At Protect Your Wealth, we continually monitor the Canadian life insurance, disquisitional illness, and inability insurance market place to provide the best possible insurance solutions for our clients. Some of the companies we recommend are household names, such every bit Canada Life, Manulife, and Sunday Life. Others, like Ivari, Empire Life, and SSQ Insurance, are not likewise-known, although they have excellent policy options. Many times, when nosotros nowadays smaller life insurance companies along with the large-proper noun ones, clients are concerned. "What happens if my life insurance company goes insolvent or broke?" they ask. In this case, they are equating 'smaller' with 'potentially unstable.' It'southward not truthful.

Small Life Insurance Companies Are Still Strong

Although not all insurance companies are household names, they still have a solid history in the Canadian marketplace and/or strong and secure backing. For example, did you know that:

What Happens If My Life Insurance Company Becomes Bankrupt?
  • SSQ Insurance serves over three million Canadians and has over eleven billion dollars in assets?
  • Empire Life has been serving the life and critical illness insurance needs of Canadians for over 100 years?
  • Ivari is actually 100% owned by Canada Pension Programme through a subsidiary company?

Small Life Insurance Companies Notwithstanding Meet Regulations

All Canadian life insurance companies, regardless of size, must maintain a minimum continuing capital and surplus ratio. The higher the company's ratio, the better position it is in to pay claims.

Regulations require a ratio of at to the lowest degree 120%, just many companies maintain much higher ones. For example, Foresters Financial maintains a ratio close to 400%. A wealth planning advisor tin can provide you with the data you need to select a financially-solid insurer.

All Canadian Life Insurance Policies Are Protected

Allow's assume that the worst happens. Yous have out life or critical disease insurance with a company that subsequently declares defalcation. What happens then?

In Canada, all life, critical illness, and disability insurance policies are protected by a non-profit system chosen Assuris. Simply like all banks are required to be members of the Canadian Deposit Insurance Corporation (CDIC), all life insurance companies must be members of Assuris.

Assuris guarantees that if your life insurance provider fails, your policies volition be transferred to a solvent insurer and you volition receive, at the very least, 85% of the promised insurance benefits.

Assuris guarantees that you will retain at least 85% of your expected benefits and cash values in the event of your insurance company becoming insolvent.
  • Life insurance decease benefits upwardly to $200,000 or 85% of the expected do good
  • Life insurance cash values up to $60,000 or 85% of the actual cash value, whichever is higher

  • Life insurance cash values up to $threescore,000 or 85% of the actual cash value, whichever is higher

  • Inability insurance benefits upwardly to $two,000 per month or 85% of the expected monthly income benefit, whichever is college
  • Healthcare expense benefits up to $60,000 or 85% of the expected benefits, whichever is higher
  • Long-term care benefits up to $two,000 per month or 85% of the expected monthly income benefit, whichever is college
  • Annuities upwards to $60,000 or 85% of the expected benefits, whichever is higher

In add-on

  • Segregated funds will take their contract guarantees transferred upwards to $60,000 or 85% of the guaranteed amounts, whichever is college (actual market value is not affected).
  • Group life, disability and wellness expense insurance volition have the same guarantees as individually owned policies.
  • Eolith blazon products will be transferred to the solvent company. These products include tax free savings accounts, aggregating annuities, universal life overflow accounts, premium deposit accounts and dividend deposit accounts. Assuris guarantees that policyholders volition retain 100% of the accumulated value of these products, up to $100,000.

What Happened With By Life Insurance Company Insolvencies?

There have been simply four instances where Assuries became involved with life insurer insolvency:

  • LesCoopĂ©rants (1992): At the time Les CoopĂ©rants was declared insolvent it had 222,000 individual policyholders and 600,000 grouping insurance certificate holders. All policyholders were fully covered and protected by Assuris.

  • Sovereign Life (1993): On December 21, 1992, the Superintendent of Fiscal Institutions took control of The Sovereign Life Insurance Company and the court granted a winding-upwards order. At the time, Sovereign Life had 249,000 policyholders: 96% of policyholders were protected with 100% of original benefits, with the remaining 4% receiving at least 90% of their benefits. Assuris transferred all policies to a solvent life insurance company.

  • Confederation Life (1994): Confederation Life, founded in 1871, had operations in Canada, the United States, and the Britain. Confederation Life was forced into liquidation in 1994, due to not having enough avails to encompass policy holders and creditors. At the fourth dimension, the company had 260,000 individual policyholders in Canada and another 1.five one thousand thousand people were members of a grouping insurance plan. The liquidation procedure continued until May 2012, and all Canadian policyholders retained 100% of initial benefits with no loss incurred.

  • Union of Canada Life (2012): Founded in 1864, Union of Canada Life serviced approximately 22,000 policies across Canada, generally in Quebec. 99% of policy owners were fully covered, with the remaining 1% retaining a minimum 95% of their benefits. Union of Canada Life was bought past UL Mutual (now UV Insurance), where policies were transferred to.

In 2008, American International Group, 1 of the globe's largest life insurance companies, required a government bailout to rescue it from collapse. Earlier the crisis, it lost $99.ii billion of its $1 trillion worth of avails, just the Federal Reserve Depository financial institution of New York stepped in with an $85 billion loan to go along it from going under.

The reality is that no insurance company, regardless of size, is allowed to external risks which could threaten their viability. All the same, given the relative stability of the Canadian life insurance marketplace, much stronger regulations mail-2008, and added consumer protection with Assuris, policyholders tin rest assured they accept access to financially secure solutions. In the event that your life insurance visitor fails, you will be informed on how your benefits are protected by Assuris, with no need for extra awarding or claim filing with Assuris.

If you are concerned well-nigh the fiscal wellness of a prospective insurer, you lot can work with an experienced wealth planner who can investigate and suggest you of the insurer's standing with leading credit agencies. Although in that location are safeguards in identify, it's always amend to bargain with a life insurance company that has footling chance of going bankrupt in the first identify.

If yous want to secure your futurity with a comprehensive life insurance packet, working with a wealth planning specialist will assistance you source the right solution for your particular situation.

At Protect Your Wealth, we accept been providing life insurance and wealth management solutions since 2007. We believe that every client's needs are unique and we volition advisedly evaluate your needs and goals before recommending a solution. We proudly service clients in Ancaster, Burlington, Dundas, Hamilton, Oakville, Waterdown and the surrounding areas, so delight telephone call 1-877-654-6119.

Frequently Asked Questions (FAQs)

A life insurance company condign insolvent means that the company has been placed into liquidation, rehabilitation or conservatorship. This ways that the company is no longer operating.

In the upshot that a life insurance company becomes insolvent, a non-turn a profit organisation called Assuris volition accept over the responsibility of covering those under the protection of policies from the insolvent company.

Life insurance companies can protect themselves against losses by using deductibles. A deductible is an amount of coin that is paid by the client in order to reduce cover risk pools and mitigate the problems associated with agin option.

Life insurance companies fail equally a upshot of shocks to their uppercase or reinsurance arrangements, being overwhelmed by claims from a catastrophic event and/or alleged fraud.