Universal Life Insurance: Increasing Versus Level Death Benefits

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Universal life policies began increasing in popularity in Canada during the 1980s with the introduction of rising interest rates. Consumers at that time wanted to take advantage of rising interest rates within a tax sheltered environment and Universal policies afforded them that opportunity.

Universal Life insurance unbundles permanent life insurance and separates the cash value component from the life insurance component of the policy.

Further changes have been made to Universal life plans over the past two decades, including a wider variety of investment options. Many companies offer numerous investment vehicles within their Universal Life plans.

BMO Insurance offers over 400 different investment options within its Universal Life program, including a whole range of equity-based funds.

Universal Life policies also provide the insured a choice between a level death benefit and an increasing death benefit.

With a level death benefit option, the death benefit remains level throughout the policy and the insurance risk charges decrease as the insurance company deducts the policy cash value from the face amount, when setting its annual risk charge.

On an increasing death benefit option, the death benefit equals the face amount plus any cash accumulation within the policy. Under this option, the risk charges remain level, but the death benefit increases each year according to the value of the investment account.

For more details, please feel free to contact us at 1-866-899-4849 or visit our Universal Life Quote Page.