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Estate Planning with Universal Life Insurance

How It Works

Universal Life Insurance deposits are paid into your policy's fund value (after a cost of insurance charge), where it grows tax-sheltered. Every month, various deductions, such as the cost of insurance, are then made from the fund value. If sufficient funds are available, you have the ability to make withdrawals from the accumulated fund for your needs. Withdrawals reduce the death benefit and fund value. The policy continues as long as the fund value is sufficient to cover the various deductions each month.*

Uses for Universal Life Insurance

  • Provides an amount of money to pay taxes upon death
  • Restore equity when a family business is given as an inheritance to one or more children but not all
  • Invest savings in a tax-sheltered investment that would be otherwise taxable
  • Provides access to savings to complement retirement income*
  • Transfer accumulated retained earnings to your beneficiaries with minimal tax consequences
  • Estate, special needs and business planning

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Universal Life

A Universal Life Insurance policy is a flexible way to create an inheritance for your loved ones and build tax-sheltered cash value.


  • Flexibility - You decide the amount of life insurance and premium payments subject to policy minimums
  • Leave a significant inheritance - Life insurance proceeds are generally income tax free to the beneficiary
  • The growth in the accumulated fund value is tax-free and the accumulated fund can be paid to your beneficiaries in addition to the amount of insurance tax-free as well
  • Access to fund value - The fund value can be accessed to help in the event of a critical illness, disability or loss of independence without tax penalties
  • Three cost of insurance choices:
    • Term 10 that renews in a yearly renewable term after 10 years and is completely paid-up at the age of 90
    • Term 20 that renews in a yearly renewable term after 20 years and is completely paid-up at the age of 90
    • Term to 100 that offers a lifetime level cost
  • Term costs of insurance allow you to build a larger accumulated fund quicker than with term to 100
  • Low management fees on investments
  • Convert the term cost of insurance into a term to 100 and freeze your insurance costs
  • Costs of insurance guaranteed
  • Choice of 32 investment options

Customize Your Policy

Add even more value to your Universal Insurance policy by buying any of these optional riders. A State Farm® agent can help you customize a policy to meet your needs.

Guaranteed Insurability

This coverage allows the policy owner to purchase additional amounts of insurance on the life of the insured person without evidence of insurability up to a maximum of 5 times.


  • Level and guaranteed
  • Standard option dates: Age 25, 30, 35, 40 and 451
  • Exceptional option dates: Marriage, buying a home, birth or adoption (90 days after the event). It automatically cancels the next standard option1

*Taxes may apply.


1Options can be exercised on a permanent plan only. Standard options may be exercised up to 31 days before or after the policy anniversary date.

2Surrenders may be subject to a surrender charge. Withdrawals will reduce the death benefit and the policy cash value. Withdrawals also will reduce the policy account value/cash surrender value. Loans accrue interest.

*With Universal Life the coverage will expire when the fund value is insufficient to cover the cost of insurance.

Insurance policies and/or associated riders and features may not be available in all provinces, and policy terms and conditions may vary by province. For more details on coverage, costs, restrictions and renewability; or to apply for coverage, contact your local State Farm agent.

This is a general description of coverage. A complete statement of coverage is found only in the policy.