Best Universal Life Insurance Canada: Updated 2024 guide
- Possibility to modify the contract at any time
- Tax-sheltered savings option that grows
- Guarantees for children included
Permanent Life Insurance by Beneva offers lifetime coverage with flexible payments. Clients may decide to surrender all or part of your policy to provide a cash flow, for example, as additional retirement income. Also, premiums are fixed.
- Fixed or decreasing insurance amount
- Fixed premiums and guarantees
- Option to convert to permanent life insurance without medical evidence
Pick-A-Term by iA is a term life insurance solution designed with affordability and flexibility in mind, suitable for various stages of life including young families and pre-retirees. It offers terms from 10 to 40 years, which can align with significant financial commitments like mortgages or educational expenses. The fixed and guaranteed premium structure simplifies budgeting, while options to renew annually or convert to permanent insurance provide adaptability as needs evolve. This product is ideal for those seeking financial security without the long-term commitment of permanent life insurance, accommodating both personal and business insurance needs.
- Versatile term options from 10 to 40 years, matching key financial periods.
- Premium rates are guaranteed and known upfront, aiding in financial planning.
- Allows conversion to permanent coverage at any time without health checks.
- Can be renewed annually to adapt to changing insurance needs.
- Available with additional benefits such as critical illness and disability insurance.
- At renewal, premiums may increase based on the new term.
- Decreasing Benefits Option is not suitable for those needing consistent coverage amounts throughout the term.
- Numerous coverage and benefit options could complicate decision-making.
- Lifetime protection at a guaranteed rate
- Guaranteed surrender values and guaranteed paid-up values
- Suitable for all age groups
Solution 100 by Empire Life offers lifetime coverage and protection up to age 100. Premiums end at age 100 with coverage lasting your entire lifetime, and rates will never increase, no matter your age or health status. Solution 100 offers the option to change to reduced paid-up value and stop paying premiums or access cash values through surrender or a policy loan.
- Guaranteed Level premiums
- Guaranteed cash surrender values
- Guaranteed Paid-up values
- No online quote available
- Benefit in case of disability and tax-free
- Lifetime protection and tax-advantaged investments
- Option to guarantee a child's or grandchild's insurability
RBC Whole Life Insurance by RBC offers lifetime coverage, cash value guarantees, a potential for dividends, and the chance to plan your estate. It is one of the more cost-effective policy options in the long term. By creating policy dividends, RBC Whole Life generates long-term growth. This is the ideal solution for clients having predictable long-term needs.
- Multiple riders available
- Online account access
- Digital e-policy
- Available to permanent residents only
- Option of level costs or annually renewable term costs
- Three death benefit options
- Non-taxable disability protection
Genesis by iA Financial Group is a flexible product that allows you to save and maximize your estate tax-free, insure your mortgage, protect the value of your business, have access to liquid assets for additional retirement income, deal with the unexpected, or bring a project to life.
- Guaranteed costs of insurance
- Surrender value
- Disability benefits
- No electronic policy
Universal life insurance is a flexible permanent life insurance. Not only does it offer traditional protection, but it doubles as a tax-deferred investment account.
This guide offers everything you need to know about universal life insurance plans, including their benefits, costs, how they work, and more.
Use our free tool to compare the best universal life insurance plans in Canada now and get your free personalized quote today.
Best universal life insurance Canada 2024
- iA Groupe financier: Term, whole, and universal policies
- RBC Life Insurance: Backed by Canada's largest bank
- Canada Life Insurance: Merged entity of 3 top insurers (Great-West Life, London Life, Canada Life)
- Sun Life Insurance: Oldest and one of the largest insurers in Canada
- BMO Insurance: Age 0-80 permanent life available
- Equitable Life of Canada Insurance: Ability to convert term policies to permanent plans
- Ivari Universal Life Insurance: Established Canadian insurer, 80+ years
What is Universal Life Insurance?
Universal life insurance (UL) is a type of permanent life insurance. As long as the policyholder maintains their coverage by making payments they are protected for life with their universal life insurance policy.
Universal life combines a savings and investment vehicle with the traditional life insurance component encouraging you to grow your wealth for you or your beneficiaries to use it later. It is flexible too. You can pick your investments while benefiting from tax-preferred savings. It’s possible to withdraw money from or borrow against your policy.
These policies come with a guaranteed death benefit, so you are confident that you’ll be able to leave something to your loved ones when you pass away.
How does Universal Life Insurance work?
When you purchase a universal life insurance policy, you are buying death benefits and investment.
The insurance company determines a goal premium that it believes would be adequate to pay the cost of coverage while also increasing the cash value of the policy, but premiums are flexible.
Paying more or less than the target will mean more or less money to go toward growing the cash value of your life insurance. If you miss a premium payment the amount is deducted from the value of the policy.
Here are a few points to keep in mind:
- Any remaining or additional funds after paying the premium are allocated to the investment portion of the policy.
- You chose how to invest the funds.
- As long as there is enough money left over to pay for the insurance, you are free to utilize the funds in your account as you see fit.
- When you pass away, a beneficiary whom you’ve picked will inherit the money from your insurance policy.
Universal life insurance explained
Sarah, a 35-year-old from Ontario, purchases a universal life insurance policy with a $500,000 death benefit. She pays a flexible premium of $150 per month, a portion of which goes toward the cost of insurance, and the remainder goes to the cash value. After 10 years, the policy has accumulated a cash value of $20,000. If needed, Sarah can access this cash value for purposes like supplementing her income or covering unexpected expenses.
What are the types of universal life insurance?
What is standard universal life insurance?
As explained earlier, standard universal life insurance or simply universal life insurance is the most basic form of UL. It offers a flexible premium and an interest rate on the cash value component that is set by the insurance company. The cash value can increase over time, depending on the amount of premium paid and the current interest rate environment.
What is variable universal life insurance?
With certain restrictions, a variable universal life policy allows you to choose where to invest the money, unlike a whole life policy, in which the company or provider determines where to invest this cash value. You are given a variety of investing possibilities by the provider which can demand regular monitoring, so for individuals who prefer a hands-off attitude, it is not the best option.
A variable universal life insurance policy's objective is to build cash value that can be withdrawn and utilized for different life events, such as paying off a mortgage, paying for medical expenditures, or taking a global vacation. Additionally, your insurer will continue to pay a death benefit to your beneficiaries even if you pass away too soon or don't use all of your cash value.
What is index universal life insurance?
Indexed universal life Insurance (IUL) is a form of permanent life insurance that functions equivalently to UL policies except how cash value is accrued.
In contrast to just using non-equity earning rates, IUL cash value growth is possible based on a stock index, which is a predetermined collection of different stocks. IUL, like universal life insurance, allows you to modify your premium as your cash value increases, giving you the option of eventually switching to a zero-cost policy where your accumulated cash value pays for all premiums.
Keep in mind that indexed universal life Insurance policies are more expensive than other types of life policies due to increased premium expenses and associated fees. Additionally, be sure you comprehend how the insurance company will determine your interest rate, the earnings cap, and other potential expenses.
What is guaranteed universal life insurance?
A no-lapse guaranteed universal life insurance gives you a policy with all the benefits of standard universal life insurance with the added certainty that the coverage won't lapse. To prevent the policy from expiring, a predetermined minimum premium depending on your coverage amount must be paid.
This can be a better option if you don't want to pay close attention to your policy but still want the benefits of universal life insurance coverage.
Is universal life insurance worth it?
Life insurance is a powerful tool for providing for your loved ones when you are no longer around.
Depending on your investment needs and beneficiaries, universal life insurance may be the right choice for you. They are a good match if you are looking for a permanent policy with the extra advantages of flexible investment alternatives, tax-sheltered growth, and premium flexibility.
However, if you'd prefer a less expensive choice and only require coverage for a certain period, you may look into other possibilities, like Term Life insurance. From an investment perspective, RRSP and TFSA accounts also offer tax advantages.
How much does Universal Life Insurance cost?
The cost of Universal Life insurance will vary from person to person since it depends on so many factors:
- Gender: The cost of this policy is generally cheaper for women than for men.
- Age: The younger you are, the lower your rates will be
- Amount of coverage: The higher your coverage is, the more expensive your policy rate.
To get an idea of the average cost of universal life insurance quotations, check the following chart.
| Coverage amount | Gender | Age: 30 | Age: 40 | Age: 50 |
|---|---|---|---|---|
| $250,000 | Female | $104 | $160 | $252 |
| $250,000 | Male | $121 | $183 | $286 |
| $500,000 | Female | $194 | $309 | $489 |
| $500,000 | Male | $223 | $353 | $559 |
| $1 million | Female | $380 | $610 | $968 |
| $1 million | Male | $439 | $698 | $1,107 |
Life insurance rates vary with individual circumstances and you must get quotes from multiple providers. It may seem daunting but we've made it easy for you. Use our comparator below to compare the best plans and get free universal life insurance quotes in no time.
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What are Universal Life Insurance pros and cons?
UL presents some tangible benefits over a term life insurance or a whole life policy. But even with all the flexibility and investment advantages, there are also disadvantages to consider.
Advantages of universal life insurance
- Adjustable premiums: You can easily modify universal life premiums to match your financial situation, unlike other kinds of life insurance. You choose to pay larger rates more frequently, lower premium payments, skip payments, pay out-of-pocket for premiums, or pay premiums using the policy’s accumulated cash value.
- Access to the cash value: You can easily borrow against your policy. You may not even need to pay back the loan since you already have cash value in your policy. Be careful to only make a partial withdrawal as a full one may leave you with nothing and cancel the policy.
- Adjustable Death Benefit: You have the freedom to adjust your death benefit, typically at any moment, to tap into the policy’s cash value. For instance, if your death benefit was primarily intended to replace your income while your children were still young, you might decide to lower it after they start working as adults. Reducing the policy's death benefit allows you to lower your premiums. Alternatively, you can increase it to leave a larger death benefit to your beneficiaries.
- Tax-deferred growth: The policy’s cash value growth is tax-sheltered making it a nice way to save money. Withdrawals may be taxable.
Disadvantages of universal life insurance
- Cost: Universal life insurance policies can be more expensive than term or whole-life policies.
- Higher fees: The investment component of universal life insurance means more administration and higher fees.
- Adjustable premiums: The cash value of the policy decreases if the minimum premium is paid, if less is paid than the target premium or if payments are skipped. This can mean there is no excess premium to allow the policy to accrue cash value or a decrease in the policy’s monetary value. It can even mean the policy expires! If the cash value is only used to pay the premium, the policy will eventually run out of cash value, at which point your coverage may cease.
- Access to the cash value: The money you borrow does not come directly out of the cash value but from the insurance provider with the cash value serving as collateral. Even though you don't have to pay it back, the loan is not free money. The cash value of your policy will decrease if you don't at least pay the interest.
- Decrease death benefit: Reduced death benefits can mean that your beneficiary will receive less money than you had anticipated when you purchased the policy.
- Increasable death benefit: Increasing your death benefit typically requires a medical test because you must once again pass the insurance company's underwriting requirements. This is likely to increase your premium.
Universal life insurance vs whole life insurance
Trying to choose between whole life and universal life insurance? Here are the main differences.
| Features | Universal Life Insurance | Whole Life Insurance |
|---|---|---|
| Stability | No. If cash value is only used to pay premium, the policy may eventually run out of cash value, at which point your coverage may cease. | Yes. No matter when policyholder dies, beneficiaries get guaranteed death benefit. |
| Flexible Premiums | Yes. Depending on the investments you choose, premiums may change. You are free to alter number of premiums during the term of the contract. | No. When policy is purchased, premiums are set, guaranteed never to rise, as long as you continue to pay them. |
| Investment Account | Yes. Policyholder may invest in any way they like tying the value of policy to the success of their investments. Cash savings will accrue interest but losses are also possible. | Sometimes. Cash surplus value does not accrue interest, but participating policies may receive dividends if company assets turn a profit. |
| Tax Advantages | Yes. Market gains earned by investments are tax-sheltered. | Yes. Dividend payments are tax-sheltered. |
| Borrowing | Automatic premium loans are triggered by unpaid premiums. If loans surpass the cash surplus value, the policy will lapse. | Yes. Many whole-life policies let you borrow up to 90% of cash value. |
| Missed payments | Value of the account is instantly deducted for missed payments. If account value can't cover payments, coverage will cease. | Automatic premium loans are triggered by unpaid premiums. If loans surpass cash surplus value, policy will lapse. |
If you're wondering which type of permanent life insurance suits you best, look no further. Use our free comparator below to explore the best life insurance options in Canada, get personalized quotes in seconds, and find a policy that truly fits you best.
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What is the best universal life insurance in Canada?
The best UL in Canada varies based on your individual needs. Focus on your budget, coverage needs, and preferences for flexibility. You could use our comparator to get quotes and find a plan that's best for you. However, here are some of the best providers of UL.
| Provider | Basic Features | Get a quote |
|---|---|---|
| Sun Life |
| Get a quote from Sun Life |
| iA Financial Group |
| Get a quote from iA Financial Group |
| RBC |
| Get a quote from RBC |
| Canada Life |
| Get a quote from Canada Life |
| BMO |
| Get a quote from BMO |
| Equitable life of Canada |
| Get a quote from Equitable Life |
| ivari |
| Get a quote from Ivari |
