Universal Life Insurance Universal life insurance combines long-term insurance protection and significant tax-related and other financial benefits. Policy Control Universal life offers considerable control and flexibility by enabling the policy owner to select and change premium amounts, premium payment periods and investment options. Tax-Free Payout of Death Benefits to Beneficiaries  Naming an appropriate beneficiary may make the cash value of your policy and its death benefit proceeds exempt from creditors’ claims. Wealth Management As touted by national accounting firms, proper financial planning combined with a universal life policy can significantly further estate and investment planning objectives. Through your policy, you can control the investments (TSX, Bonds, Seg Funds, etc) in your own selected portfolio and see detailed illustrations of where your funds are invested. Lower Fees The universal life approach may provide an opportunity to reduce or eliminate probate fees. Deferred Income Tax Few investment vehicles other than conventional RRSPs and universal life allow you to defer your income tax savings while you maintain access to equity markets and also maximize returns. Unlike RRSP contributions, which are made with before-tax dollars, insurance premiums are not deductible. In both cases, income earned is tax-deferred until the policy’s maturity.  Funds withdrawn from your policy during your lifetime are taxable to the extent that the amount withdrawn exceeds its adjusted cost base. On death, however, the entire amount (that is, the original insurance amount plus the accumulated cash value) is received tax-free as a death benefit. Alternatively, funds withdrawn may be treated as a loan against your policy, which is repaid from the death benefit. Universal Life Insurance Maxed out your RRSP? There is a solution. Example: You have $26,000 that you would like to put into your RRSP this year, but you can only add a maximum of $22,000 each year (unless you have room left over from last year). Assuming that you have no room to add more than $22,000. You now have $4,000 in excess. What can you do with it? Use universal life as an additional tax deferral vehicle. RRSP versus Universal Life           RRSP     Universal Life     Deposits     Amounts invested are tax deductible     Amounts invested are not tax deductible     Amounts Earned     Your savings accumulate tax-free     Your savings accumulate tax-free     Withdrawals     Withdrawals (capital and interest) are 100% taxable     Generally only interest income is taxable.     In some cases there may be no income tax owing on the amount withdrawn     Maximum Contribution     Your maximum contribution is 18% of your income, minus your pension adjustment.     The overall ceiling is currently $22,000.     The more insurance coverage you acquire, the more tax-free savings opportunities you enjoy.     The faster and sooner you save, the more tax-free savings opportunities you enjoy.     By exploiting the full potential of this tax shelter, you can maximize your tax-free savings     Maximum Investment Age     Age 71     No age limit     Type of Investment Available     The following investments are available from :     • Guaranteed Investment Certificates (GICs) • Mutual Funds • Stocks     Investment options include: • Guaranteed Investments • Daily Interest Option with guaranteed minimum return • 1,3,5 & 10 year Guaranteed Interest Option with guaranteed minimum return • Variable Investments • Index funds tied to world markets (Canada, United States, Europe, and Asia). • You can maximize your investment returns by combining insurance with a diversified portfolio and building in exactly the level of risk required for your desired rate of return.