Non-participating whole life insurance is a policy that provides lifetime protection and guarantees premiums, offering stability over speculation. This guide explains everything you need to know about non-par whole life insurance, including how it works, its costs and benefits, and the top insurance companies offering it in Canada.
What is Non-Participating Life Insurance?
Non-participating whole life insurance, also known as non-par whole life or standard whole life, is a type of permanent life insurance that provides lifelong coverage for the insured, provided premiums are paid as scheduled.
The key term is “non-participating,“ which means that, as a policyholder, you do not share in the insurance company’s profits. You are not paid dividends. In exchange, you get a guaranteed death benefit, lower and guaranteed level premiums, and a guaranteed schedule of cash value growth, all in exchange for not receiving dividends.
Key Benefits of Non-Par Whole Life Insurance
Non-par insurance is built on three powerful promises:
- Guaranteed Lifelong Death Benefit: As long as you pay your premiums, the death benefit is guaranteed to be paid out to your beneficiaries, tax-free. It will not decrease or expire, providing permanent protection.
- Guaranteed Level Premiums: The amount you pay for your policy is locked in on day one and will never increase. This provides budget certainty for the rest of your life, regardless of changes in your health or market conditions.
- Guaranteed Cash Value Growth: A portion of your premium contributes to a cash value component within the policy. The insurer provides a contractually guaranteed schedule showing exactly how much cash value you will have in any given year. This growth is tax-deferred.
All these features make non-par life insurance very suitable for estate planning, business insurance needs, and financial stability.
How the Cash Value in Non-Par Insurance Works
A portion of your premium payment goes toward the pure cost of insurance, and the insurance company invests the rest in its conservative, long-term portfolio. They are contractually obligated to credit your policy with a minimum, pre-determined amount. This is how they can guarantee the growth of the cash value.
After a number of years (often around 10), the accumulated cash value becomes a liquid asset you can access in several ways:
- Policy Loan: You can borrow against your cash value. This is a loan from the insurer secured by your policy. You will be charged interest, but the loan is typically not considered taxable income by the CRA. Any outstanding loan balance reduces the death benefit until it is repaid.
- Withdrawal/Surrender: You can withdraw a portion of the cash value or surrender the policy entirely for its cash surrender value. This can have tax consequences. If the amount you receive exceeds the policy’s Adjusted Cost Basis (ACB), essentially, the total premiums paid minus the net cost of pure insurance, the gain is taxable as income.
- Reduced Paid-Up Insurance: If you no longer wish to pay premiums, you can use the accumulated cash value to purchase a smaller, fully paid-up whole life policy. You can keep a smaller death benefit for life, with no further payments.
Who is Non-Participating Whole Life Best Suited for?
Based on its benefits and how it works, here are the types of individuals and businesses that are best suited for non-par whole life insurance:
Those Seeking Permanent Estate Protection
Non-par whole life is ideal for permanent estate liquidity, final expense coverage, or legacy protection. It provides funds to cover costs and taxes and leaves an inheritance.
Business Owners
Business owners can benefit from buy-sell arrangements, key person insurance, creditor protection, and continuity planning. It covers business risks.
Conservative Investors
Individuals who prefer guarantees over potentially higher but volatile returns from investments may favour non-par whole life insurance due to its stability.
Younger Buyers
Younger buyers can lock in permanent coverage early in life by purchasing non-par whole life insurance policies at lower premium rates.
Retirees Needing Income
Retirees may utilize policy loans and withdrawals from accumulated cash values to supplement retirement income tax-efficiently.
Charitable Donors
Donors can leverage non-par whole life insurance to leave a lasting legacy gift for a charitable organization or cause.
In summary, non-participating whole life insurance is most suitable for individuals and business owners seeking permanent protection, guaranteed stability, tax-advantaged supplemental retirement income, or robust estate planning.
What Does Non-Par Whole Life Insurance Cost?
The premiums for non-participating whole life insurance depend on 5 key factors:
Age and Gender: Younger applicants pay significantly less. Females generally pay less than males due to longer life expectancies.
Health Status: Applicants in good health with no medical conditions pay lower premiums than those with chronic illnesses. Positive lifestyle factors also help lower costs.
Coverage Amount: Due to economies of scale, policies with higher death benefit amounts qualify for pricing discounts and lower premium costs per $1,000 of coverage.
Payment Period: You can choose to pay for life (“Life Pay” or “Pay-to-100”) or over a shorter, fixed period (e.g., 10 or 20 years), after which the policy is fully paid-up. A 20-pay option will have higher annual premiums but a shorter payment duration.
Non-participating life insurance premiums are generally lower than participating life policies for equivalent coverage amounts and insureds. Term life insurance typically has significantly lower premiums than non-par whole life insurance, but it does not provide permanent lifetime coverage. Working with a licensed life insurance agent can help analyze your situation, budget, and needs and recommend the best product.
Comparing Non-Par vs. Other Life Insurance Types
Besides the two main types of whole life insurance (par and non-par), there are also universal life and term life to consider. Here is an overview of how they differ:
| Feature | Non-Participating Whole Life | Participating Whole Life | Universal Life | Term Life |
| Premiums | Guaranteed & Level | Higher, but can be offset by dividends | Flexible (minimum & maximums) | Lowest cost, increases at renewal |
| Cash Value | Guaranteed growth schedule | Guaranteed base + potential dividends | Tied to investment performance; not guaranteed | None |
| Best For | Certainty, estate planning, predictable costs | Long-term growth potential, higher risk tolerance | Flexibility in payments & investments | Temporary needs (mortgage, income replacement) |
| Key Trait | Guaranteed Stability | Growth Potential | Flexibility | Affordability |
In short, participating in a whole life policy offers potential dividend upside, while non-participating in a whole life policy offers lower guaranteed premiums. When choosing between the two policy types, consider your budget, your preference for guarantees, and the dividend tax implications.
Leading Non-Par Whole Life Insurance Providers in Canada
Here are 4 of the top life insurance companies in Canada offering competitive, non-participating permanent life insurance products:
Foresters Financial
Key Products:
- Non-Par Whole Life: Offers 20-pay and pay-to-100 premium options with guaranteed cash value.
- Available Riders: Term 10, 20, and 30 years can be added to the base plan.
Foresters non-par whole life insurance provides lifetime coverage, guaranteed premiums, and tax-deferred cash value accumulation. It offers preferred underwriting classes and discounts for higher coverage amounts. The minimum face amount is $50,000, and the maximum is $5,000,000.
Full review: Foresters Financial Life Insurance
Empire Life
Key Products:
- Solution 100: Permanent coverage with guaranteed premiums, death benefits, and cash values.
- Term to 100: Lower-cost permanent option without cash value.
Empire Life’s non-par permanent life insurance products provide lifetime protection for Canadians needing estate planning and legacy solutions. Solution 100 offers guaranteed cash values starting in year 10. Term to 100 is a more affordable product with no cash accumulation.
Full review: Empire Life Insurance Review
Sun Life Financial
Key Products:
- SunSpectrum Permanent Life II: Get coverage up to $25 million, Lifelong protection with cash value.
- Sun Life Go Guaranteed Life Insurance: Get coverage up to $25,000, no cash value, Guaranteed life insurance with no medical questions.
Sun Life Financial is a leading provider of non-participating permanent life insurance solutions in Canada. SunSpectrum Permanent Life II and Sun Life Go Guaranteed Life are ideal for Canadians seeking permanent, non-participating whole life insurance with cash value accumulation from a reputable top insurer. Sun Life’s non-par products provide lifelong guaranteed protection for estate planning, business insurance, and financial stability needs.
Full review: Sun Life Insurance Canada
iA Financial Group
Key Products:
- Whole Life Insurance: Offers L10, L20, L65, L100, and T100 non-participating permanent life insurance options.
- Child Life & Health Duo: Hybrid whole life and term critical illness coverage for children.
- Life and Serenity 65: Whole life coverage with additional benefits for loss of independence at age 65+.
iA Financial Group provides Canadians with various non-participating whole life insurance solutions. Their products offer lifetime protection with guaranteed premiums, death benefits, and cash values (except T100). Unique offerings like Child Life & Health Duo and Life and Serenity 65 provide combination benefits.
iA Financial Group’s non-par whole life plans are helpful for estate planning, leaving a legacy, income supplementation, and business insurance needs. They provide predictable costs and lifelong guarantees. The minimum face amount is $10,000, and the maximum is $10 million.
Full review: iA Financial Group
When comparing non-par whole life insurance providers, evaluate premium costs, cash value accumulation details, ratings for financial strength, available riders to customize coverage, and overall customer service levels. An experienced insurance advisor can help narrow down the best non-participating whole life insurance product for your specific financial situation and needs.
Key Questions to Ask Your Advisor Before Purchasing
When you meet with a licensed insurance advisor, you are in the driver’s seat. Use these questions to ensure you get the right policy:
- Can you show me an illustration for a 20-pay policy versus a pay-to-100 policy? I want to see the difference in premiums and long-term value.
- What is the guaranteed cash surrender value in year 10, year 20, and at age 65?
- What is the current interest rate you charge for policy loans? Is it fixed or variable?
- Can you run a comparison showing this non-par policy versus a participating policy from the same company?
- What happens if I can’t make a premium payment? Does the policy include an Automatic Premium Loan feature?
- Based on my goals, why are you recommending this specific product over Universal Life or another option?
The Bottom Line
Non-participating whole life insurance is not an investment designed for high growth, but an attractive option for estate planning, conservative investing, business insurance needs, and Canadians who prioritize stability. The key is to work with a qualified advisor to determine if its unique benefits align with your specific, long-term financial needs.
FAQs on Non-Participating Whole Life Insurance
What are the cash value options with non-par whole life insurance?
Accumulated cash value can be accessed via policy loans, withdrawals (up to surrender value), or being used to purchase reduced paid-up insurance with no more premiums due.
Is the death benefit of non-participating whole life insurance guaranteed?
Yes, the death benefit is guaranteed for life, provided premiums continue being paid as scheduled. It does not expire or change as long as the policy stays in force.
Can the premiums for non-par whole life insurance increase?
No, premiums are fixed and guaranteed at the time of purchase. As long as premiums are paid on time, the insurance company cannot increase premiums.
When do non-participating whole life insurance benefits start?
The death benefit protection starts immediately at policy issue. Cash values and reduced paid-up benefits start accumulating after a set period, usually 10 years.
Is non-par a good way to save for retirement?
It can be part of a retirement plan, but it should not replace traditional tools such as RRSPs and TFSAs. Its primary purpose is insurance protection, with the cash value serving as a conservative, tax-advantaged savings vehicle, best used after other registered accounts are maximized.
