Universal life insurance is a permanent affordable policy

Universal life insurance is a permanent, affordable policy that can help keep your premiums low over time and allows you to build tax-sheltered wealth inside your professional corporations. Consider purchasing universal life insurance between ages 30 and 55 if you:  

• Provide for the family so their lifestyle can be maintained  
• Cover out standing loans and mortgages  
• Fund partnership agreements  
  

Then between age 55 and 65, many professionals really wonder “why am I carrying all this life insurance?”  

Between age 65 and older the need for life insurance increases again. Now it is for estate planning. For professionals, the best place to save money when you’re working is in your RRSP account and in your professional corporation. Now you reach age 65, your accountant shows you how much tax is owed to the government by the estate on the last death before the money goes to your family.  

At age 65 it is not the best time in life to be buying life insurance. By having some universal life insurance in force in the earlier years is a great start to estate planning and will save you a large amount of money in the later years.  

UNDERSTANDING UNIVERSAL LIFE POLICIES 

Universal life insurance is permanent life insurance. It’s designed to help you provide financial support to your beneficiaries. What makes universal life insurance unique is that it allows you to invest your money and build wealth over time - tax free. Universal life policies can be set up with level premiums to the age of 100, or you can plan to increase your premiums and have the policy paid up in 10, 20 or 30 years.

Most policies allow you to customize a coverage plan to suit your specific needs. You can choose the type of death benefit contained in the policy. A few common options are:  

• Level face - The death benefit remains the same for as long as you own the insurance policy.
• Face plus - The cash value is added to the death benefit and both are paid out on death.

Generally, you can choose the insurance costs to be a level structure or yearly increasing structure.  

With the level payment structure, you can pay premiums all the way to age 100, or the plan could be set up to pre-pay itself so you can stop premiums at some point in the future.  

With the yearly increasing payment structure, the insurance cost is very low in the early years which allows our cash values to grow faster.  

In some cases, you can switch between the two payment structures. This way, you can use the yearly increasing structure to build up early account values quickly before switching to the level structure to grow your investment over time.

Universal life Insurance with Level premiums to age 100:  

A male non-smoker age 35, 750,000 dollars of coverage would cost 548.56 per month, with premiums level to age 100. 

A female non-smoker age 35,750,000 dollars of coverage would cost 478.63 per month with premiums level to age 100. 

(these rates are correct on April 9, 2020) 

Ask your advisor about the payment options available to you and decide which one best suits your long-term goals.