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Universal life

Universal Life

You’ve decided that you need life insurance. But not just any life insurance will do. You want a financial solution that will protect you during your lifetime and provide for your loved ones or beneficiaries. You may want to consider a universal life (UL) plan.​




​What does a universal life plan offer?

Unlike term insurance which provides pure protection, a UL policy also includes a savings component. This savings component allows for tax-deferred investment growth that can be used in many ways such as supplementing retirement income or helping to cover the costs associated with a disability*. The amount of savings that can be accumulated within this type of plan depends on a number of factors including the age of the insured and the amount of insurance coverage purchased.

Universal life products

Transamerica offers several universal life insurance plans that provide valuable and flexible coverage. These products also include strong guarantees such as the cost of insurance rates1 and the policy fee. Universal life also offers a wide range of investment options, a choice of death benefit options, riders, optional benefits and many other features you and your advisor can use to customize your plan to your specific needs.

What can you do with your universal life insurance plan?

The question really should be, what can’t you do with your UL plan! Because it has a built-in savings component, a UL policy gives you tax efficiencies while letting you:

  • Build assets for your children

  • Help protect your mortgage

  • Enhance your retirement income

  • Provide financial options and solutions for small businesses

  • Help protect your retirement savings in case of an occupational disability or one caused by 26 critical illnesses, including the need for long-term care*

*Restrictions and impacts may apply depending on the type of transaction. Refer to the provisions in the contract for more details.

1 Rates are guaranteed not to change provided there is no change in coverage type, face amount or primary insured.



 How it works


​Universal life insurance, or UL, is one of the most flexible life insurance plans available today. By combining protection with savings, a UL plan offers something for today…and for tomorrow.

How universal life insurance works

With universal life insurance, each payment you make is basically divided into three parts:

  1. A cost for the insurance

  2. This pays for the cost of your insurance coverage.

  3. A deposit into the investment options of your choice

  4. This is where your money will grow without being subject to taxation for as long as it remains in your policy.

  5. A small administration charge or policy fee

  6. This ensures that you are provided with annual reports, allows you to shift investments up to four times a year without an additional fee, and offers you access to many other benefits through Transamerica.

Your UL Interest Options
If a UL policy sounds right for you, your advisor can present you with Interest Options and help you design an investment portfolio that suits your unique risk tolerance. You can choose to invest in Fixed-Rate Interest Options, which guarantee minimum rate of return, or you can choose Interest Options that fluctuate with market performance. It’s your’s your choice.
Accessing the funds in your UL policy during your lifetime

It’s your money, so you should have access to it. By regularly depositing money into the flexible savings amount of your universal life policy you create a fund that you can access through various means and for various needs. You can access the money as Living Benefits, or take a policy loan or withdrawal to enhance your retirement or for other needs.

Each approach outlined above of accessing your funds has a unique set of advantages and disadvantages and each is subject to a different set of tax consequences. When the time comes, your financial advisor can help you decide how to best access the funds in your UL policy based on your current situation. 

What happens when you’re gone

Upon your death, your beneficiary will receive a tax-free death benefit that includes the insurance amount (the net amount at risk) of your policy, plus the accumulated value inside the policy. This money can be used to help secure the future of your loved ones or to help pay any taxes associated with your estate. 

* Surrender charges and taxes may apply.


 Optional benefits


Optional benefits

It’s always good when you can have what you want, how you want it. And that goes for more than just hamburgers! When it comes to creating a universal life insurance plan that meets your specific needs, it’s nice to know that you can customize your base plan with a variety of riders and options. This way you pay for exactly what you need and nothing else.

Of course, not every optional benefit is right for everyone. Each rider comes with its own conditions and limitations that may or may not help you achieve your goals. Your advisor can review the details of all the optional benefits available to you including:

Term Riders
  • When you add one or more Term Riders to your universal life insurance policy you are creating what we call a layered insurance solution that is designed to evolve as your need for protection evolves.

  • Term riders are available in 10-, 20- or 30-years terms.

  • You can add or remove Term Riders as needs arise or drop off

AD&D – Accidental Death and Dismemberment
  • Provides a benefit in the case of dismemberment or death resulting from an accident.

  • Can replace, or help replace, loss of income and extra expenses not covered by provincial health care programs.

  • Other conditions may apply. Please speak to your advisor.

Children’s Insurance Rider
  • Provides low-cost term life coverage on the lives of your children (including stepchildren or legally adopted children).

  • Allows each child to convert his or her coverage to any eligible insurance plan for up to five times the initial coverage amount, subject to certain conditions.

  • Provides paid-up term insurance to each insured child if you, the primary life insured,  die before your children’s 25th birthday.

  • Other conditions may apply. Please speak to your advisor.

Payor Waiver of Monthly Deductions
  • Transamerica will keep your child’s protection in place by paying the insurance charges, should the person who is responsible for paying the premiums, known as the “payor,” die's or become's totally disabled.

  • Insurance protection will continue uninterrupted with monthly insurance charges waived.

  • Other conditions may apply. Please speak to your advisor.

Payor Waiver of Planned Premium
  • Transamerica will continue to make premium payments (up to a defined maximum) to your child’s protection should the person who is responsible for paying the premiums (also know as the “payor”) die or become totally disabled. (Available on select plans only. Ask your advisor for details as to whether this option is available for you.)

  • Other conditions may apply. Please speak to your advisor.

Waiver of Planned Premium
  • Transamerica will continue to make premium payments (up to a defined maximum) into your policy, if you become totally disabled before the age of 65.

  • Ensures that each waiver benefit amount waived will have the same effect as if you had paid it directly to Transamerica.

  • Other conditions may apply. Please speak to your advisor.

Waiver of Monthly Deductions
  • Maintains your valuable insurance protection, if you experience a total disability before the age of 65.

  • The monthly deductions waived will allow you to maintain your existing coverage, providing your family with the secure future you intended for them.

  • This does not cover any premium payments in excess of the insurance charges.

  • Available on select plans only. Ask your advisor for details as to whether this option is available for you.

  • Other conditions may apply. Please speak to your advisor.





What you need to know about your cost for insurance

It may seem like magic – working with your advisor, you will provide all of your personal and medical history, decide how much insurance you want and for how long and, poof, out pops a number. This number is an initial or preliminary quote for how much your insurance is likely to cost per month. It is based on various factors that you have provided such as your age, gender, smoking status, etc. However, it may differ from the final rate you are offered which will take into account more detailed lifestyle and family history information.   

Do I have a choice?

Actually, you do. As with many other areas of your life, you get to make choices and there isn’t always a right or wrong way to go. For example, when it comes to household utilities, some people find it helpful to have equalized billing and pay the same amount each month. Others prefer to pay for what they actually use even though the amount they pay may vary greatly from invoice to invoice. The important thing is that you get to choose the payment schedule that is right for you.  When it comes to your insurance, we also think that you should be able to choose how you wish to pay.

With universal life insurance, you have two options to pay for the cost of your insurance:

  • Annual Renewal Term (ART) cost of insurance

The monthly cost per thousand dollars of insurance, while the same within any given year, increases with each policy year. 

  • level to 100 cost of insurance

The monthly cost per thousand dollars of insurance remains the same, or “level”, for life.

You also have flexible ways to pay your premiums:

  • Monthly, quarterly, semi-annually or annually.

Depending on which cost of insurance option you choose, your payments (also known as premiums), and the total amount paid in any given year, may be different even though your coverage amount will remain the same.


 Investment options


​Investment options

The power of universal life lies in its tax-deferred investment growth. Funds invested in Transamerica’s universal life policies accumulate on a tax-deferred basis within limits set out in the Income Tax Act (Canada) and its regulations. One key benefit is that the pre-tax investment earnings can be used to pay for the cost of insurance. Over the long term, tax-deferred funds generally have the advantage of generating higher net returns than taxable investments with the same risk/return profile due to the tax being deferred on growth. However, the tax-deferred status only applies while the investments are within your insurance policy. If the funds are withdrawn from the policy current taxation rules will apply. 

When you purchase a universal life (UL) insurance policy from Transamerica, a portion of each premium payment you make goes towards the UL fund value. How much of this money goes towards the UL fund value depends on how much additional premium you pay above the monthly insurance charges.

Fund value
The fund value is an account held within your policy that is invested in one or many investment options called Interest Options. Interest Options provide the ability to earn interest on a tax-deferred basis. Your investment in some Interest Options are guaranteed not to decrease in value while others may have a higher return potential but a risk of declining in value. With a Transamerica UL policy, you can choose from a comprehensive range of interest options to create the investment portfolio that’s right for you.

Your advisor will help you select interest options that best suit your risk tolerance, financial circumstances and long-term goals.

Your Interest Options include:

Daily Interest Option This Interest Option, called the Treasury Bill (T-Bill) Interest Option is intended to hold funds for short periods of time and offers a guaranteed minimum interest rate.

  • Provides interest primarily based on the return of Government of Canada Treasury Bills

  • Guaranteed to never credit negative interest.

Fixed-Rate Interest Options (min $500) If you are concerned about market fluctuation, you may wish to consider Fixed-Rate Interest Options which offer minimum interest guarantees.

  • Available in one-, five- and 10-year fixed-rate Interest Options.

  • Provides interest primarily based on the return of Government of Canada bonds in one-, five- and 10-year terms.

  • Guaranteed to never credit negative interest.

Individual Index Interest Options

  • Passive Individual Index Interest Options are linked to the performance of major stock and bond indices around the world.

  • We also offer Individual Interest Options that provide returns linked to the performance of actively-managed mutual funds.

Portfolio Interest Options Ranging from conservative to aggressive growth, Portfolio Interest Options are ideal for investors seeking a comprehensive investment solution. You can work with your advisor to determine your investment objectives and risk tolerance which you can use to select the portfolio that best suits your investment profile.

  • Choice between:

    • Passive Portfolio Interest Options that track the performance of certain stock and bond market indices (e.g. S&P/TSX 60, S&P 500).

    • Managed Portfolio Interest Options combine the skills of a variety of leading mutual fund managers to produce “managed” investment returns.

Talk to your advisor about which Interest Option will help you meet your financial goals.
What about income taxes?

The power of universal life lies in its tax-deferred investment growth. The interest you earn within your policy is not taxable as long as your policy falls within the tax-exemption limits prescribed under the Income Tax Act. Transamerica ensures your policy will continually meet the tax-exemption guidelines.

Need help choosing your interest options?

A licensed insurance advisor can help you choose a mix of Interest Options that is appropriate for your needs and risk tolerance. Always review your profile annually to ensure your financial needs are being met. 


 How much insurance do you need?


How much insurance do you need?

This used to be a tricky question that required a lot of charts and graphs and endless questions but not anymore. Now there’s LifeScripter® from Transamerica. Whether you are focused on saving for your future or paying down your debt…or both, LifeScripter can find the right solution for you.  

Have you tried LifeScripter?

The online LifeScripter tool from Transamerica lets you quickly and easily find out exactly how much coverage you need – now and for the future. On your own, or with the help of your advisor, simply answer a few questions and LifeScripter will analyze your needs and create a solution just for you. This solution can be used as the basis for discussions with your advisor about the right mix of products to best meet your needs. 

So…do you still need the help of a financial advisor?

In a word, yes. Like doctors, lawyers and other professionals, a financial advisor is a highly skilled and well-trained licensed professional. You can expect a financial advisor to make your individual financial interests a top priority, from helping you to understand how much insurance you need to finding the right products to meet those needs. Prior to your initial meeting, your financial advisor may recommend that you use an online tool like LifeScripter which will provide a starting point for your discussions.  

® LifeScripter is a registered trademark of Transamerica Life Canada.

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