Sun Life hikes premiums for certain policies
As the continuing pandemic creates a challenging environment for life insurers, Sun Life has hiked premium rates on some of its life insurance and critical illness policies, with some increases reaching 27% for new applicants.
As per a release published on March 19, the company said it is raising level COI rates on its SunUnivesalLife II policies by an average of 5%, with limited pay COI rates increasing by an average of 23%. Sun Permanent Life plans, meanwhile, are seeing life pay rates increased by an average of 7%, with limited pay rates being hiked by an average of 27%.
Focusing on Sun Critical Illness Insurance life pay and limited pay plans, the company said it is raising adult T75 and T100 rates by 10% for base coverage, return of premium on death, and return of premium on cancellation/expiry.
The statement also indicated that maximum coverage amounts would be increased to $3 million, with special quotes available for coverage over $2 million.
Citing CIBC World Markets analyst Paul Holden, Reuters said that the higher levels of increases to life insurance premiums apply to more specialized products.
The move has taken place as record-low interest rates soften the potential returns of insurers’ investment portfolios. Meanwhile, the current coronavirus pandemic has introduced heightened stock-market volatility and increased health risks, creating additional hurdles.
Moshe Milevski, a finance professor at York University’s Schulich School of Business, told Reuters that current owners of policies that include dividends will likely see decreased payouts.
In an email to the news outlet, Vineet Kochnar, Sun Life’s senior vice president for insurance solutions, said that the company has not raised rates for less interest-sensitive products, adding that the change has no connection to “current or anticipated claims experience.”
Katrina Lee-Kwen, senior vice president for non-par insurance solutions at Canada Life, said it has not raised rates because of COVID-19, but raised premiums for its universal life product in February in consideration of low interest rates and “the long-term guarantees associated with these products.”
A spokesperson for Manulife offered no comment to Reuters on whether it had increased premiums.
But CIBC’s Holden maintained that the entire life insurance industry will have to consider, and will likely push through with repricing in response to lower interest rates.
While he expects sales across the life insurance industry to be depressed in the short term, he predicts a rise in the next 12 to 18 months as consumer concerns on health overtake their price sensitivity. But beyond that, he anticipated that higher prices and lower investment yields will put pressure on sales.
At the moment, higher payouts are somewhat offset by fewer claims on certain types of healthcare coverage, including dental, vision, and extended coverage. Sun Life, Manulife, and Canada Life have therefore been able to cut dental premiums by 50%, according to separate statements from the firms.
Sun Life and Great West Life are also returning 20% of premiums for other extended coverage excluding prescription drugs; the reductions will be retroactively applied to the beginning of April, and reassessed monthly. Meanwhile, Manulife said it will cut premiums by 10%, including prescription drugs, for the month of May.
Read the original article at https://www.lifehealthpro.ca/rss/