Changes to Permanent Insurance Pricing – Canada

Posted Friday, November 12th, 2010. Filed Under Financial Empowerment

To make effective decisions for your future you need to be aware of changes that are taking in industries that may impact you. Insurance is our safe guard so that if something happens we are personally covered or perhaps for our loved ones.

For those in Ontario, Canada – I want you to be aware of changes to permanent insurance pricing:

Important news concerning upcoming insurance pricing

There are changes with permanent life insurance pricing coming in the next
few months. One Major carrier has given us advance notice that there is to
be approximately a 10% average increase in rates for all permanent life

Also the same carrier will be implementing a 0.5% reduction to the
contractual guaranteed interest rates offered within tax sheltered policies.
(The guarantee is contractual for life).

In the past few years, there has been an expectation that insurance rates
would be increasing, as a large assumption in pricing these policies is the
interest rate environment.

With historically low interest rates, the insurance industry has been
waiting for some movement.

Other carriers will follow suit, with increases to their own permanent
insurance rates, and subsequent decreases in guaranteed interest rates.

What does this mean for you?

The 10% increase is self-explanatory – it will cost more for the same

If you or someone you know is going to buy insurance within the next 2 years think about doing it now or at least consider the annual savings as the reason to check it off your to-do list.

The rate reduction for guaranteed accounts has a far greater impact.
i.e. For a client investing $10,000/year in the tax-sheltered accumulation
fund – and choosing the guaranteed investment option (above the cost of

Assuming the current rate is 3.5%, a 0.5% decrease in annual credited
interest rates to 3.0% actually means they would see:

§ after 10 years, 2.75% less accumulated value

§ after 20 years, 5.44% less accumulated value

§ after 40 years, 11.25% less accumulated value

This means that quick pay scenarios will see a far greater increase than

If you have maxed out your Group plan, RRSP, TFSA, and RESP (if applicable)
this high rate of guaranteed return could mean a few more years of
retirement income that is guaranteed interest rates offered within tax
sheltered policies.

Current pricing is still available until December 4, 2010 (needless to say,
current rates are lower than they should be). Current contractual
guarantees are still available to be locked in for life on policies secured
before March 2011.

Feel free to contact us with any questions or concerns you may have with
your current insurance policies.

Best regards,

Jay F. Llave

“Create and Protect Wealth”
Insurance and Financial Advisor
Creative Planning Financial Group
(416) 487-5210 ext. 5317

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