when you need coverage for a set period (e.g. until the mortgage is paid or children are independent) and want the lowest premium. Choose whole life when you need coverage for life, want cash value, or have specific estate or business planning needs and understand the higher cost.
You can also combine both: term for the bulk of your needs and a smaller whole life policy for permanent needs.
Frequently asked questions
What is the main difference between term and whole life?
Term covers you for a fixed period and has no cash value; whole life covers you for life and can build cash value. Term is much cheaper for the same death benefit.
Is whole life better than term life?
It depends. For temporary needs (mortgage, kids), term is usually better value. For lifetime coverage and cash value, whole life can be appropriate if you’re willing to pay the higher premiums.
Can I convert term to whole life?
Many term policies include a conversion privilege that lets you switch to permanent coverage without new underwriting. Check your contract for the conversion window and eligible products.
How much more is whole life than term?
For the same death benefit, whole life premiums are often 5–10× term premiums. Exact multiples depend on age, health, and product design.