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Ways to Use Life Insurance

Make the most of your life insurance.

Deciding what type of and how much life insurance to buy depends on your responsibilities and your financial needs for the future. You can use life insurance to help protect your family and your hard-earned estate, to enhance your retirement income, and much more.

You are on: Protect Your Family

Using Life Insurance to Help Protect Your Family

Your first priority is to help protect your loved ones. Life insurance is one of the most responsible decisions you can make to help ensure that your spouse, children or other loved ones can continue to enjoy the quality of life they deserve.

Our life insurance policies pay a tax-free(1) death benefit that your family can use to:

  • Maintain their current lifestyle/help pay for day-to-day expenses
  • Pay for your children's post-secondary education
  • Pay off outstanding loans and debts
  • Cover final expenses such as funeral costs

How much life insurance do you need?

Expand Short-term affordable coverage

Expand Long-term dependable coverage

Expand Coverage for final expenses and more

Expand Protection against accidents

You are on: Protect Your Estate

Using Life Insurance to Help Protect Your Estate

If you've spent a lifetime accumulating your assets—not only for your own enjoyment, but for your loved ones as well, it's important to plan for what will happen to your estate after you die.

Expand How tax laws affect your estate

Expand What life insurance can do for you

Expand A real life example of estate protection

Expand Sharing wealth with your adult children and building an estate

You are on: Enhance Your Retirement

Enhancing Your Retirement with Universal Life Insurance

If you're concerned about a shortfall in your future retirement income, you might want to consider the benefits of a universal life insurance policy.

Universal life insurance can provide the insurance coverage you need, control over your investments to help you achieve the growth you're looking for, and tax-preferred investment attributes that few other investment options provide. You decide how much insurance coverage you need and how much you can contribute to your investment account, and you pay that amount. Provided certain conditions are met, your investment account income can grow tax-free(2).

Use a tax-exempt universal life insurance policy to:

  • Provide yourself an opportunity to accumulate funds without being taxed on its growth.
  • Generate tax-free retirement income.

How it works

  • Investing the maximum allowable amount can allow you to take full advantage of the tax-preferred accumulation of income that universal life insurance plans offer.
  • Policies usually increase in value over time, and like many other assets, can be used as collateral for a loan from a financial institution, such as a bank, credit union or trust company.
  • At retirement, you can use your policy as collateral to apply for a series of financial institution loans, which, according to current tax laws, can be arranged without tax implications.
  • At the time of your death, the loan amount and accumulated interest on the loan can be repaid to the financial institution through the tax-free(1) death benefit, meaning you won't be leaving your heirs to deal with your unpaid loan.

Disclaimer: This material provides only a general overview of how universal life insurance can be used to enhance retirement income. We recommend that you consult a qualified tax professional when doing your planning for retirement.

You are on: Fund an Education

Funding a Child's Education with Universal Life Insurance

In most cases, a Registered Education Savings Plan (RESP) is the preferred way to save for a child's education. Any growth of the money invested in a plan is sheltered from tax until the funds are withdrawn. When the money is withdrawn, the growth is taxed at the student's tax rate, which is likely to be lower than the tax rate of the parent, grandparent or other person who invested in the plan.

However, the amount of money that can be invested for any one child in RESPs is limited. As a result, many people also look to universal life insurance.

Reduce your student’s tax burden

When money is deposited into the investment portion of a universal life insurance policy, its investment growth is sheltered from tax. To take advantage of this, a parent or grandparent can purchase a policy on the life of a child and contribute to the policy until the child turns 18 (or 19 in some provinces). At that time, the parent or grandparent can transfer ownership of the policy to the child, with any taxes on investment growth deferred until the child withdraws the funds.

With proper planning, there should be enough invested in the policy to pay the premiums on an ongoing basis after the transfer. In addition, the student can use the funds in the investment portion to pay his or her educational costs. Like an RESP, these withdrawals will be taxed at the student's lower tax rate.

You are on: Access Cash

Using Your Life Insurance Policy to Access Funds

Universal life insurance can be a powerful financial tool because of its investment component. As needed throughout your lifetime, you can choose to access the money you’ve accumulated under your universal life insurance policy—known as the accumulation value—to meet cash flow needs during retirement, at a time of illness and more.

There are a number of ways you can access your policy's accumulation value at RBC Insurance:

  • Make a cash withdrawal. You can withdraw money by written request at any time. The minimum withdrawal is $500. Note that your withdrawal will affect the amount of your death benefit under the policy. In particular, if your policy has a level protection death benefit option, any requested withdrawal or policy option that reduces the accumulation value will automatically reduce the coverage amount and partial surrender charges may apply.
  • Request a policy loan(3). You can borrow from your policy’s accumulation value at any time. Both fixed-rate and variable-rate loans are available for policies that have satisfied a minimum funding requirement. Loan interest is payable annually on the policy anniversary. Your coverage under the policy will be reduced while the loan is outstanding.
  • Use your policy as collateral for a bank loan. If you use your universal life insurance policy as collateral for a loan, you can access funds tax-free(1), while allowing your cash value to continue to grow untouched, on a tax-advantaged basis. At the time of your death, the loan amount and accumulated interest on the loan can be repaid through the tax-free death benefit of your insurance policy.
  • Cancel your policy. You can cancel your insurance at any time by written request. You will receive the policy’s accumulation value, minus any outstanding insurance costs and applicable surrender charges if you cancel your policy during the early years of your coverage. Surrender charges are specified in your policy. A market value adjustment may also apply if you withdraw money from a guaranteed interest option.

Take the Next Step – Contact Us Today

A licensed RBC Insurance® advisor can provide advice to help you choose the life insurance plan that’s right for you.


1) Note that probate fees are applicable if you have not designated a beneficiary and the proceeds of your policy become part of your estate.

2) Current tax laws limit the maximum amount of money that can be used to fund a tax-sheltered insurance policy.

3) If the policy loan amount exceeds the adjusted cost base of the policy, the excess amount is taxable.


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