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