When MATH is Mathing for Universal Life Insurance
By: Joan Diaz
A lifetime financial tool for responsibilities that don’t follow a timeline
Some financial responsibilities don’t expire at age 65.
Some risks don’t disappear when the mortgage is gone.
Some goals don’t fit inside a 10‑ or 20‑year window.
UL solves problems investments can’t even enter the ring for — the kinds of lifelong tax, liquidity, and legacy challenges that other investment vehicles were never designed to handle.
Below is the full, compelling case for UL without comparing it to RRSPs, TFSAs, or any investment vehicle.
Some financial obligations don’t end — and the final tax bill can be massive
When you pass away in Canada, the government treats many of your assets as if you sold them all on your last day, even if your family plans to keep everything.
This creates a huge final tax bill that your next of kin must pay immediately.
They don’t follow a 10 or 20 year timeline.
They show up the moment you die, and they can financially crush your family if there’s no liquidity.
Here’s what gets hit:
Rental properties
Deemed sold at fair market value. Capital gains tax applies instantly.Cottages, cabins, or farmland
These often appreciate for decades. The tax bill can be so large that families are forced to sell the property just to pay CRA.Non‑registered investments
Stocks, ETFs, mutual funds — all treated as sold at death, triggering tax on the growth.Final expenses and debts
Funeral costs, legal fees, and outstanding debts must be settled before your estate is distributed.Estate equalization for children
If one child gets the house or business, the others need cash to balance things out — and that cash has to come from somewhere.
A UL policy can be used to pay the large tax bill your estate faces at death. Instead of your family scrambling to sell property, liquidate investments, or take on debt just to satisfy CRA, the UL death benefit creates instant, tax‑free liquidity at exactly the moment it’s needed. It turns a guaranteed future tax problem into a guaranteed future tax solution.
They don’t follow a 10‑ or 20‑year timeline.
They show up the moment you die, and they can financially crush your family if there’s no liquidity.
A term policy cannot solve a permanent problem.
Creating an inheritance for the people you love
Not everyone has liquid assets.
Not everyone wants their kids to inherit a tax bill instead of wealth.
UL creates a guaranteed, tax‑free inheritance, even if:
your investments fluctuate
your real estate is illiquid
your retirement lasts 30+ years
your savings get used up
It’s certainty in a world full of variables.
Wealth transfer — the cleanest, simplest, most tax‑efficient method
UL is the only tool designed to move wealth from one generation to the next without friction.
How it works:
You fund the policy
Cash value grows tax‑advantaged
Death benefit passes tax‑free, instantly, privately
No probate
No delays
No government interference
This is wealth transfer done right.
A permanent policy you only pay for 10 or 20 years
This is where people go:
“Wait… so I don’t pay forever?”
Exactly.
With UL, you can:
• fund it aggressively for a set period
• build enough cash value
• let the internal growth cover future costs
The policy becomes self‑sustaining.
You’re not paying for insurance forever —
you’re building an asset that eventually carries itself.
Flexibility during financial hardship
Life happens.
UL gives you the ability to:
pause premiums
reduce payments
let cash value temporarily cover the cost
It adapts to your life instead of punishing you for being human.
Tax‑free access through policy loans
You can borrow against your cash value:
tax‑free
without selling investments
without triggering capital gains
without income tests
without penalties
And depending on the cash value, you can even choose not to repay during your lifetime — the death benefit settles the loan.
This is how wealthy families create tax‑free retirement income.
Low‑interest collateral loan option
Banks love UL because:
it’s stable
it’s predictable
it’s backed by the insurer
That’s why collateral loans against UL often come with very low interest rates.
You get liquidity without touching your investments.
A tool to melt down your non‑tax‑efficient assets (RRSP, LIRA) in retirement
RRSPs and LIRAs are tax bombs in retirement:
every withdrawal is fully taxable
forced RRIF withdrawals can push you into higher brackets
they can trigger OAS clawbacks
they inflate taxable income late in life
UL gives you a strategy to melt down these accounts efficiently:
use UL loans to supplement income
withdraw smaller amounts from RRSP/LIRA over time
stay in lower tax brackets
reduce the size of the tax bomb at death
shift wealth into a tax‑free vehicle
leave a clean, tax‑free benefit to your family
UL becomes the “pressure‑release valve” that lets you control your taxable income in retirement.
This is advanced math — and it mathes beautifully.
Enjoy benefits while alive
People hate paying for insurance because:
“Why would I pay for something I don’t want to use?”
UL flips the script.
With UL, you get:
protection if you die
benefits while you live
You’re not just paying for death.
You’re building an asset you can use:
for emergencies
for opportunities
for retirement
for legacy
Final Thoughts
It’s the only insurance that rewards you without requiring you to die first.
UL is not an investment vehicle designed to “beat” RRSPs or TFSAs.
It’s not even playing the same sport.
It operates in a completely different arena — one built around control, tax strategy, liquidity, and legacy.
Trying to compare UL to RRSPs or TFSAs is like bringing a ballerina to a boxing match.
Both are talented, but they’re built for completely different arenas.
RRSPs and TFSAs are growth vehicles.
UL is a control vehicle — the tool that handles lifelong tax liabilities, estate costs, liquidity needs at death, tax‑free wealth transfer, permanent protection, access to tax‑free leverage, and RRSP/LIRA melt‑down strategies.
UL isn’t competing with your investments.
It’s completing the parts of your financial plan that investments cannot.
UL makes sense when your financial responsibilities outlive the timeline of term insurance — and when you want to enjoy the benefits of your money while you’re still alive. When the math is mathing, UL is the only tool that checks every box.
Contact us to learn more.
