Enhanced Canada Life universal life insurance resource page

Canada Life is moving towards web-based illustrations for all products, and desktop illustrations will be decommissioned in the future. UL is the last of the products to be added. 

With UL in Canada Life Illustrations, the user experience is vastly improved. You’ll find new graphing features and faster solves. The illustration reports have been updated in plain language, making it easier for you to talk to your clients about UL. It also includes the ability for you to download and share your saved cases with others.

You’ll always be working in the most current version, with the most current rates and features available.

On Feb. 12, we’ll be updating the desktop software to remove our outgoing UL product. After the update, you won't have access to existing UL cases on Concourse/Concourse Direct™ unless they’re downloaded and saved as a PDF.

Reminder: this move means that existing saved cases will need to be saved out as PDFs from the desktop software and reproduced in Canada Life Illustrations. Save these cases as PDFs before Feb. 12, when the enhanced Canada Life universal life is available on web-based illustrations. Be sure to save and download any existing UL cases you still need access to as a PDF.

You need to register for Workspace to use Canada Life Illustrations. If you haven’t registered for Workspace to access web-based Canada Life Illustrations, you can register now.

In addition to faster solves, universal life insurance illustrations are now easier to use and have the ability illustrate up to $25M, up from $10M. The enhanced client report has been simplified with plain language and includes a What is universal life insurance client-facing one-pager, detailing how UL works. We’ve also streamlined the illustrated values reports by removing some columns, and adding a policy cost column (cost of insurance). 

There are also additional graphs showing how planned premium payments, policy costs, and investment accounts impact each other, as well as details on how a policy could work under different assumptions. This includes an acknowledgement of variability and risk graph, illustrating how a 0%, 3% and 6% return on the investment account impacts the monthly deductions.

These cases are still available for sale, but due to current software limitations, it’s not available for you to illustrate at this time. Please reach out to your wholesaler or Head Office Quote Support for assistance in illustrating these cases.

No. Universal life insurance is a long-term product and requires careful planning and proper funding. While clients and advisors may want to build quick-pay solutions, it should be noted that the shorter the payment solution, the more reliance there is on having stronger long-term account earnings to support this plan. Therefore, shorter premium payment durations can add to the risk of inadequately funding the policy, potentially resulting in an increase in premium payments or even a lapse of coverage. To help reduce this risk, Canada Life Illustrations will not illustrate fewer than five annual out-of-pocket premium payments.

The Stable Growth Account is backed by a portfolio with broad and diverse exposure to Canadian bonds and equities. It has a target asset mix of 70% fixed income and 30% non-fixed income.

We’ll review and update the crediting rate for the Stable Growth Account at least once per year based on expected investment returns, smoothing of gains and losses within the underlying asset portfolio, and other factors relevant to the long-term stability and success of the account. 

These factors include expected future deposits and withdrawals, fairness between current and future policyowners and avoiding deficits in the account. We plan on targeting a small surplus in the account that will help provide stability of returns. 

We’ll determine the Stable Growth Account crediting rate at least yearly and update, as needed. With our bias to stability of returns, we expect off-cycle adjustments to be rare.

No. The Stable Growth Account is a separate account from our participating account, it’s not linked in any way.

While the Stable Growth Account and the participating account are distinct, they both use a 70% fixed income and 30% non-fixed income asset mix. This 70% / 30% asset mix provides a balance between the opportunity to share in the upside of market performance but at this same time not being overly exposed to volatility. 

While the smoothing process may vary between the Stable Growth Account and the par account, they both use smoothing to help stabilize returns. 

The introductory 1.00% bonus crediting rate will be funded by Canada Life. That is, Canada Life will contribute to the Stable Growth Account asset portfolio an amount equivalent to 1.00% annualized, on a daily basis.

The bonus crediting rate will be in effect until Dec. 31, 2025. This means your clients’ Stable Growth Account balance is earning an extra 1.00% until that time.

For the purposes of collateral lending, including immediate financing arrangements, we understand some lenders will consider lending against 90% or 100% of the net cash value of a universal life policy invested in an account similar to the Stable Growth Account (assuming 100% is invested in the Stable Growth Account). These lending ratios are comparable to how they’d consider a par policy. 

Each lender may vary. Clients should confirm lending terms with their lender of choice. 

No, the Stable Growth Account is only available on new sales. See the transition rules for further details.

On the Stable Growth Account, index accounts and managed accounts (formerly known as VIOs), we’re increasing the asset-based commission from 0.25% to 0.5%. We recognize the time and effort it takes to manage your clients’ investment accounts with UL, and we want to reward you for your commitment to your client’s insurance solutions and ongoing needs. 

We’re also making changes to our first-year commission. We previously paid first-year commission of 60% up to target premium (example for Level COI) and then 8% on deposits above target premium. We’re changing this to 60% up to target premium and then 5% on deposits above target premium. This is very competitive compensation, not only for a UL product but also when compared to other insurance and wealth management strategies designed to fill the same client need, for example, mutual funds or participating life insurance with ADO. This is especially true when considering that mutual funds no longer offer a front-end load option. 

With the removal of surrender charges for level cost type, the advisor commission chargeback period for advisor-related policies for level cost type UL is changing from two years to five years. There is no change to annually increasing cost types. 

For Par, the advisor-related policy chargeback period is changing from five to seven years to further protect the par account.  

These changes are applicable to all applications dated Feb. 12, 2024 or later. Compensation guides will be updated to reflect these changes for Feb. 12. 

Although we no longer sell the guaranteed limited pay cost type, you can still build a limited pay strategy for your client with universal life insurance. Consider using an overfunded AI 85 or AI 100 cost type, together with a guaranteed interest account (GIA) or the new Stable Growth Account and solve for the premium payment required over the client's chosen payment period.

For clients who have a low risk tolerance and need a solution that is guaranteed, we recommend using a GIA (formerly known as GIO). Our GIA options provide market interest rates and offer a 0% minimum.

For clients with a little more risk tolerance, the Stable Growth Account can be a great choice. It offers 70% fixed income exposure, a guaranteed 0% minimum interest rate, and smoothing of gains and losses over time. The current crediting rate of 4% is not meant to be a best-case or worst-case scenario, but illustrating at 0% is likely unrealistically low, given past fixed income and equity performance. Based on a client’s risk tolerance, consider showing a limited pay period the client wants using an interest rate less than 4%. You could show this in addition to a 4% solve. It's impossible to predict market conditions, but for clients with some risk tolerance, using a limited pay solve with a realistic long-term return with the Stable Growth Account can be an attractive solution.

We’ve removed surrender charges for the level cost type entirely. This is great news for your clients as they now have instant access to their account value, allowing them to overfund with more confidence with level cost type, without the worry of accessing their account value if their financial circumstances change. This is attractive for clients looking to leverage their policy because no surrender charge increases the amount of net cash value that’s available. This may increase the amount of money a client can borrow against the policy. 

We continue to require surrender charges on annually increasing cost types. We’ve kept the surrender charge period at 9 years but changed the pattern and lowered the peak charge, to better align with our new annually increase cost of insurance rates and to help ensure the right type of policies are sold, with a long-term view and funding plan.

For those of younger ages, we have other life product solutions, both in and out of universal life insurance that fit their needs. Younger ages can access lower premiums for a shorter period, with the option to switch to level using the AI cost type or convert from term insurance. This protects their insurability while they’re building their long-term plans.

We made this change for level cost type during the May 2023 level reprice. We’re now applying this change to annually increasing cost types for consistency.

We’re committed to helping Canadians understand our products, so we’ve simplified how we talk about life insurance by using plain language. Review the plain language table for an index comparing the old and new terminology you’ll see in our resources.

Proper funding is an integral component of universal life insurance policies with an annually increasing cost type. The increased first-year premium will help, but doesn’t guarantee, that the policy will remain in effect in the future. Therefore, clients need to plan for their policy to be adequately funded to pay for the annually increasing monthly deductions, so their coverage will remain in effect for their lifetime. Clients may want to consider overfunding in the early years to help build up account value which can then be used to cover the higher monthly deductions in later years.

Yes. Clients who held affected investment accounts will receive letters starting in February informing them of the changes, including the investment accounts that they hold that have had changes. If they want to make changes to their selected investment accounts, they’re asked to contact their advisor.