Ben Nguyen 
Non-participating whole life insurance, also known as non-par whole life or standard whole life, is a permanent form of life insurance that provides lifetime protection along with guaranteed premiums and values. Policyholders do not receive dividends, resulting in lower premiums than participation in whole-life policies.
Non-par whole life insurance is ideal for Canadians looking for permanent estate planning, business insurance, or legacy protection. Leading insurance providers like Foresters Financial, Empire Life, Sun Life Financial, and others offer competitive, non-participating permanent life insurance products in the Canadian market.
This guide of Lifebuzz will explain everything you need to know about non-par whole life insurance, including how it works, its costs and benefits, and some of the top insurance companies offering it in Canada.
What is Non-Participating Whole Life Insurance?
Non-participating whole life insurance is a permanent life insurance policy that provides lifelong coverage for the insured, provided premiums are paid as scheduled. Here are the key features of non-par whole life insurance:
- Lifelong Coverage: The death benefit and insurance coverage are guaranteed for the insured’s life as long as premiums continue to be paid. Compared to term insurance, lifelong coverage provides permanent protection.
- Level Premiums: Premium amounts are fixed, guaranteed, and remain level throughout the policy’s duration, guaranteeing the predictability of long-term costs.
- Guaranteed Values: Non-par whole life policies accumulate a cash value, which is accessible through policy loans, withdrawals, or reduced paid-up insurance. The insurance company guarantees the cash value and reduced paid-up amounts.
- No Dividends: Non-par whole life policies do not pay dividends to policyholders, distinguishing them from participating whole life plans. The lack of dividends allows for lower premiums.
- Strong Estate Planning Tool: An effective way to provide tax-free funds to cover estate taxes, expenses, funeral costs and to transfer wealth to heirs.
- Business Insurance: Useful for business buy-sell agreements, key person insurance, creditor protection, and employee benefits.
- Death Benefit Payout: The guaranteed death benefit passes directly to beneficiaries, avoiding probate.
In summary, the defining features of non-participating permanent life insurance are guaranteed lifetime coverage, level premiums, accumulated cash value, and no dividends paid out. This makes it very suitable for estate planning, business insurance needs, and financial stability.
How Does Non-Par Whole Life Insurance Work?
With non-participating whole life insurance, the policyholder pays a guaranteed level premium each year for life, and the insurance company guarantees a fixed death benefit amount for the insured’s life. Here is an overview of how non-par whole life insurance works:
- Premium Payments: A portion of the annual premium covers the actual insurance cost. The remaining amount gets invested by the insurance company to build cash value.
- Cash Value Accumulation: The cash value grows on a tax-deferred basis and is guaranteed by the insurance company based on an assumed interest rate. Market fluctuations do not impact it.
- Accessing Cash Value: After a certain period, such as 10 years, the built-up cash value can be accessed via policy loans, withdrawals, or reduced paid-up insurance.
- Policy Loans: The accumulated cash value can be borrowed against, subject to interest charges set by the insurance company. Loans reduce the death benefit until repaid.
- Withdrawals: Cash can be withdrawn up to the amount of the surrender value. This reduces the death benefit dollar for dollar. Surrender charges may apply.
- Reduced Paid-Up Insurance: The option to stop premium payments in exchange for a reduced amount of paid-up whole life insurance. The death benefit is reduced accordingly.
- Death Benefit Payout: Upon the insured’s death, the designated beneficiaries receive the guaranteed death benefit amount, bypassing probate.
The cash value and reduced paid-up insurance become accessible after a specific period, usually around 10 years. The insurance company determines the guaranteed cash values and reduced paid-up insurance amounts.
What are the Benefits of Non-Par Whole Life Insurance?
Here are 9 of the main benefits of non-participating permanent life insurance:
Lifelong Protection
The primary advantage of non-par whole life insurance is its lifelong protection. The death benefit continues for the insured’s entire life as long as premiums are paid as scheduled, ensuring permanent coverage.
Guaranteed Premiums
Premium amounts are fixed and guaranteed for the duration of the policy. They will never increase, offering stability and predictability for the long term. This allows policyholders to lock in a low premium for life.
Tax-Advantaged Cash Value Accumulation
The cash value builds up tax-deferred and can be accessed income tax-free through policy loans and withdrawals. Thus, policy loans and withdrawals may be more tax-efficient than taxable investment accounts.
Available for Policy Loans
The policy’s accumulated cash value can be borrowed in times of financial need. This provides access to funds without having to liquidate other assets.
Reduced Paid-Up Insurance Option
There is the option to stop paying premiums in exchange for a reduced amount of paid-up whole life insurance. This allows policyholders to maintain some coverage without ongoing premium payments.
Avoids Probate
The death benefit passes directly to named beneficiaries without going through probate. This provides faster access to funds compared to assets left in a will.
Supplements Retirement Income
Through policy loans and withdrawals, the cash value can be used tax-efficiently to supplement retirement income, helping offset losses in other investments.
Strong Estate Planning Tool
Non-par whole life insurance can provide income and inheritance tax-free funds to cover estate taxes, expenses, debts, funeral costs, charitable gifts, and wealth transfers to heirs.
Protects Business Interests
It is helpful for business owners to use for buy-sell funding, key person insurance, creditor protection, employee benefits, and continuity planning.
In summary, non-participating whole life insurance provides permanent, guaranteed protection and tax-advantaged cash value accumulation that can supplement income and cover business needs.
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 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 strong estate planning solutions.
What Does Non-Par Whole Life Insurance Cost?
The premiums for non-participating whole life insurance depend on 5 key factors:
Age of the Insured
Premiums are significantly lower when purchasing coverage at younger issue ages since life expectancy is longer. However, premiums rise as the issue of age increases.
Gender
In general, premiums are lower for females compared to males. Gender-distinct pricing reflects women’s higher 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.
Full review: Life Insurance with Pre-Existing Conditions
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.
Insurance Company
Each insurer prices policies differently. So, it helps compare quotes from leading providers.
Below are sample annual premium costs for a $500,000 non-par whole life policy for a healthy male insured at various ages:
- Age 30: $721
- Age 40: $1,026
- Age 50: $1,664
- Age 60: $2,788
- Age 70: $5,134
Non-participating whole life insurance premiums are generally lower than participating whole life policies for equivalent coverage amounts and insureds.
Term life insurance generally has significantly lower premiums than non-par whole life insurance, but it lacks permanent lifetime coverage. Participating whole life offers the potential for dividends, which may reduce overall costs.
A licensed life insurance agent can help analyze your situation, budget, and needs and recommend the best product.
Full review: Life Insurance Rates By Age Chart in Canada
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.
Full review: Guaranteed Issue Life Insurance
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.
Comparing Participating vs. Non-Participating Whole Life Insurance
The two main types of whole life insurance are participating whole life insurance and non-participating whole life insurance policies. Here is an overview of how they differ:
Participating Whole Life
- Policyholders receive dividends from insurer profits
- Dividends can reduce premiums or increase cash value
- Premiums tend to be higher initially
- Provides upside if claims experience is favorable
- Dividends are non-taxable
Full review: Participating in Life Insurance
Non-Participating Whole Life
- No dividends paid to policyholders
- Premiums are lower from the outset
- No upside participation in positive claims experience
- All values are fixed and guaranteed
- Avoid dividends tax complexity
Key Differences:
- Participating policies offer dividends; non-participating policies do not
- Premiums are generally higher for participating whole life upfront
- Non-participating policies have only fixed, guaranteed values
- Non-participating policies avoid dividends taxation
In summary, participating in a whole life provides potential dividend upside, while non-participating in an entire life offers lower guaranteed premiums. When choosing between the two policy types, consider your budget, desire for guarantees, and dividend tax implications.
Conclusion
Non-participating whole life insurance provides permanent death benefit protection, guaranteed level premiums, and tax-advantaged cash value accumulation within the policy. While more expensive than term insurance, non-par whole life remains in effect for life and does not expire like term coverage.
The lifetime guarantees and predictable costs make non-par whole life insurance an attractive option for estate planning, conservative investing, business insurance needs, and clients prioritizing stability. Leading insurance companies like Foresters Financial, Empire Life, and Sun Life offer customizable, non-participating permanent life insurance solutions to suit your financial situation.
Before deciding, speak with a licensed life insurance agent who can analyze your specific objectives and budget and recommend the best non-par or whole life insurance product to meet your needs. They can guide you in structuring the optimal coverage and policy features. Overall, non-participating whole life insurance should be considered by Canadians seeking permanent, lifelong protection along with tax-sheltered cash value growth.
Get Expert Guidance on Life Insurance in Canada
Carefully assessing your situation with an experienced advisor can determine if non-par whole life insurance aligns with your financial priorities. If you seek permanent lifetime coverage, be sure to compare quotes from multiple providers to find the best policy.
At Life Buzz, we make comparing life insurance easy! Get matched with the right policy and savings from leading insurers online.
Frequently Asked Questions (FAQs)
What is non-participating whole life insurance?
Non-participating whole life, also called non-par whole life, is a permanent form of life insurance that provides lifetime coverage along with guaranteed premiums, death benefit, and cash values. It does not pay dividends to policyholders.
How does non-par whole life insurance work?
It provides lifelong coverage in exchange for fixed premiums. A portion of premiums covers insurance costs while the rest builds up a cash value inside the policy. This cash value grows tax-deferred and can be accessed via loans, withdrawals, or reduced paid-up insurance.
What are the benefits of non-participating whole life insurance?
Key benefits are permanent protection, guaranteed stable premiums, tax-advantaged cash value growth, income supplement options, avoids probate, and effective estate planning.
Who is non-par whole life insurance best for?
It's ideal for permanent estate planning, conservative investors who prioritize guarantees over investment returns, business owners, younger buyers locking in insurability, and retirees needing tax-efficient income.
How much does non-participating whole life insurance cost?
Premiums depend on factors like age, gender, health, and amount of coverage purchased. It usually costs less than par whole life for equivalent coverage. Term life premiums are lower but not permanent.
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.
What are the best non-par whole life insurance companies in Canada?
Top providers like Foresters Financial, Empire Life, iA Financial Group, Sun Life, and Manulife offer competitive non-participating permanent life solutions for Canadians.
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