In response to a round of changes made by Manulife Financial in October, Desjardins Financial Security (DFS), Transamerica Life Canada and BMO Life Insurance have announced that pricing will increase for their permanent insurance products.These carriers are following an industry trend. On Oct. 15, Manulife increased the price of its universal life coverage by an average of 7% to 12%, depending on the product and Empire Life raised its rates, overall, by 3.5% effective Sept. 30. The Insurance and Investment Journal published an article on this topic last month.
DFS informed its sales network that it would be increasing the cost of its guaranteed permanent insurance policies at the end of November. This increase is the second of its kind in less than a year for DFS.
Transamerica Life Canada and BMO Life Insurance recently announced that they also plan to follow suit. Like Manulife, Empire Life and DFS, they blame low long-term interest rates and market volatility. At Transamerica
Transamerica and BMO, the increases affect universal life products. Transamerica announced that it would implement its pricing changes on Nov. 28, and BMO will take action on Jan. 7, 2012. In a message to advisors, Transamerica said it expects all insurance companies to increase their level cost of insurance rates by an average of 10% over the next three months.
As for DFS, it is increasing the price of the following permanent life insurance products: Life 10 and Life 20, which are traditional quick-pay whole life products available outside of the PACE universal life platform; UL Precision 10; UL Precision 20, UL Foundation T100, and UL Health Care Advantage 65.
André Langlois, vice president of development and marketing, individual insurance and savings at DFS, discussed the situation in an interview with The Insurance and Investment Journal. “The average increase is in a range between 8% and 11%,” he said. Mr. Langlois added that there are differences at certain ages but in general, the new rates are tightening around the middle bracket.
Life Start 15, a whole life product payable over 15 years and aimed at the child market, has also seen its price adjusted to refl ect increases in Life 10 and 20.
“There were inconsistencies in the pricing of this product. In some cases, an insured would have paid less for this policy than for a policy payable over 20 years,” explained Mr. Langlois.