Term & permanent life insurance, plainly.
Two very different products share the name “life insurance.” Here’s the real difference, how much coverage a family actually needs, and rough premiums by age, explained without the sales pitch.
Everything to know about choosing life insurance
Who it is for
- Anyone choosing between term, whole and universal life
- Families buying a first policy
- People reviewing existing cover
- Business owners looking at estate planning
How it works
- We estimate how much cover you need
- We compare term, whole and universal life for your goals
- We handle the application and underwriting with several insurers
- We review your cover as your life changes
What affects the cost
- Your age, health and tobacco use
- The cover amount
- The type of plan, term or permanent
- Riders and extra benefits you choose
Common mistakes to avoid
- Buying only on price
- Choosing the wrong type for your goal
- Not updating beneficiaries
- Letting a policy lapse
A young family uses term life for a 25 year mortgage and adds a small permanent policy to cover final expenses. Illustration only.
Questions people ask
How much life insurance do I need?
A common starting point is your debts, the income your family would need to replace for a number of years, future costs and final expenses, less savings and existing cover.
Should I choose term or permanent?
Term suits a temporary need such as a mortgage. Permanent suits lifelong needs such as estate planning. Many people use both.
Do I need a medical exam?
Many plans need one, while simplified plans use health questions instead.
Choose your type of life insurance
Term, whole and universal life are three different products. Each has its own page with full details, and a comparison below.
| Term | Whole | Universal | |
|---|---|---|---|
| Coverage period | Fixed term | Whole life | Whole life if funded |
| Premium cost | Lowest | Highest, fixed | Flexible |
| Cash value | None | Guaranteed | Not guaranteed |
| Best for | Mortgage, kids, income | Legacy, estate | Tax sheltered growth, business |
Term vs. permanent, the real difference
Term life insurance covers you for a fixed period, 10, 20, 30 or 40 years, and pays a death benefit only if you pass away during that term. It’s pure protection, with no savings or investment component, which is why it’s the cheapest way to get a large amount of coverage.
Permanent life insurance (whole life or universal life) covers you for your entire life as long as premiums are paid, and typically builds cash value over time that you can borrow against or that grows tax-advantaged. It costs significantly more for the same death benefit, because part of the premium funds that cash value.
| Term | Permanent | |
|---|---|---|
| Coverage length | Fixed term (10 to 40 yrs) | Lifetime |
| Cost for same coverage | Lower | Significantly higher |
| Cash value | None | Builds over time |
| Best for | Income replacement during working/child-raising years | Estate planning, permanent needs, tax-advantaged growth |
How much coverage a family actually needs
A common shortcut is 10× annual income, but that ignores debt, dependents, and existing savings. A more accurate approach adds up what your family would actually need to replace:
- Remaining mortgage & other debts to pay off completely
- Years of income replacement until the youngest child is independent
- Future costs already planned for, education, a child’s wedding, elder care
- Final expenses, funeral costs typically run $10,000 to $20,000
- Minus existing savings, investments, and any workplace life insurance already in place
For most working parents with a mortgage and young children, this adds up to somewhere between 8× and 12× annual income, but the honest answer is specific to each household’s numbers, not a rule of thumb.
Estimate your coverage need
Quick coverage calculator
A starting point for the conversation, not a substitute for a full needs analysis.
A simplified illustration for education only. It does not account for inflation, specific tax treatment, or a household’s full financial picture, a proper needs analysis considers all of these.
Life Insurance Needs Calculator
Go beyond the quick estimate above: add up immediate cash needs, ongoing income needs and existing coverage to see your full protection gap.
Riders worth knowing about
| Rider | What it adds |
|---|---|
| Critical illness rider | A lump sum if diagnosed with a covered serious illness, paid while still alive |
| Waiver of premium | Premiums are waived if you become disabled and can’t work |
| Guaranteed insurability | Right to buy more coverage later without new medical underwriting |
| Convertibility | Right to convert term coverage to permanent later without new health questions |
Convertibility is especially worth understanding upfront, it’s often the cheapest way to eventually add a permanent policy if health changes later make new coverage hard to qualify for.
The mistakes we see most
- Relying only on workplace group life insurance, which usually ends the day employment does
- Buying coverage based on a rough multiple of income without accounting for debt or dependents
- Waiting for a “better time” while premiums quietly rise with age each year
- Not disclosing health history accurately, this can void a claim when the family needs it most
- Letting a term policy lapse right before it would have converted to permanent coverage
Want an actual needs analysis, not a rule of thumb?
MS Insurance Inc. builds a coverage recommendation from your real numbers, income, debt, dependents, and existing coverage, and compares term and permanent options across carriers.
Frequently asked
Can I have both term and permanent insurance?
Yes, many people layer a large term policy for the high-need years (young kids, mortgage) with a smaller permanent policy for lifelong needs like final expenses or estate planning.
What happens if I outlive my term policy?
Coverage simply ends at the end of the term unless you renew (usually at a much higher rate reflecting your current age) or had a convertibility rider allowing a switch to permanent coverage beforehand.
Do I need a medical exam to qualify?
Often yes for larger amounts of coverage, though simplified-issue and no-medical-exam policies exist for smaller amounts or specific health situations, typically at a higher premium for the same coverage.
Is the death benefit taxable in Canada?
Generally no, life insurance death benefits are paid out tax-free to beneficiaries in Canada, which is part of why it’s an effective estate-planning tool.
How is permanent insurance’s cash value different from a TFSA or RRSP?
Cash value inside a permanent policy grows tax-advantaged and is tied to the insurance contract itself, with its own rules for accessing it (loans or withdrawals against the policy), rather than being a separate, freely accessible investment account.