Universal Life Insurance
Universal life insurance (often shortened to UL) is a type of permanent life insurance. UL protection is for lifelong peace of mind with a broad range of investment account options for tax-preferred savings growth.
How Does It Work?
- Flexible premium, adjustable benefits, current interest rate applied
- Combines term insurance and savings account.
- Both are paid out at death.
- Premiums can be increased or decreased, skipped or stopped provided there is enough value to maintain the cost of insurance
- From the premium a deduction is made for expenses and cost of insurance. The balance is invested for the policyowner
- Came to Canada in 1981-2 during a peak interest rate period
- Buyers wanted better returns and an “unbundled” product
- Unbundling the product leads to flexibility of coverage, deposits, investments
- Changes to taxation effective Dec. 1, 1982 made UL more attractive