Universal Life Insurance

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Universal Life Insurance in Canada

Universal Life Insurance (UL) in Canada is a type of permanent life insurance that combines a death benefit with an investment component. It provides flexibility and allows policyholders to adjust their premium payments and death benefits, as well as manage the investment portion of the policy. The premium you pay for a UL policy is divided into two parts: the cost of insurance (COI) and the cash value. The cash value earns interest, and you have the flexibility to adjust your death benefit and premium payments.

One of the premium options within Universal Life Insurance is Yearly Renewable Term (YRT). YRT is a type of term insurance where the cost of insurance increases annually based on your age. As you get older, the cost of insurance rises, and the premium increases accordingly. YRT provides lower initial premiums compared to level premiums, but they can become quite expensive as you age.

Other premium options in Universal Life Insurance may include level premiums, where you pay a consistent premium throughout the life of the policy, or limited pay options, where you pay premiums for a specified number of years.

universal life insurance in canada


Death Benefit

Like other life insurance policies, UL provides a death benefit to the beneficiaries upon the death of the insured. The death benefit is generally income tax-free.


Policyholders can adjust their premium payments within certain limits. They can pay more than the minimum premium required to build up the cash value or pay less if they have sufficient cash value to cover the costs of insurance.

Cash Value

A portion of the premium paid goes into the cash value component of the policy, which is invested. The policyholder has some control over the investment options, choosing between different funds offered by the insurance company. The cash value grows tax-deferred.

Investment Options

Universal Life policies typically offer a variety of investment options, such as fixed interest accounts, index funds, or mutual funds. The policyholder bears the investment risk and reward.

Fees and Charges

Universal Life policies may have various fees, including cost of insurance charges, administration fees, and investment management fees. It's essential to understand these fees and how they can impact the overall performance of the policy.


Policyholders have the flexibility to increase or decrease the death benefit, subject to underwriting requirements. They can also access the cash value through policy loans or withdrawals, although this may affect the death benefit and could have tax implications.


Who should consider Universal Life Insurance?

Universal Life Insurance can be suitable for individuals who:

  • Need permanent coverage: Universal Life provides coverage for the entire lifetime of the insured as long as premiums are paid.
  • Want flexibility: The ability to adjust premiums and death benefits over time can be appealing for those with changing financial needs.
  • Seek an investment component: Individuals looking for a life insurance policy with an investment component may find Universal Life attractive, as it allows them to participate in the financial markets.
  • Have a long-term perspective: This type of insurance is more suitable for individuals with a long-term investment horizon, as the cash value builds up over time.
who should consider universal life insurance

It's important for individuals considering Universal Life Insurance to carefully review the policy terms, understand the fees involved, and consult with our insurance advisor to ensure it aligns with your financial goals and needs.

Universal Life Insurance (ULI) in Canada is a type of life insurance that combines a death benefit with an investment component. It offers policyholders flexibility and a range of options, making it a versatile financial tool.


For more in-depth knowledge, some specific scenarios and FAQs about Universal Life Insurance in Canada, please refer to our Blogs

  Benefits of Universal Life Insurance

Death Benefit

Like other life insurance policies, ULI provides a death benefit to the beneficiaries upon the policyholder's death. This benefit is generally tax-free.


ULI policies offer flexibility in terms of premium payments. Policyholders can adjust the amount and frequency of premium payments within certain limits. This allows individuals to tailor the policy to their changing financial situations.

Cash Value Growth

ULI policies have a cash value component that grows over time. This cash value can be invested in a variety of options, such as fixed-interest accounts, equities, or other investment vehicles chosen by the policyholder.

Tax Advantages

The cash value in a ULI policy grows tax-deferred. Policyholders can access this cash value through policy loans or withdrawals, and the growth is not taxed as long as the policy remains in force.

Estate Planning

ULI can be used as a tool for estate planning. The death benefit can provide a tax-efficient way to transfer wealth to beneficiaries.

Adjustable Death Benefit

Policyholders can often adjust the death benefit amount within certain limits. This flexibility can be valuable in response to changes in financial needs.

  Intricacies and Considerations

Cost of Insurance

The cost of insurance within a ULI policy can increase over time, especially as the policyholder ages. This means that policyholders may need to adjust their premium payments to keep the policy in force.

Investment Risks

The cash value of a ULI policy is invested, and the returns are not guaranteed. If the chosen investments perform poorly, it can impact the cash value and the overall performance of the policy.

Policy Charges and Fees

ULI policies often come with various charges and fees, including administrative fees and cost of insurance charges. Policyholders should be aware of these costs and understand how they may affect the policy's overall performance.

Interest Rate Changes

The interest rates credited to the cash value may vary based on the performance of the insurer's investments. Changes in interest rates can affect the policy's cash value growth.

Surrender Charges

If policyholders decide to surrender or cancel the policy, there may be surrender charges, especially in the early years of the policy. It's important to understand the surrender schedule before purchasing the policy.


Universal Life policies can be complex, especially when considering the investment component. Understanding the various features and options is crucial to making informed decisions.

Before purchasing a Universal Life Insurance policy in Canada, it's advisable to consult with our insurance advisor to ensure that the policy aligns with your financial goals and to fully understand the terms and conditions. Additionally, reviewing the financial strength and reputation of the insurance company is essential to ensure the stability of the policy.



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