Universal Life Insurance

A permanent life insurance solution combining lifelong protection and tax-advantaged investing, offering maximum flexibility, transparency, and control.

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What is universal life insurance?

Universal life insurance is a type of permanent life insurance that offers flexible, cost-effective, lifelong coverage plus the ability to accumulate additional tax-sheltered capital.

There are two components to a universal life insurance policy: insurance and investment. You choose your investments from a range of available options and wealth can accumulate tax-deferred (within legislative limits). You can withdraw or borrow from your policy, with certain tax implications. You can also choose who to leave your money to.

Universal life offers you the flexibility to adjust your premium payments and investment choices to be customized according to your unique risk tolerance and changing lifestyle.

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Lifetime Coverage

Ensure the people you love are financially protected for life. Your protection does not end after a certain period.

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Tax-Advantaged Investing

A portion of your premium purchases your insurance, while the rest is invested.

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Access to Funds

Access funds in your policy during your lifetime to fund, an education, a home, a business, or supplement your income in retirement or during a time of illness.

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Estate Planning

The unique features of participating life insurance make it an ideal tool for protecting your assets and passing them on to your chosen beneficiary(ies).

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How does universal life work?

Universal Life Insurance is a flexible insurance plan that combines life coverage with an investment component. Here's how it functions:

  • Premium Payments - Ensuring Continuous Coverage: Your policy remains active and in force as long as you continue to pay the premiums. Timely premium payments are crucial to maintaining the policy's benefits and coverage.

  • Insurance and Investment Components: Once the insurance costs are deducted, the remaining portion of your premium contributes to an investment account. You have the choice to select from a variety of investment options, allowing you to tailor your investment strategy according to your preferences and risk tolerance.

  • Accessing Your Funds: The policy provides the flexibility to withdraw or borrow from the cash accumulated in your investment account, subject to maintaining sufficient funds to cover ongoing insurance costs. This feature can be beneficial for addressing short-term financial needs or opportunities.

  • Death Benefit - Providing for Your Beneficiaries: In the event of your passing while the policy is active, your designated beneficiaries, which can be persons or charities, will receive a tax-free cash benefit. This payout not only includes the insurance coverage amount but also any accumulated value in the investment component, offering a significant financial resource to your beneficiaries.

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Accessing Your Funds in Universal Life Insurance

As your Universal Life Insurance policy's cash value grows, it opens up opportunities for you to access these funds. This flexibility is one of the key benefits of Universal Life Insurance. Here are the ways you can utilize the accumulated cash value:

  • Borrow Against Your Policy: You have the option to take out a loan against your policy's cash value. This can provide a quick and convenient source of funds when needed.

  • Leverage as Collateral for Loans: Your policy's cash value can also serve as collateral for a loan from a third-party lender. This can provide a quick and convenient source of funds when needed.

  • Withdraw Cash Value Directly: For immediate financial needs, withdrawing a portion of the cash value is possible. This option provides direct access to your funds for any purpose.

Considerations and Tax Implications

The way you choose to access or use the cash value of your policy can have different tax implications. It’s essential to understand these nuances to make an informed decision. Consulting with a professional financial advisor is highly recommended to navigate these choices effectively and to understand how they align with your overall financial plan.

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How much does universal life insurance cost?

There are a number of factors that can affect policy pricing, including:

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Generally, insurance cost less for younger age groups, and more for older age groups

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Women live longer than men on average, so insurance may cost less than for males.

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Your unique health history, family history, chronic diseases and lifestyle can impact costs.

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High-risk occupations can increase cost. Conversely, low-risk occupations can reduce cost.

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Is Universal Life Insurance Right for You?

Universal Life Insurance can be an ideal solution for certain financial needs and goals. It may be particularly suitable for individuals who:

  • Seek Permanent Life Insurance Coverage: Ideal for those who want lifelong insurance protection to secure their family's future or their own peace of mind.

  • Desire Tax-Advantaged Growth for Non-Registered Assets: Perfect for financially secure individuals looking for efficient ways to grow their wealth with favorable tax treatment.

  • Looking Beyond RRSPs and TFSAs: A strategic choice for those who have already maximized their Registered Retirement Savings Plan (RRSP) and Tax-Free Savings Account (TFSA) contributions and seek additional avenues for tax-efficient investment.

  • Estate Enhancement for Future Generations: Suitable for individuals wishing to increase the value of their estate for the benefit of their children and grandchildren.

  • Business Owners Seeking Tax-Efficient Protection: An excellent option for entrepreneurs who need a cost-effective method to safeguard the financial value of their business.

  • Strategies for Mitigating Transfer Taxes: Useful for those planning ahead to cover potential income or capital gains taxes in a more financially efficient manner.

Get in touch

Talk to an advisor who can understand your situation, answer your questions and help you build an insurance plan appropriate for you and your family.

Frequently asked questions

Answers to key questions about Universal Life Insurance

What is Universal Life Insurance?

Universal Life Insurance is a flexible type of life insurance that combines protection and savings. You can adjust the premium and death benefit amounts. Part of your premium goes toward your life insurance, while the rest is invested, potentially growing your savings tax-deferred.

How does the investment component of Universal Life Insurance work?

The investment component in Universal Life Insurance allows you to invest a portion of your premiums in a variety of investment accounts. These investments can grow tax-deferred, potentially increasing the cash value of your policy, which you can use or borrow against.

Can I withdraw money from my Universal Life Insurance policy?

Yes, you can withdraw from the cash value, subject to fees and potential reduction in death benefit. It's important to understand the policy's terms and tax implications before making withdrawals.

How does Universal Life Insurance differ from Whole Life Insurance?

Universal Life Insurance offers more flexibility than Whole Life Insurance in premiums, death benefits, and investment options. Whole Life has fixed premiums and a guaranteed death benefit.

Can Universal Life Insurance be converted to Whole Life Insurance?

Generally, Universal Life policies do not allow conversion to Whole Life. However, most term life policies can be converted to permanent life insurance (Universal Life or Participating Whole Life).

Still have questions?

Please contact our office and we'll be happy to address any questions you may have.