Whole Life Premiums vs Term Insurance Rates
Free Sample Rate Comparisons for Male and Female Life Coverage
Oct 27, 2009
Whole life insurance rates are usually higher than premiums for comparable amounts of term life coverage. However, there are a couple of caveats to this first-glance arithmetic.
First, term insurance renews at the end of its level-premium period at higher rates, while whole life premiums remain fixed throughout the insured person’s lifetime. Term insurance durations commonly range from 5 to 30 years with older applicants usually constrained to shorter terms.
In addition, whole life policies accrue cash values and policy loan capabilities that can offset higher premium costs.
This article compares lowest average sample premiums for $100,000 worth of whole life insurance against the rates for the same amount of term life insurance. Rates are for non-smoking males and females in average health. Term4Sale’s free online rate comparison tool was used to obtain source rate data for applicants who live in the Toronto postal code district starting with the characters M5E.
Whole Life Premiums Versus Term Life Rates for Men
Below are average annual insurance rates for a 40-year-old man in average health who is a non-smoker. The average premium for whole life policy is over 6 times more expensive than the average premium for 10-year term life insurance.
- Average annual premium for whole life … C$956 per $100,000
- Average annual premium for 10 year term … $151
- Average annual premium for 15 year term … $243
- Average annual premium for 20 year term … $208
- Average annual premium for 25 year term … $302
- Average annual premium for 30 year term … $333
Note that the 20-year term life rate is lower than the 15-year annual premium. This is because Compulife’s system includes rate quotes from many insurance companies, some of which compete for customers by aggressively lowering their premiums in targeted age bands.
Male Whole Life Premium Rate Savings
While whole life premiums for a male 40 year old are significantly higher during periods in which a competitive term life policy is in effect, this cost advantage dramatically shifts to whole life insurance after the initial term life period expires.
Below are the accumulated premium costs for the lowest-provider of whole life insurance and different periods of term life insurance as shown. Compulife’s lowest-cost provider with the most competitive rates is shown within brackets for each category.
- Whole life … C$27,854 in total fixed premium costs for 40 years (La Capitale)
- 10 year term … $59,220 after 40 years (Canada Life Assurance)
- 15 year term … $59,445 after 40 years (Industrial – Alliance)
- 20 year term … $51,140 after 40 years (Equitable Life)
- 25 year term … $47,725 after 40 years (Unity Life)
- 30- year term … $46,230 after 40 years (Unity Life)
At age 80, a male covered by La Capitale’s whole life insurance policy will pay roughly $28,000 for $100,000 worth of coverage. In contrast, the 15-year term life insurance policy for that same amount from Industrial – Alliance costs twice as much in accumulated premiums to age 80.
Whole Life and Term Insurance Rate Comparison for Women
Below are rates for a 40-year-old woman who is a non-smoker. If consumer buys a 10-year term life insurance policy at the average annual premium of $129, she will enjoy a rate that is more than 6 times lower than the average whole life insurance premium. For 10 years, that sample term life policy will result in savings of $6,650 ($7,940 minus $1,290).
- Average annual premium for whole life … C$794 per $100,000
- Average annual premium for 10 year term … $129
- Average annual premium for 15 year term … $215
- Average annual premium for 20 year term … $164
- Average annual premium for 25 year term … $251
- Average annual premium for 30 year term … $252
Whole Life Premium Cost Savings for Females
Like the male applicant, a 40-year-old female realizes significant savings under whole life insurance after the initial period during which term life premiums remain fixed at their lowest level.
Listed below are the overall premium costs to insure a 40-year-old woman for $100,000 worth of whole life coverage and different types of term life insurance up until age 80. The lowest-cost provider for each category of life insurance is shown within brackets.
- Whole life … C$22,400 in total fixed premium costs for 40 years (L’Excellence Life)
- 10 year term … $46,070 after 40 years (Equitable Life)
- 15 year term … $38,062 after 40 years (Industrial – Alliance)
- 20 year term … $31,060 after 40 years (Canada Life Assurance)
- 25 year term … $34,335 after 40 years (Unity Life)
- 30- year term … $35,620 after 40 years (Unity Life)
When all premiums are totaled up at age 80, Equitable Life’s 10-year term insurance policy ends up costing $23,330 more for $100,000 in coverage if compared with the low-cost whole life contract that L’Excellence Life underwrites.
Even more savings are feasible when one considers that Equitable Life offers the lowest-priced 20-year term life rates from the Compulife sample data.
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