UL Mutual’s Equitable Program offers an Avant-Garde Insurance Prospect

Nothing is more frustrating than trying to predict the market to a dime. Whether the recent call to keep federal interest rates has you breathing a sigh of relief or turning your knuckles white – our financial security is in due, in no small part, to changes in the market.

In the tradition of Empire Life’s somewhat maligned (and as of this writing: defunct) Hybrid 100 plan, UL Mutual brings its permanent life insurance plans to the forefront with their Equitable program: a permanent life plan that offers UL Mutual’s signature “avant garde” style of wealth management.

Like the Hybrid 100 plan, the Equitable Program offers premiums based on Canada’s current interest rates – though with protective features that can make it a little more enticing when trying to play the market.

UL Mutual’s Equitable Plan at a Glance

Permanent life insurance usually comes as a fairly simple package: pay for life to get coverage for life. Contrasted with whole life and universal life, this makes permanent plans typically better suited for people planning for long-term costs like estate planning; but whom don’t have the taste for investing into their insurance.

UL Mutual, at face, does offer relatively simplistic permanent life insurance plans – but it offers it under two packages, Adaptable-Equitable and Integral-Equitable, and with considerable benefits that mark UL Mutual as quite a different horse in this race.

So let’s break it down, shall we?

Adaptable-Equitable

A whole life version of the equitable plan, Adaptable-Equitable allows the plan to be paid off in a minimum of 20 years, up to any age ending in 5 (25, 35, 45, etc.). Early settlement options are always nice, though under Adaptable-Equitable you’re required to stick to one.

It also includes:

  • A cash surrender value on the 10th year;
  • Partial or full surrender for capital, or premiums.
  • The option to layer insurance, adding a term plan onto Adaptable-Equitable.
  • Adjustable on the 3rd, 5th, and 7th policy years without a medical exam.

Integral-Equitable

Altogether more simplistic than UL Mutual’s Adaptable-Equitable, Integral-Equitable offers the same “Equitable” benefit (which we will get into) with less hangups found in Adaptable-Equitable. In fact, aside from the general trappings of permanent life insurance, it really has two distinct features:

  • A reduced paid-up insurance option to stop paying and keep partial coverage, and;
  • A “buy-back” option to offer an instant cash flow option if or when you cancel the policy.

Indexing your Insurance to Interest?

So now we come to what makes UL Mutual altogether different: both plans are based around the “Equitable” moniker, a benefit that inversely indexes the premiums you pay to Canada’s national interest rate.

So if interest rates go up, your premiums go down. Conversely, if interest rates go down, your premiums go up. A provision is added, however, that you will not pay more than your initial amount, even if interest rates somehow went even lower.

Considerations if You’re Considering

While the ability to profit off an upturn in interest rates is desirable, the plan does have some considerations if you’re willing to enter into a policy like UL Mutual’s Equitable plans.

  • You need to decide your financial goals early on. Past the 7th year, you cannot switch from Adaptable to Integral, or vice versa, nor can you make other adjustments such as adding in a term rider without providing a medical statement.
  • While you can benefit from lower premiums if interest rates go up – this makes it difficult to properly budget for your insurance as costs are fluctuating.
  • Unlike many whole life plans, you have to decide between an early settlement or a reduced paid-up. You can’t have the best of both worlds.

To Sum Up: Is it Wise to Play the Market?

In short: if you don’t know enough about the market to know if this plan is right for you – there’s a good chance it isn’t. Whole life caters a bit more to the financially independent goal-setters than it does for the typical family.

UL Mutual’s Equitable Series does indeed hold to their values of providing more dynamic options for Canadians, though the question needs to be asked: is more options always good? For those looking for reactive investments and a concrete estate plan, UL Mutual can provide. If you’re looking for a plan that you can pay into and forget about – there’s just too much to forget about for this product to be a wise decision.

Leave a Reply

Your email address will not be published. Required fields are marked *