Canada Life keeps GWB product but lowers guaranteespar Alain Thériault | October 19 2012 03:02PM
On Oct. 19, Canada Life made changes to its lifetime income benefit option on segregated fund policies, reducing the guaranteed withdrawals from 5% to 4.2% for clients who start making withdrawals between ages 65 and 69. This reduction, which also applies to Great-West and London Life, varies according to an age scale.Saundra Edwards, assistant vice-president, Individual Life Insurance Marketing, attributes the company’s decision to long-term interest rates that are hovering at historical lows, coupled with volatile financial markets.
Contracts in force will remain intact. The changes apply only to new sales and additional deposits within existing contracts. The insurer has not changed the segregated fund base guarantees, Ms. Edwards confirmed in an interview with The Insurance and Investment Journal.
Canada Life has kept its guarantees slightly above 4%, but, unlike its competitors, pared the deferral bonus, which is now 3% instead of 5%. “We don’t think it’s the most important component of the product,” Ms. Edwards says.
At Canada Life, Great-West and London Life, guaranteed withdrawal benefit (GWB) product sales tend to be concentrated among clients who are about 5 to 10 years from their planned retirement date. “[These] people focus on guaranteed income,” she points out.
The age scale changes are as follows: Single-life income for people who start making withdrawals at ages 50 to 54 is limited to 3%; it rises to 3.4% for ages 55 to 59, 3.80% for ages 60 to 64, 4.2% for ages 65 to 69, 4.6% for ages 70 to 74 and 5% for ages 75 and up.