Universal life lets the policyholder shape the payout. Compare Level, Level + account value, Level + cumulative premiums, and Indexed, then watch how each changes the death benefit and the net amount at risk (NAAR) over time.
Gross deposit each year. Higher premiums grow the account faster, shrinking NAAR.
Only affects the Indexed option: the face grows at this rate each year.
Death benefit by policy year
How this works. Every year the UL account earns interest but is charged the cost of
insurance on the net amount at risk (NAAR = death benefit − account value). The death benefit
option changes what the beneficiary receives, which changes the NAAR, which changes the mortality
charge, so the choice also affects the account's investment performance.
Level: pays the original face amount. As the account grows, NAAR shrinks, making this the least expensive option.
Level + account value: pays face plus the account, so NAAR stays level and the death benefit rises.
Level + cumulative premiums: pays face plus every gross premium paid in, effectively a refund of premiums on death.
Indexed: the face itself grows at your chosen index rate; NAAR can climb over time.
Educational illustration of standard Canadian insurance concepts. Figures are illustrative, not an insurer’s rates.
Illustration only, not a quote or advice. Figures are simplified for education and do not
reflect any specific insurer's rates. Consult a licensed advisor.