It’s guaranteed, lifelong protection that lets you invest and build your wealth. And it’s one of the most flexible and affordable products available that covers you for life.
There are two parts to a universal life insurance policy: Insurance and investment. You choose your investments and wealth can accumulate tax-free, within limits set by the government. You can withdraw or borrow from your policy, with certain tax implications. You can also choose who to leave your money to.
How does it work?
You pay a premium for your insurance coverage.
After you’ve covered the insurance costs, the rest of the money goes to the policy’s investment part.
The money goes toward investments of your choice.
You can access the money in your account to use however you want, as long as there’s enough left to cover the insurance costs.
You choose who receives the money from your insurance protection when you die. Universal life insurance gives you access to money you’ve earned in your policy.
You can access the money as long as enough is remaining to cover your monthly insurance cost, as well as any cancellation charges, policy loans and market value adjustments.
Withdrawals
You can make a partial withdrawal at any time.
Withdrawals decrease your policy’s cash value as well as your beneficiary’s payment.
The minimum withdrawal is $500.
The maximum depends on your policy. You pay income tax on any withdrawals you make from your policy.
Policy loans
Borrow with interest from your policy’s cash value – as long as there’s enough money to cover the cost of canceling your Insurance – and eventually pay it back.
Your cash value continues to grow as if you hadn’t taken out the money.
Easy answer by Canada Life