The crediting rate to the account of participating whole life insurance policies equals or exceeds 6% for most insurers’ products in this market. It competes with the variable returns offered by universal life insurance investment options. In contrast, non-participating whole life insurance generally represents a more affordable option than participating whole life.
Tables based on data from InsuranceINTEL, a Canadian insurance product information centre owned by Insurance Journal Publishing Group, highlight a range of permanent insurance product features that illustrate their differences and strengths.
Eighteen insurers offer a total of 28 whole life insurance products, including 15 participating and 13 non-participating. Eleven insurers offer 13 universal life insurance products.
Early cash value
Both types of whole life insurance share the common feature of providing a cash value. The client receives this value in cash if they cancel their policy. They may also access this value while keeping the policy by choosing one of these options:
- Requesting a policy loan from the insurer, which they will need to repay with interest. If they die before paying off the loan, the insurer will substract the amount due plus interest from the death benefit.
- Assigning their cash value to the insurer in exchange for reduced paid-up insurance, which eliminates the need for further premiums.
- Assigning their cash value to the insurer in exchange for an extended term insurance option, also without further premium payments.
When a whole life insurance policy first accrues cash value, this amount then increases annually. InsuranceINTEL data reveal that it often takes at least 10 years for cash value to become available. Some insurers stand out by offering cash value in the early years of the policy.
For participating whole life insurance, Canada Life, Empire Life, iA Financial Group, RBC Insurance, and Sun Life offer cash value as of the first anniversary for certain products. Co-operators Life provides cash value after two years.
For non-participating whole life insurance, only BMO Insurance offers cash value as of the first policy year. Sun Life offers cash value beginning in the third year on its Sun Permanent Life product.
BMO Insurance and Empire Life include their 100-Year Term insurance product in InsuranceINTEL’s non-participating whole life table. A fourth category of permanent life insurance offered in Canada, 100-Year Term, does not provide cash value.
Universal life: In a class of its own
Universal life insurance differs from participating whole life with its capital accumulation fund. The client can select investment options for their excess premiums. Among these options, all insurers offer guaranteed interest accounts and indexed accounts linked to financial market performance.
The product’s base premium covers the cost of insurance, and the client can choose to pay this at a level cost or as a yearly renewable term (YRT) cost.
Whole life: Growth and high premium
In terms of annualized premiums, sales trends favored whole life insurance during the first half of the current year, according to the Canadian Individual Life Insurance Sales Survey for Q2 2024, published by LIMRA. Whole life insurance saw its premiums increase by 8% in the first half of 2024 compared to the first half of 2023. LIMRA’s survey does not differentiate between participating and non-participating whole life insurance.
Thirteen of the 16 LIMRA survey participants reported growth in whole life premiums in the first half of 2024. At the end of this period, whole life insurance premiums totaled $659.4 million.
The LIMRA survey does not reveal sales growth in policy count. Its data indicate that 92,254 whole life insurance policies were sold in the first half of 2024.
The average annual premium per whole life insurance policy sold was $7,148 in the first half of 2024.
Universal life insurance saw its premiums decline by 1% in the first half of 2024, compared to the first half of 2023, amounting to $125.5 million.
In terms of policy count, 56,224 universal life insurance policies were sold in the first half of 2024.
The average annual premium per universal life insurance policy sold in the first half of 2024 was $2,232.
The following insurers participated in the LIMRA survey: Assumption Life, Beneva, BMO Insurance, Canada Life, Co-operators Life, Desjardins Financial Security, Empire Life, Equitable Life, Foresters Financial, iA Financial Group, ivari, Knights of Columbus, Manulife, RBC Insurance, Sun Life, Wawanesa Life.
