Empire Life has launched a new term life insurance product, Solution 30, which has an initial term of 30 years. After that, renewals are on a guaranteed annual renewable basis.
The product also includes a conversion right that can be used during the 30-year term. Only the initial term premiums and the first renewal term are guaranteed. Rates do not increase after the age of 85 and the policy is fully paid when the insured person turns 100-years-old.
Solution 30 is aimed at the mortgage market and the changing needs of young, middle class families, Mike Stocks, vice president and chief marketing officer at Empire Life, told The Insurance and Investment Journal. “With rising house prices, many middle income Canadians are choosing 25 to 30 year amortization periods for their mortgages. Solution 30 is ideal for these types of longer term insurance needs,” he said.
Stocks provided pricing examples, based on monthly premium costs. A 30-year old, non-smoking man who wishes to have $200,000 in coverage would pay $28.80 per month for the first 30 years, and $137.78 per month at first renewal. A 30-year old non-smoking woman who would like the same amount of coverage would pay an initial premium of $22.32 per month for the first 30 years and a premium at first renewal of $105.12 per month.
As for high prices at renewal, Stocks says the goal is not to get insured individuals to abandon the product after 30 years. “Unlike the typical 30-year insurance with a much bigger jump in renewal premiums… the increases are more gradual.” This makes it an ideal solution for clients who may need insurance for a few more years after the initial term, he says. “We want to give them a choice to renew their coverage, or as much of their coverage as they feel they need, for as many years as they want without asking them to pay the renewal premium for a step rate 30-year-level term plan.”