In Canada, the disadvantages of universal life insurance include complex policy administration, higher fee loads compared to term insurance, and the risk that poor investment returns within the fund accounts could leave the policy underfunded. If cash values drop below required thresholds due to market downturns or rising mortality charges, Canadian policyholders may be forced to inject substantial out-of-pocket cash payments later in life to prevent the contract from lapsing and triggering a major tax liability.
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