Watch every premium dollar get taxed, spent on the cost of insurance and admin, then credited with growth, and see whether the policy stays alive or collapses.
Premiums are flexible: drop this low enough and the account can't cover the charges.
YRT is cheap early but climbs steeply with age. LCOI charges a higher, flat rate for stability.
"Level + account" pays face plus the account value, so the amount at risk never shrinks, costing more.
Fixed charges in this model: premium tax 2% of every deposit, admin $120/yr (manual: 2–4% tax; flat fee or % of premium).
Policy is viable.
Account value @ 20 yrs
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Viability
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Cost of insurance (yr 1)
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Net amount at risk (yr 1)
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Insurer's own exposure
Account value over time
Hover along the line to scrub through the years; the breakdown below updates live.
One year, unbundled: year 1
Where a single year's account balance goes. Hover the chart above to change the year.
How this works. Unlike whole life, universal life shows you the machinery. Each deposit is first hit with premium tax; then the insurer deducts the cost of insuring you and its admin expense; whatever remains earns the investment return you choose and becomes account value. Because premiums are flexible and the cost of insurance can rise (YRT climbs every year with age), an underfunded policy or a weak return can drain the account until it can no longer cover the charges, and the policy lapses. Level cost (LCOI) trades a higher early charge for stability. The net amount at risk (death benefit minus account value) is what the mortality charge is actually applied to.
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.