Universal Life Insurance
Choosing Universal Life Insurance
With our universal life insurance product, you can ensure the financial security of you and your loved ones through one and the same contract and at the same time accumulate additional tax-sheltered amounts. It provides you with a flexible financial program that you can adapt to your changing needs.
Universal Life insurance is one solution that combines 2 important aspects of financial planning:
- Permanent insurance protection for lifelong peace of mind and
- Investment account options that can grow your savings, tax-deferred.
Universal life insurance combines permanent life protection with tax-advantaged investment opportunities to help you increase your long term wealth. Suitable for personal or business needs, universal life insurance can help you:
- Leave proceeds to your beneficiary - tax-free
- Further your retirement and estate planning
- Build tax-deferred equity and accessible cash value over time (may be subject to taxation)
- Establish collateral for a bank loan
- Provide key person coverage for your business (business continuity)
- Ensure multiple lives when you purchase the policy, or later (Term Insurance rider).
With a selection of product styles and optional coverage features (called riders), universal life is highly customizable to fit into your financial plan.
After deduction of the applicable taxes, your premiums are used to pay the insurance costs and administration fees. The surplus monies are invested in the investment options of your choice.
A more flexible but intricate type of insurance that combines long term life insurance with an opportunity for tax-deferred savings, Typically lifetime protection. Choice of level or increasing amount of insurance. Cost of the insurance may be:
- Guaranteed and level,
- Increase each year or
- Combination of both.
The surplus monies constitute the “savings” component of your contract and generate interest that accrues tax-free. The interest generated and the interest bonus, which you are paid as of the fifth year, are reinvested in the investment options you have chosen.
You may make withdrawals from the amounts accumulated in your investment options at any time. Certain transaction fees may apply. No surrender charge applies with the level cost of insurance option. You choose a guaranteed death benefit amount that will be paid to your beneficiaries when you die. Your payments are deposited to a "policy fund".
Any money you deposit over and above what is required for the cost of the insurance can either be:
- placed into investment accounts to grow-deferred,
- or used to increase the value of your death benefit.
Who Should Consider Universal Insurance?
- Individuals or families seeking financial security and wishing to accumulate additional funds (to carry out retirement plans, for example).
- Young dual-income professional couples that can pay the insurance premium more quickly.
- Persons with a higher-than-average income who are looking for a tax-sheltered savings vehicle other than a registered retirement savings plan (RRSP).
- Business people, to finance a shareholders' agreement or insure a key employee.
Universal Life Explained
Universal life insurance is a type of permanent life insurance, primarily in North America. Under the terms of the policy, the excess of premium payments above the current cost of insurance is credited to the cash value of the policy. The cash value is credited each month with interest, and the policy is debited each month by a cost of insurance charge, as well as any other policy charges and fees which are drawn from the cash value, even if no premium payment is made that month. Interest credited to the account is determined by the insurer but has a contractual minimum rate of between 2% and 4%. When an earnings rate is pegged to a financial index such as a stock, bond or other interest rate index, the policy is an "Equity Indexed Universal Life" contract.