Universal Life Insurance
is a flexible permanent insurance and investment plan that combines life
insurance protection and a tax-deferred investment vehicle:
● the investments
in the policy pay for the insurance coverage;
● existence of the insurance
elements permits the investment growth to accrue
within a tax-deferred environment.
Your investment in the policy may
provide additional retirement income or the value of your investment
may be added to the death benefit and will go to the assigned
beneficiary without tax.
flexibility of this insurance allows it to be adapted to a variety of
life insurance application such as estate creation/preservation,
additional retirement income and business application. Most
policies provide you with a variety of options and features so you can
customize your policy to meet your needs. And a good
Universal Life plan
lets you change your policy as your needs change.
How does Universal Life Insurance work?
you first buy your Universal Life plan, you start pay premiums to
the insurance company. Upon receipt of your payment, the insurance
company deposits your premiums less the provincial premium tax to the
Investment Account (s) you selected on your application for life
Each month, monthly
charges will be withdrawn from the Investment Account(s) based on the
method you elected on the application. Monthly charges include cost of
insurance charge, administration charge, charge for any riders and/or
additional benefits attached to the policy. If you have accumulated
funds over and above what is required to pay the monthly charges, these
funds will form your Account Value. Your Account Value will earn
interest is linked to the investments you select on your application for
the life insurance. It may be positive or negative, and your Account
Value may fluctuate. Growing funds in your Investment Account(s) may be
used as a source of additional income (for example, retirement income)
or added to the death benefit.
have to select
investments you want to put your money when signing the contract. The
initial premium allocation to the Investment Accounts may be changed
during the policy existence. Generally, you can choose to invest in any
you make regular payments (or lump sum payments, if you choose to) the
Account Value in your policy grows tax-deferred. You may make
additional payments into the Investment Account(s) (besides regular
monthly premiums, for example), up to the maximum allowed Canadian tax
law (the Income Tax Act). When you reach the limit, the excess money is
moved to an overflow fund. This fund also earns interest, but it’s not
tax-deferred. You can withdraw money from this fund at any time. Any
amount remaining in the overflow fund will be added to the amount of the
may stop making your monthly payments temporarily, if there is enough
money accumulated in the Investment Account(s) to cover their costs.
for any reason (including the fluctuation of the
there are insufficient funds in your policy to cover the monthly
charges, your policy will lapse.
Cost of insurance
can choose the type of the cost of insurance, that is the amount
the insurance company deducts from your Investment Accounts every month
to pay for the insurance coverage. Typically, the amount you pay for
your insurance is structured in one of two ways:
a level cost of insurance
: the rate remains constant over the life of your policy or
a yearly cost
of insurance: the rate increases each year to equal the actual
cost of insuring you as you grow older.
You can access the
Cash Value of your policy through a cash withdrawal (full or partial).
The Cash Value is equal to the total Investment Accounts, less surrender
charges and outstanding policy loans.
You may elect to
surrender the entire policy at any time, in which case the Cash Value
will be paid to you. A full surrender will terminate the policy. A
partial surrender is the withdrawal of a portion of the Cash Value.
There are the maximum and the minimum you can withdraw established by
the insurance contract.
Policy Loan feature allows you to borrow funds using a Cash Value of the
policy as collateral security. The outstanding Policy Loan balance will
reduce any proceeds on death or termination. Usually, a Policy Loan
repayment may take place at any time.
Collateral Loan (Leveraging)
Collateral loan against Cash Value may be arranged with third party
lending institution. It allows you to use a Cash Value of the policy as
a source of a supplemental retirement income.
arrangements may provide tax-free retirement income with the
accumulating loan paid off by the death benefit of the policy when the
life insured dies – with any excess available for beneficiaries.
Types of coverage
Single Life: Coverage for one life.
A multiple life policy can include up to five or six coverages. New
coverages can be added at any time up to the allowed maximum. The
policyholder can also substitute new insureds for those originally
chosen, remove coverages or split the policy.
Customizing your policy with extra benefits
recommended a yearly review of your insurance policy to make sure it
continues to meet your changing needs. And, if your needs change, it’s
good to know that you have several options to change your current amount
of insurance or type of coverage.
your universal life policy, you can choose a number of “riders” or extra
benefits. These extra cost options help customize your policy. Some
rewards for healthy living
you consider yourself to be healthy and you lead a healthy lifestyle,
you should choose an insurance company that offers preferred underwriting. This
means that you may get further discounts on your insurance than someone
who is not as healthy.
You can choose
insurance plan from the Canada's top insurance companies:
BMO Insurance, Equitable Life of Canada,
Empire Life, RBC Insurance, Industrial Alliance, Canada Life
Contact us for more
information and consultation.
If you have
any questions or concerns, please