Universal Life Insurance is one of the more complicated polices available in Canada. The reason for that is because there is quite a few options available with UL policies.
Some people buy Universal Life just for the insurance component because you can buy T100 or term to 100 cost of insurance option, and it is close to the same price as a T100 policy.
Other people buy Universal Life for investment purposes. That is what UL was really designed for. You see, by depositing extra money into a UL policy, over and above the minimum insurance premium, the extra deposit will create a side account, a cash value so to speak. This cash value is available to the policyholder, and can be used in different ways.
One of the ways you can use the cash value is to offset the premiums, so essentially it can become a payed up policy after a few years. You can also use the cash value for a premium holiday, so if you ever have a hard time affording to pay the premium, you can take a break and the policy will be paid for by your cash value.
Some people buy Universal Life as a tax shelter. One unique feature of UL is that any gains that accrue inside the policy will not be taxed as long as they stay inside the policy, so it is a good alternative to GIC's and other non-registered investments.
In any case, no matter what you want to do with a Universal policy, we strongly recommend that you consult with a financial advisor, and go over all the details and pit falls of UL.
In the meantime, you can use our calculator above to run some quotes, at least for the minimum premium T100 cost of insurance
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