Universal Life Insurance

Universal life insurance (UL) is permanent life insurance plan with a lot of flexibility. It combines term insurance with an investment account. The insured chooses how to invest the money within the plan (from choices provided by the insurance company) and the life insurance premiums come from the investment portion.

UL allows an insured to see clearly how much of their premium is being saved, how much is going towards actual insurance, and what the administration and commission charges are.

The life insurance portion of the UL policy is term insurance. Some plans are designed to have a level cost of insurance that does not change. This offers good stability. Other plans have an increasing cost of insurance. Generally the increasing cost of insurance starts lower than the level cost of insurance. This can be good or bad. It is good if extra funds are put into the investment account and it does well. It is bad if the investment is performing poorly.

If the investment account is performing poorly, extra premiums may be required later on to pay the premiums on the life insurance. If the investments perform well, then the premium may be lowered or the policy may be leveraged for additional income. There are potential tax advantages from the investment account.

Universal Life is popular among those that like to be actively involved in their finances. This page is a quick overview of the basic components of UL. If you would like more information on Universal Life Insurance - contact us – especially if you are from Ontario.

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