Clients now have greater protection if their life insurer goes bankrupt.
Assuris, the member-funded nonprofit that protects policyholders if a life insurer fails, raised its guaranteed protection levels by five percentage points across four main categories.
As of May 25, benefits are now covered up to the greater of 90% of the promised benefits, up from 85% prior to the change, or the following amounts:
- Death benefit: $1 million (up from $200,000)
- Health expense: $250,000 (up from $60,000)
- Monthly income (e.g., from annuities): $5,000 per month (from $2,000 per month)
- Cash value and segregated fund guarantees: $100,000 (from $60,000)
Further, accumulated value benefits are now fully protected up to 90% or $100,000, whichever is higher, up from a straight maximum of $100,000. Examples of products with accumulated value benefits include accumulation annuities, universal life overflow accounts, and whole life dividend deposit accounts.
“Assuris is confident that this enhanced policyholder protection strengthens public confidence in the industry,” the organization said in a release.
Every carrier that writes life and health in Canada must become an Assuris member, while fraternal benefit societies and prepaid medical services companies can opt to become members.
Examples of Canadian life insurer failures include Union of Canada Life Insurance, which was placed into liquidation in 2012, and Confederation Life, which collapsed in 1994.