The Empire Life Insurance Company has launched a new life insurance product, which it says is the first of its kind in the Canadian insurance market, combining guaranteed and adjustable features.
The permanent insurance product, called Hybrid Solution 100, could allow policyholders to benefit from lower premiums should long-term interest rates rise.
“Hybrid Solution 100 is the first of its kind in Canada and a timely addition to the permanent insurance marketplace,” says Sean Kilburn, senior vice-president of life insurance at Empire Life. “Canadian consumers and their advisors have dealt with multiple price increases and more limited permanent insurance product choices over the past two years due to prolonged low interest rates.”
Indeed, the premiums associated with most permanent life insurance products have risen considerably in the past couple of years, as low interest rates squeeze the profitability of these products. This has some clients reluctant to lock themselves into long-term policies at current rates.
“We keep hearing that interest rates are going to rise and mortgages and other costs will go up,” Kilburn says. “The beauty of Hybrid Solution 100 is that it could help offset these increasing costs with lower insurance premiums.”
Adds Kilburn: “It truly offers downside protection with upside potential to those who believe long-term interest rates will rise.”
The product provides coverage amounts that are guaranteed. Premiums can move up or down within a specified range, only as a result of changes in an interest rate range that is determined annually using a Government of Canada long-term bond yield benchmark. No other factors influence any premium increase or decrease, and as a result, advisors and their clients have the transparency and security of knowing when and how insurance premiums change every year.
“Empire Life is committed to working with advisors to help protect Canadians and their families with life insurance that is simple, responsive and cost-effective,” said Kilburn.