Last updated : July 28, 2023

What is universal life insurance?

Universal life insurance is one of the most flexible types of permanent life insurance for Canadian residents.

It offers key financial planning features such as lifelong protection that never expires and opportunities for tax-preferred savings growth.

Why choose universal life insurance?

Flexible premiums

Select the amount of premiums you pay. Pay more than needed to keep your policy in good standing so that you have more flexibility in the future when you retire or have less income.

Tax-preferred investing choices

Choose from a variety of diversified investment account options. Any interest you earn in your account won’t be taxed while it remains in your policy.

Protect your family

Maximize your estate and financial value for your loved ones and protect them from financial hardship after you die.

Cash accessibility

If your policy has cash value, you may have access to extra funds to supplement your retirement income or during a time of illness. To have cash value, you must pay more than the amount needed to keep your policy in good standing. Please note there may be tax implications to accessing your cash value. Connect with an advisor for more information.

Lifelong protection

Guaranteed lifetime protection – this means your coverage does not end after a certain period.

Protect your business

Offers business owners a tax-efficient way to protect the value of their business.

How does universal life insurance work?

You choose a guaranteed death benefit for your beneficiaries. When you make a payment, your money goes into something called a policy fund.

The policy fund is used to pay for your cost-of-insurance1, while any extra balance can be invested in a broad range of investment account options for tax-preferred savings.

1 Cost-of-insurance (COI) component - COI covers the cost of providing the death benefit, administrative fees, optional benefits added to your policy, and provincial taxes.

Types of universal life insurance plans

At Sun Life, we offer 2 flexible universal life insurance plans. Both allow you to take charge or sit back when managing your life insurance policy.

SunSpectrum Universal Life II

Ideal for people who want:

  • Lifetime protection
  • The opportunity for tax-preferred growth in savings
  • To design an investment mix in their policy using a variety of investment account options

Key Features:

  • Coverage ranges from $25,000 to $5 million
  • 13 investment options
  • A reduced paid-up feature - allows you to reduce your death benefit and stop payments any time after age 70
  • Guaranteed investment bonus rewards you for maintaining and growing your policy fund value

More about SunSpectrum Universal Life II

SunUniversalLife II

Ideal for people who want:

  • Lifetime protection
  • The opportunity for tax-preferred growth in savings
  • Extensive flexibility with a variety of death benefit, cost of insurance, and investment options

Key Features:

  • Coverage ranges from $100,000 to $25 million
  • 5 death benefit options
  • 6 cost of insurance options
  • 21 investment options

     

More about SunUniversalLife II

Talk to an advisor to get a quote or buy universal life insurance

Not sure which permanent life insurance is right for you? Talk to a Sun Life advisor.
Our advisors look at your specific needs to help you decide which insurance products are the best for your situation.

Enter your postal code to find an advisor near you.

Frequently Asked Questions

What is the difference between whole life and universal life insurance?

Whole life insurance offers a guaranteed fixed death benefit and premiums. Some whole life policies can also include a cash value component.

Universal life insurance can offer flexibility on your death benefit, premiums, and the investment savings elements of your policy.

Can I still apply for universal life insurance if I smoke or vape?

Yes. You can apply for universal life insurance, even if you smoke or vape.

However, using tobacco or nicotine can put people at a higher risk of smoke-related illnesses – which can translate to higher premiums.

Have more questions about how smoking, vaping or using cannabis can affect your life insurance?

Read more about life insurance for smokers

Can you convert universal life insurance to whole life insurance?

Generally, universal life insurance contracts do not allow a conversion to whole life insurance.

However, most term life insurance policies can be converted to permanent life insurance policies.

Speak to an advisor for more details

What happens when a universal life insurance policy matures2 ?

Universal life insurance covers you for your entire life, meaning the policy doesn’t mature. If premiums are paid, your universal life insurance policy will never expire.

2 When a policy matures, it means your coverage ends and the policy cash value is paid out to the policy owner. 

Can you cash out a universal life insurance policy?

Yes. There are several ways you may be able to take cash out of your universal life insurance policy. But when you withdraw from your policy or take a policy loan, your total death benefit may decrease.

3 common ways to take cash from a policy (if there’s enough cash value) are:

Partial withdrawal – you can withdraw a portion of your cash at any time.

Policy loan – allows you to access cash by borrowing against the policy fund.

Full withdrawal (cancelling your policy) – if you cancel your policy, you will receive the cash surrender value minus any fees, loans, or market value adjustments.3

Connect with an advisor to learn more about how to cash out a universal life insurance policy

3 There may be tax consequences associated with a full (cancelling the policy) or partial withdrawal or taking a policy loan. Surrender charges may also apply to full or partial withdrawals.

Does Canada have indexed universal life insurance (IUL) or variable universal life insurance (VUL) policies?

No, Canadian life insurance companies don’t offer indexed universal life insurance or variable universal life insurance policies.

You may have come across these terms while researching universal life policies. But both IUL and VUL are specific to the American market.

Where can I learn more about universal life insurance?

An advisor can provide more detailed information about universal life insurance and answer any questions you have.

Enter your postal code to connect with an advisor near you.

Additional resources

Find out how much life insurance you need by trying our
Life Insurance Calculator

Do you need to submit a life insurance claim?
Learn how to submit a life insurance claim

Video: What is the difference between the 4 different types of life insurance?