Here is a number worth sitting with. Of the roughly $2.3 billion in new annualized premium that Canadians committed to individual life insurance in 2025, about 70% went to whole life and only 18% to term, according to LIMRA's year-end sales figures. Yet if you ask most personal-finance writers what a 35-year-old with a mortgage and two kids should buy, you will hear the opposite answer.
Both things can be true, and the gap between them is the interesting part of this decision.
Premium dollars are not the same as people
Whole life premiums are far higher than term premiums for the same death benefit, so a modest number of whole life policies produces a lot of premium. The 70% is a share of money, not a share of households. Still, the direction is notable: participating whole life made up most of the growth in 2025, and a separate industry study reported by Insurance Business found that term policy sales fell from about 397,000 in 2019 to about 340,000 in 2024. Canadians are not abandoning term, but fewer of them are starting it.
What term actually is
You pick an amount and a length, commonly 10, 20 or 30 years. Die inside that window and your beneficiaries receive the death benefit tax-free. Outlive it and the policy ends with nothing paid out. That sounds like a bad deal until you remember what you are buying: income protection for the specific years when other people depend on your pay cheque. Your mortgage has an end date. So do your kids' school years.
Two details trip people up. First, check whether the term is renewable and what the premium does at renewal, because it usually jumps sharply since you are older. Second, ask about conversion, the right to switch to a permanent policy later without a new medical review. If your health changes during the term, that option can be worth more than anything else in the contract.
What whole life actually is
Whole life lasts as long as you do, as long as the premiums are paid. A portion of what you pay builds cash value inside the policy. With a participating policy, the insurer may also pay dividends, which are not guaranteed. The price of all this is simple: the premium is often several times what a term policy of the same size would cost.
Whole life has real uses. If you want to leave an estate to someone no matter when you die, if you own a business and need to fund a succession plan, or if you have a family member who will need support for life, permanent coverage solves a problem that term cannot. The argument against it for a young family is usually about opportunity cost: the money going to the higher premium is money that is not going to your RRSP, TFSA or RESP.
A way to decide without a sales pitch
- Ask yourself what the insurance is for. If the answer has an end date (a mortgage, a child reaching adulthood), term fits the shape of the problem.
- If the answer is "whenever I die, I want something left," look at permanent coverage, and ask to see the guaranteed values separately from the projected ones.
- If you are tempted by whole life mostly because the premium never expires, remember that the premium also never gets cheaper. Ask what you would do with the difference if you bought term instead.
- Whichever you pick, you generally have a short review window after delivery of the policy. In Quebec, most insurers offer a 10-day period to return it for a refund.
The honest summary: term is the right tool for the most common need, and whole life is the right tool for a narrower set of needs. A good advisor will tell you which one you are, even when the commission on the other is larger.
Sources
- LIMRA, 2025 Canadian life insurance new premium
- Insurance Business, One in three Canadians underinsured (June 2026)
- Quebec life insurance FAQ, review period
General information only, not personal advice. Covaria is a comparison and referral platform, not an insurance broker. Talk to a licensed advisor before you buy.