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Retirement Q&A: Is High Cash Value Whole Life Insurance Too Good to Be True?

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Darren Devine Financial Planner with Sun Life and President of Devine & Associates in Guelph Ontario, weighs in on a thoughtful question submitted by a retiree about High Cash Value Whole Life Insurance in this helpful article in The Globe and Mail. 

See Darren's answer below:

Retirement Q & A

Q: I’m interested in your perspective on High Cash Value Whole Life Insurance, even though I’m now retired at 65. I had believed that I was “too old” to benefit from this type of insurance, now that I can afford the lofty premiums. However, after a little research, it appears that such vehicles offer a whole range of benefits. Is this too good to be true, or am I missing something?

We asked Darren Devine, CFP®, chartered life underwriter (CLU) and financial planner, Sun Life, to answer this one.

 

A: Great question! High Cash Value Whole Life Insurance can be a useful tool, even in retirement, but it depends on your overall financial goals.

As you mentioned, this tool offers a rrange of valuable benefits including:

  • Tax-free growth – Cash value and dividends (if participating) grow tax-advantaged.
  • Market protection – Your policy isn’t affected by stock market volatility.
  • Predictable returns – Guaranteed growth offers stability.
  • Fixed premiums – Locked-in rates make future planning easier.

Other factors to consider when determining if this is the right type of insurance for you include:

  • Liquidity – Accessing cash may come with restrictions and can reduce the death benefit.
  • Opportunity cost – Premiums can be high. Could those funds work harder elsewhere?
  • Estate planning fit – Best for wealth transfer, tax efficiency and legacy planning.
  • Costs at 65+ – Premiums may be expensive at this stage of life and medical underwriting could be a factor.

Whole life insurance isn’t “too good to be true,” but it’s also not a one-size-fits-all solution. If your priority is estate preservation and tax efficiency, it could be worth exploring. If flexibility and income access are more important, other strategies may serve you better.

Working with a licensed financial planner can help put your goals into perspective and find the right tools to get you there.

Have a question about money or lifestyle topics for seniors? Talk to us today we're happy to help.