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New Limits on Minimum Interest Rate Guarantee Premiums

Posted in Canada Life  ·  May 14, 2012  ·  (permalink)

The continuing low interest rate environment has cause Canadian insurers to re-evaluate prices and policies related to products with guaranteed minimum interest rates.

Effective May 14, 2012, Canada Life will limit subsequent premium deposits to the guaranteed interest options, and daily interest options in contracts with guaranteed minimum interest rate provisions at $1,000 annually.

Contracts containing these provisions were generally issued in the late 1980s and early 1990s and include subsequent premiums related to these comprehensive annuity policies.

What’s Changing

• Lump sum premiums will be capped at $1,000 per year.
• Existing pre-authorized chequing (PACs) under $1,000 can only be increased to a total amount of $1,000 per year
• Existing PACs that exceed $1,000 per year can’t be increased
• If existing PACs are changed, they will be subject to the above limits

What isn’t Changing

• Canada Life will continue to provide minimum guaranteed interest rates on existing assets within these contracts.
• Existing PACs are unaffected as long as no chances are made.

Increases to PACs in excess of this limit will be declined. Lump sum premiums that exceed the limit will be returned to clients.

 

Canada Life Rate Changes

Posted in Canada Life  ·  January 10, 2012  ·  (permalink)

 

Changes to Canada Life Millennium Universal Life and Canada Life Critical Illness insurance, effective Feb.13, 2012

Life Insurance

• Cost of insurance rates will increase for level and limited pay options.
• Minimum guaranteed interest rates are being reduced on 5 an 10 year guaranteed interest options
• The rates will increase an average of 8% for all ages for Level COI
• The rates will increase an average of  6% for limited pay  COI for all ages
• The rates will increase an average of  13% for Level COI for ages 20 – 50
• The rates will increase an average of  11% for limited pay COI for ages 20 – 50
• 5 Year GIO will decrease from 2.0% to 1.50%
• 10 Year GIO will decrease from 2.5% to 2.0%

Critical Illness

• Increases to Critical illness insurance rates (Permanent Plans)
• T100 rates will increase by an average of 8%
• T75 rates will increase by an average of 9%
• T75 paid up at 65 rates will increase by an average of 11.5%
• Plans paid up in 15 years will increase by an average of 13.5%
• Decrease to Critical illness insurance rates (T10)
• T10 rates will decrease on average by 1%
• New rate band premium reduction for amounts of $500,000 and higher

Transition Rules

• New rates in the illustration software will be in effect Feb.13.2012
• There will be no exceptions to the rules stated below, including extensions to the final placement date: 

1.   Canada Life will not accept applications sent by fax or email.
2. All requests for product changes or increases in coverage during underwriting will be at new rates
3. All requests for reissues will be at new rates
4. To be eligible for old rates applications must be received at Canada life no later than Feb 13 2012 5 pm ET
5. Applications that are eligible for old rates must be issued by May 11 2012
6. All policies must be placed no later than 30 days after issue