Compare the best universal life insurance quotes in Canada

Universal life insurance is a type of permanent life insurance product which combines a death benefit with an investment component. Like other types of life insurance, these plans pay out a set lump sum to your named beneficiaries upon your passing, offering coverage for various needs (such as estate planning). A portion of your premiums also go towards a cash value reserve – this is an investment account which allows your money to grow on a tax-deferred basis.

Although complex, a universal life insurance policy is still a form of life insurance coverage at its core. This means that by paying regular premiums, your insurance provider agrees to pay out a set death benefit to your loved ones upon your passing.

There are two components to your premium payments. Firstly, you'll need to cover the cost of insurance – this is the minimum amount you need to pay in order to keep your policy active, covering administrative fees. Anything paid on top of this goes towards your cash value account which is a reserve of funds you can access during your lifetime.

The cash value is used for investing as money within this account grows on a tax-deferred basis – you won't need to pay income tax on the gains until you take out earnings. In comparison to whole life insurance, the cash value account for a universal plan comes with more options. You can choose where you want your funds invested (e.g. stocks, bonds), depending on the level of risk you're comfortable with taking on. Some policies offer minimal guaranteed interest rates while others allow you to invest in index and variable funds.

As your cash value grows, you can withdraw or borrow from it. Withdrawals often come with tax implications, but if you're planning on paying the money back, you'll usually only be subject to interest. If there are enough funds, you can also use the cash reserve to cover the base cost of insurance, allowing you to lower your out-of-pocket premium payments.

Aside from the flexibility of your premiums, the death benefit on a universal life insurance policy is also flexible. If you find that you need more or less coverage, you can negotiate with your insurer – increasing the amount, however, may require a medical exam.

Because these policies are a form of permanent life insurance, the benefit will eventually be paid out after death. Your loved ones will receive a tax-free lump sum that can be used for anything – estate planning, succession planning, and more. Any unused cash value, however, is generally left with the life insurance company. 

Universal life insurance can be a worthwhile product, but it's not for everyone. If you only need coverage temporarily – say to cover an outstanding mortgage – then term life insurance will most likely be the more suitable, cost-effective option. And even if you've determined the need for a permanent policy, whole life insurance can offer more simplicity and less risk.

Universal life plans are designed to meet the needs of specific individuals – those looking for flexible policy options and tax-advantaged investing (especially after other accounts, such as the TFSA and RRSP, are maxed out). Here are a few sample scenarios in which this type of policy could come in handy.

While the cost of universal life insurance will differ on a case-to-case basis, here are three average rates we pulled from top Canadian providers. Keep in mind, however, that these numbers are representative of one hypothetical policyholder – to find the exact cost you'll be paying, be sure to compare universal life insurance quotes with us today.

While the premiums you pay for a universal life insurance policy are flexible, you'll still need to make sure your cost of life insurance is covered – this is the minimum amount of money needed to ensure your policy stays active. Insurers offer quotes for minimum payments based on several different factors, including the following.

Universal life insurance and whole life insurance are two of the most popular types of permanent plans – here, we cover the main policy features of the products, so you can better understand the similarities and differences.