Universal life insurance: what is it?

There are mainly three categories of life insurance: term life insurance contracts, which are mostly taken out by young people for the purpose of securing a loan, whole life insurance, which applies until on the death of the insured and generally has a cash value, and universal life insurance. The latter allows you to combine permanent life insurance with the possibility of making tax-efficient investments.

Universal life insurance is first and foremost insurance

Like all life insurance contracts, universal life insurance makes it possible to obtain life insurance protection, in this case permanent, with a guaranteed death benefit and to protect loved ones in the event of misfortune by providing them with real financial security. Flexible, this type of insurance generally offers the possibility of reducing or increasing the death benefit during the contract.
Universal life insurance policies can be purchased on one or two heads, and payable on either the first or last death.

Bonuses

Unlike other types of life insurance contracts, insurance premiums paid are deposited into investment accounts, part of which is allocated to the cost of insurance and monthly fees, with the remaining part constituting savings. .
In the event of death, the capital is paid to the beneficiaries tax free. Depending on the option chosen, payments made in excess of the cost of insurance may be added to it.

The choice between increasing or fixed cost

It is possible to opt for a progressive or fixed cost of insurance. In the first case, the premium increases each year, which has the advantage of paying less for insurance at the start of the contract, and offers the possibility of accumulating more savings during the first years, thus making it possible to optimize growth. potential savings. The other possibility is the flat insurance cost, in other words the fixed premium over the entire term of the contract.
Universal life insurance is also a tax-exempt and diversified investment

Insurance adapted to certain profiles
Universal life insurance offers the possibility of accumulating savings in a simple and efficient way tax-free. As a result, it is particularly interesting for policyholders with an inheritance objective and who seek to optimize the management of their heritage with a view to bequeathing it to their heirs. It is also for people who want to invest for their retirement, make the maximum amount of contributions to their RRSP and TFSA each year, and are looking for an additional way to accumulate savings while optimizing their taxes. Of course, universal life insurance is also suitable for corporate shareholders who wish to benefit from advantageous tax provisions in order to protect the value of their company or finance the buyback of shares between shareholders.

The possibility of investing and unlocking your savings
The insured has the opportunity to grow the amounts paid in savings according to the performance of the investment accounts he has chosen. Depending on his own risk tolerance, the insured can place his savings in guaranteed interest accounts over one, three, five or ten years, which offer low-risk investments, index accounts, which can offer a higher return. high over the long term, or opt for accounts managed specifically and tailored to the client's profile. It is also possible to make changes to the coverage terms as your needs change. If necessary, savings remain accessible at any time for the amount of tax.

Much more than permanent life insurance, universal life insurance combines permanent protection that can be adjusted according to the different stages of life and an investment making it possible to accumulate savings and make them grow sheltered from the tax. A solution perfectly suited to certain profiles, such as entrepreneurs, people making the maximum amount of contributions to their RRSP or simply wishing to optimize their wealth for the benefit of their heirs.