At United Life Financial, we regularly meet clients who purchased Universal Life Insurance years ago and later realized they never fully understood what they bought.
Many clients only remember hearing:
- “Pay this amount for 20 years”
- “You can withdraw this much later”
- “Your family gets this amount on death”
But when we review the policy together, many are surprised to learn:
- Their policy uses YRT cost structure
- Insurance costs increase over time
- Investment performance affects the policy
- Cash values are not guaranteed
- Poor investment returns may impact the policy
- Additional funding may sometimes be required
- Policy sustainability depends on multiple factors
Unfortunately, many clients were never properly educated about these details before buying the policy.
What Is YRT in Universal Life Insurance?
YRT stands for:
Yearly Renewable Term
In many Universal Life Insurance policies, the insurance cost increases as the insured gets older.
When clients first buy the policy, the cost may look low and attractive.
But over time:
- Insurance charges increase
- More money may be deducted from the investment side
- Cash value growth may slow down
- Policy performance may depend heavily on market returns
- Underfunded policies may face problems later
Many people do not realize this when purchasing the policy.
Some Clients Never Even Received an Illustration Properly
One concerning issue we often see is that some policyholders:
- Never received a proper illustration before applying
- Did not understand the illustration
- Were never shown different scenarios
- Did not review low-return assumptions
- Only focused on projected future values
An insurance illustration is extremely important because it helps explain:
- Policy structure
- Insurance costs
- Investment assumptions
- Future projections
- Risks
- Sustainability
- Guaranteed vs non-guaranteed values
Without understanding the illustration, clients may make decisions based only on optimistic numbers.
Universal Life Insurance Includes Investment Risk
Many clients do not fully understand that Universal Life Insurance can include investment components.
This means:
- Returns are not always guaranteed
- Market performance matters
- Lower returns can affect future cash value
- Policy performance can change over time
Some people are shown high projected future values without fully understanding:
- These are projections
- They depend on assumptions
- Actual performance may differ
- Insurance costs can increase internally
Universal Life Insurance can be a very useful product for the right client and the right situation — but only when properly explained.
Insurance Should Never Be Sold Like a Simple Savings Plan
One of the biggest problems is when policies are explained too simply:
“Pay this much for 20 years and take this much later.”
Insurance products — especially Universal Life Insurance — are more complex than that.
Clients deserve to understand:
- What type of cost structure the policy uses
- Whether costs increase over time
- What assumptions are used
- What risks exist
- What happens if returns are lower
- Whether additional premiums may be needed
- Which parts are guaranteed and which are not
These conversations are important for long-term financial planning.
Ask Questions Before Buying Any Universal Life Policy
Before purchasing Universal Life Insurance, ask:
- Is this YRT or level cost?
- How do insurance costs change over time?
- Are cash values guaranteed?
- What happens if investment returns are lower?
- Can the policy require additional funding later?
- What assumptions are being used?
- Can I see different illustration scenarios?
- What are the risks involved?
If these questions are not clearly answered, clients should ask for more explanation before signing.
The Right Advisor Makes a Difference
A professional insurance advisor should:
- Explain policy structure clearly
- Review illustrations carefully
- Discuss risks honestly
- Explain guaranteed vs non-guaranteed values
- Help clients understand long-term sustainability
- Answer questions beyond just premiums
Insurance is not only about selling a policy.
It is about helping clients make informed financial decisions.
Final Thoughts
Universal Life Insurance can be powerful when structured properly for the right goals.
But clients should fully understand:
- YRT costs
- Investment risk
- Long-term projections
- Policy sustainability
- Funding requirements
- Non-guaranteed assumptions
Never buy a policy simply because someone said:
“Pay this much and get this much later.”
Understand how the policy actually works first.
Contact United Life Financial
United Life Financial
📧 info@unitedlife.ca
📞 905-906-7000
We help clients review and understand their insurance policies properly before making long-term financial decisions.
