2024 Canadian Life Insurance Industry Outlook

Background:

As we approach the end of the year, it’s a time of reflection and planning for many individuals and organizations. Among the many considerations that people grapple with, one that often rises to the top is the need to reassess life insurance. This period presents an opportune moment for people and businesses to review their current policies, evaluate needs, and strategize on how best to move forward in the year ahead. So, we asked a number of industry thought leaders about their views on this, how both people and organizations can prepare, and what each company was doing to help their clients.

Click on the thought leader’s picture below to explore their perspective.

Paul Grimes: “With the IA EVO platform, we have been able to move the written sale through the settled process faster than any other insurer in Canada.”

From an interest rate specific perspective, IA has been through all the cycles over the years, and we have always found that insurance products are both recession proof and, from a sales perspective, inflation and interest rates have little effect on the sales process, as advisors still need to make a living.

With the IA EVO platform, we have been able to move the written sale through the settled process faster than any other insurer in Canada. EVO combines high digital touch with high digital issue for over 60% of our policies, and we lead Canada in the number of new policies sold; 1 in 4 new life policies are IA plans. This means the risk is addressed and the agent gets paid faster using our platforms. We even have this for investment products. One thing that COVID taught us is that Canadians want insurance, they want it fast, and they may not want to see an advisor face to face, so they can benefit from our systems. For the advisors, they don’t have to drive through traffic to see clients, and clients are used to working from anywhere. So, we at IA have created a win-win situation for all.

The biggest challenge we as an industry face is the new advisors coming into the business. We need new young people to enter this great business and continue to serve Canadians. We need more mentorship programs for succession for older advisors, and more high-tech ways to connect. This will only happen if we, as an industry, can get the next generation to take on the challenge. Whoever cracks this code” will be the ultimate winner!

Rohit Thomas: “The pace of change at BMO Insurance is accelerating, and the recent product and underwriting launches are an indication of this.”

BMO recently launched a New 20 & 30-year GIA on our UL products. The 30-year GIA is a first in the Canadian insurance marketplace and can help Canadians aged 55+ lock in interest rates for the entire duration of their cost of insurance period, providing certainty during uncertain times.

There are two powerful applications:

• Single pay to fund an insurance need – personal or corporate
• Insured annuity – single pay to fund the coverage and buy an annuity with the balance of the capital – personal or corporate

We are very excited and truly believe this will add tremendous value to the HNW and UHNW estate planning markets.

From an underwriting perspective, BMO has removed Resting and Stress Electrocardiogram (ECG) requirements for all face amounts and ages across all our life insurance products. This will facilitate faster case processing for our customers.  The pace of change at BMO Insurance is accelerating, and the recent product and underwriting launches are an indication of this.

On the wealth side, we are soon launching exciting segregated fund product enhancements. With higher interest rates, an uncertain economic environment, and small business confidence at a post-pandemic low, we are working on solutions to ensure consumers can continue to protect and grow their wealth. The GIAs and new segregated fund product changes are highlights, but there is more to come in this space that will help consumers navigate this economic cycle.

Lara Nourcy: “We will be launching new products and making major investments to improve our electronic tools and to speed up our insurance contract issue times.”

At Beneva, 2024 marks the beginning of a new chapter. Having recently finalized the integration of the La Capitale and SSQ technological systems and processes, we are now focused on growth with a wide range of insurance and investment products to meet the needs of our members, clients and partners.

As the largest mutual insurance company in Canada, we want to earn advisors’ business by making significant investments to improve our electronic tools to speed up our investment processing and insurance contract issue times. Through our advisor recognition program, we also want to help advisors reinvest in their business and their customers’ growing needs. We want to position Beneva to be their partner of choice by offering the best insurance experience in Canada.

We will be launching new funds and new insurance products in 2024 to add to our already high-performing portfolio. In line with our strategy and mutualist values, we will concentrate on simple and competitive products that provide substantial added value for our customers. Our extreme disability benefit, integrated into our life insurance contracts, and our free 100% death benefit guarantee included with our investment accounts, are good examples of that philosophy.

Beyond products, we will continue to work on improving and simplifying our service, including our underwriting processes and requirements.

As a mutual, we put people and communities first. We support them through all stages of their lives by giving them peace of mind, especially during these challenging times.

Sébastien Dupuis: “Our dedication extends beyond technological advancements; we recognize experience as pivotal for attracting and retaining advisors, partners, and clients.”

In our strategic roadmap for 2024, experience takes centre stage alongside distribution and efficiency. Our commitment to enriching the advisor-client experience is exemplified by the upcoming launch of a new version of our life insurance sales platform, “LIA,” in the first half of the year. LIA empowers advisors, enabling an enhanced business experience with their clients. Our dedication extends beyond technological advancements; we recognize experience as pivotal for attracting and retaining advisors, partners, and clients. It serves as the foundation for enduring relationships, fostering an ecosystem where everyone thrives. By prioritizing experience, our goal extends beyond setting benchmarks; it’s about shaping the essence of meaningful engagement within the insurance landscape.

Michael Aziz: “Adequate life, critical illness, and disability coverage is a major component for a business continuity plan.”

At Canada Protection Plan and Foresters Financial, we continue to focus on insurance solutions for small business owners. 

Most small business owners do not have a succession or continuation plan in place that clearly communicates how they’d like the business to run if they were no longer able to run it. There are many considerations for small business owners when thinking about such an event – like who should lead the business and what types of strategies and plans they can employ.

Adequate life, critical illness, and disability coverage is a major component for a business continuity plan for a variety of reasons, which can include:

• Access to emergency funds to sustain the business – Unexpected health issues for a small business owner can have a material impact on cash flow. Coverages like critical illness or disability coverage can provide some financial relief to take some time away from the business to recover or to keep the business going. Some business-owned whole life insurance offers cash values that generally increase over time and may allow business owners to use policy loans to grow or adapt their business.

•  Key person insurance – Ideal for businesses who rely on one or two key people for critical tasks and whose absence would have a significant impact on the business operations and productivity. The death benefit is intended to support the company through a transition period of finding and onboarding a new key person.

• Helps fund insured buy-sell agreements – Targeted to businesses with more than one owner and is a legal agreement that uses life insurance to plan for any unexpected death. Intended to protect the business and the surviving owner(s) and provide a death benefit to the late owner’s beneficiaries to cover their portion of the company’s value.

• Helps fund estate equalization – Great for business owners looking to pass their business onto one or more family members/children, but not necessarily all. In the event of the owner passing, the intended family owners could inherit the business, while the others would receive an insurance payout equivalent to the value of the business.

• Help protect the financial future of their families –The family finances would probably be adversely impacted should the small business owner pass – and with many of these being family-owned businesses, they may have incurred personal debts to run the business. Life insurance can help provide financial relief and replace lost income.

Jim Ruta: “The unpredictability of everything has led to a strong desire for predictability of something – especially essential financial security.”

A worldwide plague, wild market volatility, an unprecedented runup in interest rates, and an uncertain economic future have changed a generation forever. The unpredictability of everything has led to a strong desire for predictability of something – especially essential financial security. Recent events shocked a generation who have only known stability and growth into a much greater appreciation of being prepared. They can now imagine the unimaginable.

For perceptive and inspired financial advisors, this presents an extraordinary opportunity to help more. Focusing on essential financial security means protecting clients from insurable threats to their lifestyle and legacy before planning for financial independence. Repositioning planning “up the pyramid” means clients plan while protected, are not exposed to insurable threats, and are more secure like they want.

With this new mandate, astute advisors will use life insurance for more than its important simple risk management value. They will help clients use tax-exempt cash value life insurance as long-term tax-free cash for life – so they are the beneficiaries of their own life insurance by creating “never taxed money” from “always taxed money.” They will also use it to help create generational wealth for an unpredictable and unimaginable future to guarantee the upward financial trajectory of their families forever.

Unpredictability and uncertainty have changed the life insurance industry because it made its value more obvious and valuable. More life insurance agents and estate planners will reclaim the life insurance space and prepare and protect consumers from unpredictability and uncertainty. This will create more peace of mind that is quality of life.