Universal life insurance
Universal life insurance: protect and grow, tax-sheltered
Lifetime insurance paired with an investment account you control. You decide the amount deposited, the funds selected and the pace of deposits, within tax limits.
- Permanent coverage + investment account
- Flexible deposits above the cost of insurance
- Tax-sheltered growth, tax-free death benefit
Connect with a partner financial security advisor.
- AMFCertified advisors
- $0Free quote
- FR · ENBilingual service
- QuebecProvince-wide
What is universal life insurance?
Universal life insurance combines permanent coverage and an investment account in a single contract. Each deposit first pays the cost of insurance and fees; the surplus is invested in the options you choose (guaranteed interest accounts, index funds, managed portfolios).
The account grows tax-sheltered within the limits allowed by law. At death, the insured amount and, depending on the option chosen, the account value are paid tax-free to the beneficiaries.
At a glance
- Term
- Lifetime
- Relative cost
- $$ to $$$
- Cash value
- Depends on investments
- Deposit flexibility
- High
Free · No obligation · An advisor compares insurers for you
How it works
- 1
You choose the coverage
Level amount or increasing amount (insurance + account value), level cost of insurance for life or yearly renewable term (YRT).
- 2
You set your deposits
From the minimum required to keep the policy in force up to the tax maximum. You can increase, reduce or pause deposits as your means allow.
- 3
You allocate the account
Among the insurer's investment options, according to your investor profile. Returns are not guaranteed, except for guaranteed interest accounts.
- 4
You use the value
Withdrawals, policy loans or a bank loan secured by the contract to supplement retirement; or transfer at death, tax-free.
Advantages
- Additional tax shelter once RRSPs and TFSAs are maximized
- Flexibility: deposit amount and frequency can change, premiums can be paid from the accumulated value
- Wide choice of investments and risk profiles
- Transparent cost of insurance, separate from the savings portion
- Advanced strategies for corporations (capital dividend account, key person insurance)
- Death benefit and account value transferred outside the estate
Things to consider
- Account returns are not guaranteed: poor performance may require higher deposits to keep the policy in force
- Yearly renewable cost of insurance (YRT) becomes very expensive with age if not levelled
- Management fees and possible surrender charges in the first years
- Requires regular follow-up with your advisor (allocation, deposits, tax ceiling)
- More complex than whole life: best suited to people who already have a solid savings plan
Options and riders
Universal life is modular; most insurers offer these options, with variations.
Term rider
Adds high term coverage at low cost for the mortgage or family income.
Waiver of deposits on disability
The insurer pays the cost of insurance (and sometimes a savings deposit) if you become disabled.
Critical illness
Lump-sum benefit at diagnosis, built into the same contract.
Child rider
Covers children at low cost, with the right to convert at adulthood.
Guaranteed insurability
Increases the amount on set dates without evidence of health.
Performance bonus
Some contracts pay an annual bonus on the account value after a number of years.
Whole life or universal life?
Both are permanent. The difference is mostly who manages the savings and what is guaranteed.
| Criterion | Whole life | Universal life |
|---|---|---|
| Premium | Level and guaranteed | Flexible, between a minimum and a maximum |
| Cash value | Guaranteed by contract | Depends on the chosen investments |
| Investment management | By the insurer | By you, with your advisor |
| Profile | Predictability and simplicity | Flexibility and control |
Who is it for?
- People who have maximized their RRSPs and TFSAs and want an additional tax shelter
- Incorporated professionals and business owners who want to insure and grow corporate surplus
- Anyone who wants permanent coverage with control over investments
- Families planning a legacy or tax on buildings or a cottage
Options to compare with your advisor
Trademarks of their respective owners. Sommet Protection is not affiliated with any insurer and does not distribute any product.
How it works
- 1
Request your callback
Your coverage, your first name, your mobile: three answers are enough. The rest is optional.
- 2
An advisor contacts you
Your request goes to one partner advisor, who calls you at a time that suits you. You follow the progress live.
- 3
Receive your scenarios
You get clear options, with the advantages and limits of each. You decide.
Frequently asked questions
What is the difference between universal life and whole life?
Whole life offers guaranteed premiums and cash value, managed by the insurer. Universal life separates insurance and savings: you choose the investments and your deposits are flexible, but growth depends on returns.
What happens if I can no longer deposit?
As long as the account value covers the cost of insurance, the policy stays in force. If the account runs out, you will have to resume deposits or the coverage ends after a grace period.
Level cost or yearly renewable term (YRT)?
Level cost is higher at first but fixed for life. YRT is very low early and rises every year; it only suits those who plan to build a large value quickly. Your advisor compares both projections.
Are withdrawals taxable?
A withdrawal is taxable on the portion exceeding the policy's adjusted cost basis. A loan secured by the contract is generally not taxable, which makes it a common retirement income strategy.
Is there a ceiling on deposits?
Yes. The law sets a maximum above which the policy would lose its tax-exempt status. The insurer monitors this ceiling and notifies you; the advisor adjusts the coverage if needed.
Can my corporation own a universal life policy?
Yes. Corporate-owned insurance lets you pay premiums with corporate dollars and, at death, pay part of the benefit to shareholders tax-free through the capital dividend account. Consult your accountant and your advisor.
Complementary coverage
Our coverage
Choose the coverage you're interested in — your advisor can also combine them.
Life insurance
Term, permanent, universal, participating or simplified issue: understand the differences, then let an advisor compare insurers for you. Free and without obligation.
Learn moreTerm life insurance
Cover your mortgage, your debts and your family's income for a specific period. Your advisor compares terms, premiums and options from several insurers.
Learn morePermanent life insurance
Coverage designed to last a lifetime, provided the policy stays in force. Depending on the product, premiums and cash values may be guaranteed or variable.
Learn moreParticipating life insurance
Permanent insurance whose death benefit and value increase each year through dividends paid by the insurer — without you having to manage investments.
Learn moreSimplified issue life insurance
A few health questions, no blood test, no medical appointment. Coverage that stays accessible even if you were declined elsewhere or have a health history.
Learn moreDisability insurance
Illness or accident: your ability to earn an income is your most valuable asset. Disability insurance pays you a monthly benefit while you recover.
Learn moreCritical illness insurance
At diagnosis of a covered illness, you receive a tax-free amount to use as you wish: care, time off, help at home, debts. No requirement to be unable to work.
Learn moreSommet Protection is a marketing company: it is neither a firm nor an insurer, does not sell insurance and gives no advice. This site does not allow you to purchase insurance online. Your request is passed on to an independent, AMF-certified partner financial security advisor who will contact you to analyze your needs. Eligibility and premiums are established by the insurer after reviewing your file. Product descriptions are provided for information purposes and do not replace the insurance contract, which alone prevails.