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The universal life forced to go back to base


Alain Thériault

April 24, 2018 07:00

Saundra Roll

Due to its positioning as a tax shelter, the universal life insurance is the product that has hit the hardest of the new tax rules. To enhance her sales, she needs to go back to the basis of its role, believe insurers.

«The new tax rules have had a greater impact on the universal life than whole life. When the previous legislation was put in place in 1982, this product does not exist «, says Saundra Roll, assistant vice-president, support, products and business of a large size, insurance solutions, individual customer of Great-West.

A part of the new rules aimed at aligning the operation of the two products, she said. «I’m not certain that this means a drop in sales for the universal life. You can only put so much premium in your policy universal than before. The product still offers a good value for Canadians, and an opportunity to defer the tax on the amounts accumulated. »

Despite the new rules, Saundra Roll believes that the universal life and whole life insurance products continue to offer Canadians a little costly to transfer assets to the next generation. «They remain an important part in the planning of their financial security «, she adds.

Stéphane Beaumier, regional vice-president, network career Sun Life Financial, said that he had observed a surge in sales of universal life insurance. «In 2016, there were fewer sales in universal life. We think that there will be a resurgence in the coming months. We train more of our advisers with respect to this product. «

It is seen that a vacuum is created in the insurance sales after the rush of 2016 due to the new tax. Subsequently, there has been no less of sales in number of fonts, but rather less of sales in terms of premiums important.

«This is normal, because our high net worth clients have made their purchases in 2016. It is as if all those who would have purchased ideally in 2017 and 2018 were ahead of their purchase. It will take a little more time to review large files. All counsellors have emptied their pipeline in 2016, » says Mr. Beaumier.

No upheaval

What is the future for the permanent product, now that the tax rules are less generous ? «This is not serious, because if these rules are less generous, they are still advantageous. We suggest that advisors focus on the current benefits and talk about the current product. If there is less space to accumulate are in the police, it remains all the same still. These changes do not pose challenges in the medium and long term. It is to continue to position these products as before. «

In terms of positioning, the tax reform does not sweep away the products of permanent life insurance, believes his side Guy Couture, vice-president, sales, insurance, Quebec, Manulife. «It’s not so these products that we will change, because their pricing is more influenced by the interest rate as per the income tax rules. Rather, the question is : what are the solutions we will propose to the client in estate planning, rather than developing new products as such. «

He believes that universal insurance can also be inserted advantageously in the planning of the client, despite the new constraints of the tax act. «For example, we offer universal life insurance with insurance rates, renewable annually (TRA), which can be a good option for customers who want to create a good value of the estate. «

Positioning in guaranteed funds

On January 8, iA financial Group has increased by 20 %, on average, the price of the cost insurance options accelerated payment for 10, 15 or 20 years of his universal life insurance Genesis. This increase in the rate of premiums has affected the product cost leveled. The insurer has decided to orient its efforts towards a product recently put on the market.

In a message to its advisors, including the Journal of insurance has obtained a copy, al suggests to consider the product’s Capital Value as an alternative for clients affected by the increase. The insurer said that the version of payment in 15 years in the Capital Value has not suffered price increases.

Stéphane Beaumier note that the impact of the new rules and low interest rates on prices has been negligible. «All of our permanent product are new as of January 2017. The low interest rates remain a challenge. Of course, we would like them to come back up. The new products have, however, been adapted to this reality when they were launched. Products are even less expensive. In some age groups, there has been a reduction of up to 10 %. In others, there has been increases, which means that the prices are the same as before. «

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