Premiums going up, review your policies

Premiums going up, review your policies

We are hearing announcements since last few months relating to price increases in life insurance. Price increase has also been experienced in Critical Illness insurance and some other health insurance plans. There have been several price increases in permanent life insurance plans like the T-100 and Universal Life. Companies like Manulife has increased its prices very recently creating a anticipation of price increases by some of the other life insurance companies. Prices for life insurance have jumped approximately by 20-40%  in the past year and a half, making the cost for permanent life insurance shoot up for Canadians.

Why are life insurance companies in Canada making such price increases?

One reason is the new International Financial Reporting Standards (IFRS) that have come into effect as of Jan 1, 2011. The implementation of these standards is being phased out, the new IFRS is much stricter on providing financial risk protection for businesses and consumers.

This actually implies increased amounts of capital reserves (cash on hand) that Canadian life insurance companies have to set aside for long term insurance contracts. In many cases the amount of capital reserves, including cash in hand and  investment in government bonds has increased as opposed to how much the insurance companies needed to hold previously. This holding of money in bonds and cash in hand is a costly affair. The longest bond an insurance company can buy is for 30 years only. Hence, the policies most affected by the extra reserve requirement are for the younger people insured with longevity greater than 30 years as an average. Hence on policies for the younger people, there will be a direct impact of the reserve requirement.

 

Other Articles:

How Industrial Alliance’s life and critical illness products have a cutting edge

Insurance News: Consumer Info on Health Insurance

Many Financial Advisors Miss Opportunity to Incorporate Life Insurance into Planning, (A WSJ Article)

 

We at YourInsuranceGuy.ca are experts in explaining the the various types of life insurance that could protect the entire family. Please feel free to contact us at aman@yourinsuranceguy.ca or at 1 416 509 2540. Please visit us for a no obligation quote or advice.

 

Term Life Insurance

is an extremely cost effective way to insurance yourself when your temporary ( or time bound) needs for insurance are high. During the years when we are raising our kids, have big loans to pay and also building our assets, term insurance could be a great fit.The cost of insurance ( or the premiums) are constant for the duration of the term. Policies are renewable and convertible.

 

Permanent Life Insurance

is essentially a coverage that is lifelong. It runs through our life assuring a payout upon death. The cost of insurance can be level or YRT and the payout is tax free. Its main purpose is :

 

Universal Life Insurance

..is one of the best things that could happen in the world of Life Insurance. UL policy is when a permanent life insurance is merged with the possibility to have several investment options.

Your policy provides a lifelong coverage and at the same time you can save money within the policy to create tax-sheltered savings…

UL Policy ….an excellent way to build wealth that could actually become tax-free for your family. There are several options that could be customised for an individual.

 

Combining your term and permanent insurance: both are important.

People often wonder what is better, Term or Permanent Insurance. Both have their advantages and disadvantages. However, both have a significant role in our world of protecting our family, assets, incomes, family etc etc. Therefore, it could be a good idea to take a combination of Term and Permanent Insurance. It can be bought together in one policy , thus there could be some savings on policy fees and in premiums. It is a Think Smart approach to buying Life Insurance. ( Read More and watch a video)

 

Prepared by:  Aman Kapur

 

 

 

 

 

 

 

 

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