Universal Life Insurance
Universal life insurance is a permanent policy that combines lifelong protection with a cash‑value component. It offers more flexibility than whole life, allowing you to adjust premiums and, in many cases, the death benefit as your needs evolve.
Key Features
Lifetime Coverage: Coverage continues for life if policy requirements are met.
Cash Value: Part of your premium goes into an investment‑like account that can grow tax‑deferred.
Flexible Premiums: You can often adjust payments within policy limits.
Adjustable Death Benefit: Some policies allow increasing or decreasing coverage.
Tax Advantages: Cash value grows tax‑deferred and death benefits are generally tax‑free in Canada.
Frequently Asked Questions
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How is universal life different from term? Term covers a set period; universal life is permanent and includes cash value.
How does it work? Premiums pay for insurance costs and the remainder goes to cash value.
Can cash value grow? Yes, it may grow based on interest or investment options, depending on the policy.
What are the risks? If cash value underperforms or premiums are insufficient, the policy can lapse.
What if I stop paying? The policy may use cash value to cover costs for a period, but it can eventually lapse.