Universal Life

With Universal Life, you the policyholder make the internal investment decisions on your policy and not the Insurance Company.
Universal Life insurance is a long-term form of life insurance that provides you lifetime coverage with flexibility to adjust the policy as your needs change. The cost of life insurance is fully guaranteed while the premium deposits can change from year to year or be skipped all together while the policy remains in force. The policy needs to be reviewed annually to take advantage of the various investment opportunities within your contract.
With universal life, you choose the size of premium deposits (between the minimum and maximum) and the payment period based on an assured rate of return. In addition, the policyholder owns the cash surrender value of the policy. Policy owners can choose from a wide range of investment options to invest in, including savings accounts, GICs and equity indexes.
The key feature of Universal Life is flexibility! This flexibility allows the owner to choose the premium level and payment period best suited to their situation. The minimum premium payment level will be sufficient to provide coverage for life. Deposits in excess of the required minimum premium rate are credited to the investment account that the policyholder has selected. This separation of insurance and investment provides for flexible planning opportunities. For instance, the policyholder can forego paying premiums for a year or in some cases for the remaining life of the policy if there is sufficient cash built up in the policy to cover pure insurance cost within the plan, this is often referred to a “premium offset”.
Deposits into a Universal Life policy are done on an after tax basis but the cash value growth is tax deferred while inside the plan. There are limitations applied on the maximum premium that the policyholder can contribute into the plan that are set by the Federal Government.
Another advantage to Universal Life is tax-deferred growth. Universal Life policies may be especially attractive to investors who have used up the contribution room in their RRSPs and Tax Free Savings Account and are looking for another method of tax-deferred investment growth. Although withdrawals are not tax-exempt, the policyholder can choose how much to withdraw and when, deferring taxation until retirement when marginal rates will probably be lower, thereby minimizing taxes.
Who benefits the most?
There are generally a number of clients who will obtain exceptional values within the Universal Life contract, such as:

A higher income individual who needs insurance that will last the rest of their lives, who also have investments outside RRSPs on which they are paying taxes currently and may also wish to creditor proof those assets.
A business owner who wishes to utilize corporate after tax dollars to provide a corporate asset while also creating a life insurance program to meet corporate needs.
Professional who has maximized his/her RRSPs and wishes to utilize a tax preferred accumulation vehicle while providing Estate protection for their family.
A grandparent or parent who wishes to create a “Fund” for their grandchildren or children.
A charitable organization who is the beneficiary under the policy.