What Is Universal Life Insurance? Check Benefits

Universal Life Insurance in Toronto is a type of perpetual life insurance. With a universal life policy, the insured person is covered for the duration of their life as long as they pay premiums as well as fulfill any other requirements of their policy to maintain coverage. Like many permanent life policies, Universal Life Insurance in Ontario combines a savings component (called "cash value") with lifelong protection. When you pass away, the policy's decease benefit is paid out to your beneficiaries.

What Are The Remunerations Of Universal Life Insurance?

Beyond lifelong protection, there are a few additional features of Universal Life Insurance in Ontario:

• You can withdraw money or borrow against the policy's cash worth.
• Your cash value earns interest.
• You have suppleness with premiums.
• You can alter the death benefit.

Withdraw Money or Borrow Against It

When you pay your premium on a Universal Life Insurance in Toronto, a portion of each payment goes toward paying for the death advantage. Another portion also goes to building up the policy's cash worth. Over time, after money has accumulated, you may be able to withdraw or borrow against the cash worth of the policy (the obtainable amount will vary by company). The rule on how and when you can do this varies by insurance company as well as policy. However, it's significant to know that this may reduce your death benefit, create a tax implication or even cause your policy to lapse.

Earn Interest on Your Policy's Cash Value

The cash value of a universal life policy usually earns interest that's in line with current money market rates. Of course, it's significant to note that the interest rate will fluctuate along with the market, which means the interest you receive may also go down. But, some companies proffer protection against that with a minimum performance guarantee on the policy.

Flexibility with premiums

If the cash worth of your account can cover the costs, you may have the ability to lower or stop paying your premiums on a universal life policy for a definite amount of time.

This can be useful if money becomes tight and you're looking for ways to lower monthly bills. But, there can be negative consequences, too. For example, your coverage may end if you use up the account's cash value to pay for premiums.

Keep in mind that even though your premiums are flexible, you must maintain a positive cash worth; otherwise your policy will lapse (meaning you no longer have coverage). Your insurer may proffer a grace period -- a stated amount of time in which you have to make a payment to restore your policy to a positive cash value status before coverage lapses.

Adjust the Policy's Death Advantage

The suppleness of a universal life policy also extends to the death benefit. At some point, you may want to upsurge the amount that's paid out upon your death. This is something some insurance companies permit, as long as you pass a medical exam. Likewise, you might choose to lessen the death benefit, to reduce the cost of the policy. Remember that if you increase the policy's death benefit, it may upsurge the premium you pay.

With a universal life insurance policy, you may be able to adjust your premiums and death benefit over time to suit your needs. With a Universal Life Insurance in Ontario, the premiums and death benefit are fixed for the period of the policy.