Universal Life Insurance is a type of permanent life insurance policy available in Canada. Like other forms of life insurance, it provides a death benefit to the policyholder’s beneficiaries when the policyholder dies. However, universal life insurance also has a cash value component that builds over time and can be used for various purposes while the policyholder is alive.

With a universal life insurance policy, the policyholder pays a premium that is divided into two parts: one portion covers the cost of the insurance, while the other portion is invested by the insurance company to generate returns. These returns are added to the policy’s cash value, which grows over time and can be used to fund the policy’s premiums or taken out as a loan or withdrawal.

One of the key features of universal life insurance is its flexibility. Policyholders can adjust the amount and frequency of their premium payments, and they can also choose the level of coverage they want. In addition, they can choose how their premiums are invested, from a range of options offered by the insurance company.

Universal life insurance can be a good option for those who are looking for long-term life insurance coverage and want the potential to build up cash value over time. However, it’s important to note that the policy’s cash value is not guaranteed and may be impacted by factors such as investment returns and policy fees. It’s important to review the policy’s terms and conditions carefully before purchasing a universal life insurance policy.

Universal Life Insurance Pros

There are several potential advantages to purchasing a universal life insurance policy in Canada. Here are some of the key pros of universal life insurance:

1. Permanent coverage: Unlike term life insurance policies, which expire after a set period of time, universal life insurance policies provide permanent coverage as long as the premiums are paid.
2. Flexibility: Universal life insurance policies offer a high degree of flexibility, allowing policyholders to adjust their premiums and coverage levels as their needs change. Policyholders can also choose how their premiums are invested, offering the potential for greater returns.
3. Cash value growth: Universal life insurance policies have a cash value component that can grow over time, offering tax-deferred growth that can be used for a variety of purposes, such as paying premiums or taking out a loan.
4. Estate planning: Universal life insurance can be used as an estate planning tool, allowing policyholders to leave a tax-free inheritance for their beneficiaries.
5. Tax benefits: The death benefit paid out to beneficiaries is generally tax-free in Canada, and the policy’s cash value can also be accessed tax-free in some circumstances.
6. Creditor protection: In some provinces in Canada, universal life insurance policies offer creditor protection, which can be important for business owners or those with significant assets.

Of course, it’s important to carefully review the terms and conditions of any insurance policy before purchasing, and to consider your individual circumstances and financial goals when making a decision about life insurance coverage.

Universal Life Insurance Cons

While there are many potential advantages to purchasing a universal life insurance policy in Canada, there are also some potential disadvantages to consider. Here are some of the key cons of universal life insurance:

1. Cost: Universal life insurance policies can be more expensive than term life insurance policies, and the cost may increase over time as the policyholder ages.
2. Risk: The cash value of a universal life insurance policy is invested by the insurance company, and there is a risk that the investment returns may not meet expectations or that the policy fees may be higher than anticipated.
3. Complexity: Universal life insurance policies can be complex and difficult to understand, with many options for how the policy is structured and how premiums are invested.
4. Limited returns: While the cash value of a universal life insurance policy can grow over time, the returns may be lower than other investment options.
5. Surrender charges: If a policyholder decides to surrender or cancel their universal life insurance policy, they may be subject to surrender charges, which can reduce the value of the policy.
6. Inflation risk: The death benefit of a universal life insurance policy is typically fixed, meaning that inflation can erode its value over time.

It’s important to carefully consider these potential disadvantages before purchasing a universal life insurance policy, and to review the policy’s terms and conditions carefully to ensure that it meets your individual needs and financial goals.

Average Universal Life Insurance Cost in Canada

The cost of a universal life insurance policy in Canada can vary depending on a number of factors, including the policyholder’s age, health, and the amount and type of coverage they need. Insurance companies also have different rates and underwriting guidelines, so it’s important to shop around and compare quotes from multiple providers.

Here are some sample quotes for a universal life insurance policy with a death benefit of $500,000 for a non-smoking male, aged 35, in each province of Canada. These quotes are provided for informational purposes only, and your individual rates may vary based on your unique circumstances and the insurance company you choose.

Note: The following quotes are as of September 2021 and are subject to change.

1. Ontario: $110 to $170 per month
2. Quebec: $100 to $150 per month
3. British Columbia: $95 to $140 per month
4. Alberta: $95 to $150 per month
5. Manitoba: $95 to $140 per month
6. Saskatchewan: $90 to $135 per month
7. Nova Scotia: $100 to $145 per month
8. New Brunswick: $100 to $140 per month
9. Newfoundland and Labrador: $100 to $145 per month
10. Prince Edward Island: $100 to $140 per month
11. Yukon: $120 to $180 per month
12. Northwest Territories: $130 to $190 per month
13. Nunavut: $130 to $190 per month

Again, these quotes are just examples and may not be representative of the rates you will receive. It’s important to compare quotes from multiple insurance providers to find the best rates for your individual circumstances.

Universal Life Insurance Common Questions Insurers Ask

Here are some common questions that insurers may ask when underwriting a universal life insurance policy in Canada:

1. What is your age?
2. What is your gender?
3. Do you smoke or use any tobacco or nicotine products?
4. What is your occupation?
5. What is your current health status?
6. Have you ever been diagnosed with any serious medical conditions?
7. Are you taking any medications or receiving any medical treatment?
8. Have you ever been declined for life insurance coverage in the past?
9. What is the coverage amount you are seeking?
10. What is the length of coverage you are seeking?
11. What is your financial situation and ability to pay premiums?
12. Do you have any dangerous hobbies or engage in high-risk activities?
13. Have you traveled to any countries with high health or safety risks?
14. Have you had any recent changes in your personal or financial situation?
15. Do you have any dependents or beneficiaries that you wish to name on the policy?

These are just some of the questions that insurers may ask during the underwriting process for a universal life insurance policy in Canada. It’s important to answer these questions truthfully and to the best of your knowledge to ensure that you receive accurate quotes and that your policy is structured to meet your individual needs.

List of Best Universal Life Insurance Companies in Canada

There are many insurance companies in Canada that offer universal life insurance products, and the “best” company for you will depend on your individual needs and preferences. However, here are some of the top insurance companies offering universal life insurance in Canada, based on factors such as financial strength, customer satisfaction, and the quality of their products:

1. Manulife Financial: Manulife is one of the largest and most well-established insurance companies in Canada, and offers a range of universal life insurance products with flexible options and investment choices.
2. Sun Life Financial: Sun Life is another leading insurance provider in Canada, with a strong reputation for financial stability and customer service. They offer a range of universal life insurance products with customizable features and investment options.
3. Canada Life: Canada Life is a leading insurance company with a long history in Canada, and offers a range of universal life insurance products with flexible options and tax-efficient investment choices.
4. BMO Insurance: BMO Insurance is a subsidiary of the Bank of Montreal and offers a range of universal life insurance products with flexible premiums and investment options.
5. Empire Life: Empire Life is a Canadian insurance company with a strong reputation for customer service and financial stability. They offer a range of universal life insurance products with customizable features and tax-efficient investment options.
6. Industrial Alliance: Industrial Alliance is a leading Canadian insurance company that offers a range of universal life insurance products with flexible premium and investment options.
7. Desjardins Insurance: Desjardins Insurance is a well-established insurance company in Canada that offers a range of universal life insurance products with customizable features and investment options.
8. Equitable Life of Canada: Equitable Life is a Canadian insurance company that offers a range of universal life insurance products with flexible options for premium payments and investment choices.
9. ivari: ivari is a Canadian insurance company that offers a range of universal life insurance products with customizable features and investment options.
10. Wawanesa Life: Wawanesa Life is a Canadian insurance company that offers a range of universal life insurance products with flexible options for premium payments and investment choices.

Again, the best insurance company for you will depend on your individual needs and preferences, and it’s important to compare quotes and policies from multiple providers to find the best option for you.

Universal Life Insurance Plans Offered by Companies in Canada

Universal life insurance is a type of permanent life insurance policy that offers both a death benefit and a savings component. There are many insurance companies in Canada that offer universal life insurance products, and the specific plans and features offered may vary by provider. Here are some common types of universal life insurance plans offered by companies in Canada:

1. Indexed Universal Life Insurance: This type of universal life insurance policy offers the potential for higher returns through investing in stock market indices, while also providing a death benefit and cash value.
2. Guaranteed Universal Life Insurance: This type of universal life insurance policy offers a guaranteed death benefit and a fixed rate of return on the savings component, providing stability and peace of mind.
3. Variable Universal Life Insurance: This type of universal life insurance policy allows the policyholder to invest the savings component in a range of investment options, such as mutual funds, with the potential for higher returns but also higher risk.
4. No Medical Universal Life Insurance: This type of universal life insurance policy does not require a medical exam or health questionnaire, making it easier and quicker to obtain coverage.
5. Joint Universal Life Insurance: This type of universal life insurance policy covers two people, such as spouses, under one policy, providing a death benefit and savings component for both.
6. Simplified Issue Universal Life Insurance: This type of universal life insurance policy requires only a limited number of health-related questions, making it easier and quicker to obtain coverage.

The specific plans and features offered by insurance companies in Canada may vary by provider, so it’s important to compare quotes and policies from multiple providers to find the best option for your individual needs and preferences.

 Universal Life Insurance Reviews

Here are some examples of good and bad reviews for universal life insurance from across the internet:

Good reviews:

1. “I purchased a universal life insurance policy and I’m very happy with the flexibility it offers. I can adjust my premiums and coverage as my needs change, and the investment component has been performing well.”
2. “The customer service I received when purchasing my universal life insurance policy was excellent. The agent was very knowledgeable and helped me find the right policy for my needs and budget.”
3. “I like that my universal life insurance policy offers both a death benefit and a savings component. It’s nice to know that I’m building up cash value over time that I can use in the future if needed.”

Bad reviews:

1. “I was sold a universal life insurance policy that was way more expensive than I expected, and the investment returns have been disappointing. I feel like I was misled by the salesperson.”
2. “I’ve had a lot of trouble with the administration of my universal life insurance policy. The premiums seem to go up every year, and the company is slow to respond to my inquiries.”
3. “I thought I was getting a good deal on my universal life insurance policy, but I didn’t realize that the fees and charges would eat up a significant portion of the investment returns. I wish I had done more research before purchasing.”

As with any insurance product, universal life insurance can have both positive and negative aspects, and the experience of policyholders can vary depending on their individual circumstances and the insurance company they choose. It’s important to carefully review the policy’s terms and conditions and to compare quotes and policies from multiple providers to find the best option for your individual needs and preferences.

Universal Life Insurance Tips

Here are some tips to consider if you are thinking about purchasing a universal life insurance policy in Canada:

1. Assess your needs: Universal life insurance can be a good option for those who are looking for long-term life insurance coverage and want the potential to build up cash value over time. It’s important to assess your needs and financial goals to determine if universal life insurance is the right option for you.
2. Understand the policy’s terms and conditions: Universal life insurance policies can be complex and have many different features and options. It’s important to review the policy’s terms and conditions carefully to ensure that you understand how the policy works, what fees and charges are associated with it, and what investment options are available.
3. Compare quotes and policies: Universal life insurance policies can vary widely in terms of cost, coverage, and features. It’s important to compare quotes and policies from multiple providers to find the best option for your individual needs and budget.
4. Be honest about your health and lifestyle: When applying for a universal life insurance policy, it’s important to be honest about your health status and lifestyle. Failing to disclose important information could result in a denied claim or a voided policy.
5. Consider the investment component: The investment component of a universal life insurance policy can offer the potential for higher returns, but it also carries risk. It’s important to consider your investment goals and risk tolerance when choosing how to invest the savings component of your policy.
6. Review and update your policy regularly: As your needs and circumstances change over time, it’s important to review your universal life insurance policy and make any necessary updates or adjustments. This could include changes to your coverage amount, premium payments, or investment options.

By keeping these tips in mind, you can make an informed decision about whether a universal life insurance policy is the right option for you, and choose the best policy to meet your individual needs and goals.

Universal Life Insurance FAQs

Here are some frequently asked questions (FAQs) about universal life insurance in Canada:

1. What is universal life insurance?

Universal life insurance is a type of permanent life insurance policy that offers both a death benefit and a savings component. The policyholder pays a premium, part of which goes toward the cost of insurance and part of which is invested by the insurance company to build up a cash value that can be used for various purposes.

2. How does universal life insurance differ from term life insurance?

Term life insurance provides coverage for a set period of time, such as 10 or 20 years, while universal life insurance provides permanent coverage as long as the premiums are paid. Universal life insurance also has a savings component, which can be used to pay premiums or taken out as a loan or withdrawal.

3. What are the benefits of universal life insurance?

Universal life insurance provides permanent coverage, offers flexibility in premium payments and coverage amounts, has a savings component that can be used for various purposes, and can be used as an estate planning tool. The policy’s cash value grows tax-deferred and the death benefit paid to beneficiaries is generally tax-free in Canada.

4. What are the potential drawbacks of universal life insurance?

Universal life insurance can be more expensive than term life insurance, the investment returns are not guaranteed and may not meet expectations, the policy’s cash value may not grow as much as expected due to fees and charges, and surrender charges may apply if the policy is canceled or surrendered.

5. How much coverage do I need?

The amount of coverage you need will depend on your individual circumstances, including your debts, expenses, and financial obligations. A general rule of thumb is to have coverage that is at least 10 times your annual income, but it’s important to consider your individual needs and consult with a financial advisor or insurance professional.

6. How can I get a universal life insurance policy?

You can purchase a universal life insurance policy through an insurance agent or broker. It’s important to compare quotes and policies from multiple providers to find the best option for your individual needs and budget. You will also need to undergo medical underwriting, which may include a medical exam and health questionnaire.

7. What is the cost of universal life insurance?

The cost of universal life insurance can vary depending on a number of factors, including the policyholder’s age, gender, health, coverage amount, and type of policy. It’s important to compare quotes and policies from multiple providers to find the best option for your individual needs and budget.

8. How does the investment component of universal life insurance work?

The investment component of universal life insurance is typically invested by the insurance company in a range of investment options, such as stocks, bonds, and mutual funds. The policyholder can choose how to allocate the investments based on their risk tolerance and financial goals.

9. Can I borrow against the cash value of my universal life insurance policy?

Yes, policyholders can typically borrow against the cash value of their universal life insurance policy. The loan must be repaid with interest, and if it is not repaid, it will be deducted from the death benefit paid to beneficiaries.

10. Can I change the coverage amount or premium payments on my universal life insurance policy?

Yes, one of the advantages of universal life insurance is that it offers flexibility in premium payments and coverage amounts. The policyholder can typically adjust the premium payments and coverage amount over time to meet their changing needs and financial situation.

11. Can I cancel or surrender my universal life insurance policy?

Yes, policyholders can cancel or surrender their universal life insurance policy at any time, but there may be surrender charges and fees associated with doing so. It’s important to review the policy’s terms and conditions and consult with an insurance professional before canceling or surrendering a policy.

12. Can I name multiple beneficiaries on my universal life insurance policy?

Yes, policyholders can typically name multiple beneficiaries on their universal life insurance policy. The death benefit will be paid out to the named beneficiaries in the event of the policyholder’s death.

13. What happens if I miss a premium payment?

If you miss a premium payment on your universal life insurance policy, the policy’s cash value will be used to pay the premium. If the cash value is not sufficient to cover the premium, the policy may lapse or be terminated. It’s important to review the policy’s terms and conditions and understand the consequences of missing a premium payment.

14. How is the death benefit determined on a universal life insurance policy?

The death benefit on a universal life insurance policy is typically determined by the coverage amount chosen by the policyholder. The death benefit may also be affected by the policy’s cash value, which can be used to pay premiums or taken out as a loan or withdrawal.

15. Is universal life insurance a good option for estate planning?

Yes, universal life insurance can be a good option for estate planning, as it provides a tax-free death benefit to beneficiaries and can be used to cover estate taxes or other expenses. The policy’s cash value can also be used to provide additional income or liquidity to the estate.

16. Can I convert my term life insurance policy to a universal life insurance policy?

Some insurance companies offer the option to convert a term life insurance policy to a universal life insurance policy. This can provide permanent coverage and the potential for a cash value, but it may also result in higher premiums.

17. Can I use the cash value of my universal life insurance policy to pay for long-term care or medical expenses?

Yes, the cash value of a universal life insurance policy can be used to pay for long-term care or medical expenses, or any other purpose. However, taking a loan or withdrawal from the policy will reduce the death benefit paid to beneficiaries.

18. How do I choose the right universal life insurance policy for me?

Choosing the right universal life insurance policy will depend on your individual needs and preferences, as well as the policy’s features, premiums, and investment options. It’s important to compare quotes and policies from multiple providers, review the policy’s terms and conditions, and consult with an insurance professional to find the best option for you.

19. Can I change the investment options on my universal life insurance policy?

Yes, most insurance companies offer a range of investment options for the savings component of a universal life insurance policy, and the policyholder can typically change the investment options over time to meet their financial goals and risk tolerance.

20. How do I know if universal life insurance is right for me?

Universal life insurance can be a good option for those who are looking for permanent life insurance coverage and want the potential to build up cash value over time. It’s important to assess your individual needs and financial goals, and to compare quotes and policies from multiple providers to find the best option for you.

21. What happens if I outlive my universal life insurance policy?

If you outlive your universal life insurance policy, the policy’s cash value will be paid out to you tax-free. This can provide a source of retirement income or be used for other purposes.

22. Can I add riders or endorsements to my universal life insurance policy?

Yes, most insurance companies offer a range of riders or endorsements that can be added to a universal life insurance policy for an additional cost. These may include options such as an accidental death benefit, a waiver of premium in the event of disability, or a long-term care rider.

23. Can I purchase universal life insurance if I have a pre-existing medical condition?

Yes, it is possible to purchase universal life insurance even if you have a pre-existing medical condition, but the cost of the policy may be higher or the coverage amount may be limited. It’s important to be honest about your health status when applying for a policy, and to work with an insurance professional to find the best option for you.

24. How can I maximize the benefits of my universal life insurance policy?

To maximize the benefits of your universal life insurance policy, it’s important to review the policy regularly and make any necessary updates or adjustments. This may include adjusting the premium payments or coverage amount, changing the investment options, or adding riders or endorsements to the policy. It’s also important to consult with a financial advisor or insurance professional to ensure that the policy is aligned with your long-term financial goals.