As of June 14, 2021, Sun Long Term Care Insurance (LTCI) will no longer be available for sale by advisors as reported in the June 8, 2021 edition of InsuranceINTEL Weekly, a sister publication of the Insurance Portal.

This exit leaves only two products in the Canadian market: Tangible, from Canassurance Blue Cross, and Sun Retirement Health Assist, which Sun Life is keeping open for new sales.

The LTCI product will also no longer be available as a conversion product for Sun Critical Illness Insurance.

Only LTCI applications signed and received by Sun Life by June 25, 2021 will be accepted, according to the insurer's transition rules published in InsuranceIntel Weekly. The same deadline applies to LTCI reissues.

Increase in premiums

Sun Life stated that it would lower the minimum weekly LTCI benefit from $500 to $125 on June 14, to make the product more accessible to its customers.

In contrast, Sun Life will be increasing premiums for existing LTCI clients effective August 21, 2021. In the May 5, 2021 issue of InsuranceINTEL Weekly, details of the increases were published. Effective August 1, 2021, premiums will increase at the end of a policy's five-year premium guarantee period. Customers who purchased the LTCI product before June 14, 2021 will get the new rates five years after the end of their guaranteed period.

Increases will range from 4 per cent to 40 per cent, and will depend on the product purchased, the premium payment period, the age at purchase and whether the insured is male or female. Sun Life has capped the increases at 40 per cent for clients age 65 or younger at issue. For issue ages 66 and over, increases are capped at 25 per cent.

Rates and longevity to blame

Sun Life attributes these increases to the rising cost of claims (settlements) due to increased life expectancy. “Claims will last longer than we expected because people are living longer than ever," the insurer says.

The continued low interest rate environment is another hurdle. “Interest rates have been low for many years, and this affects the funds we’ve invested to pay future claims,” Sun Life adds.

Not pandemic-related

“Sun Long Term Care Insurance features premiums that are adjustable, which means they can go up or down based on a number of factors,” Sun Life spokesperson Mylène Belanger told Insurance Portal.

Belanger adds that under the policy, if the premium changes the new amount is guaranteed for five years. “This adjustment is not related to the COVID-19 pandemic. We constantly review our product line to ensure we are meeting our customers’ changing needs. After careful consideration, we decided to stop selling Sun Long Term Care Insurance. We know that clients continue to need long-term care solutions. To meet those needs, we continue to offer Sun Retirement Health Assistance," she explains.

Several closures in recent years

In the industry, long-term care insurance products have repeatedly fallen by the wayside in recent years. Research by InsuranceINTEL, sister company of Insurance Portal, identifies products that insurers have listed as “discontinued” on the market intelligence centre. The 2017 departure of the last reinsurer to back these risks in Canada, Munich Re, aggravated the situation.

  • July 9, 2018 - La Capitale stopped offering La Capitale Long-term care insurance;
  • June 15, 2018 - Desjardins Insurance withdrew Desjardins Independent Life Insurance;
  • November 30, 2017 - Manulife discontinued Manulife LivingCare;
  • January, 2017 - UV Insurance stopped offering AdapCI Hybrid;
  • 2012 - RBC Insurance closed sales of RBC Long Term Care Insurance.

InsuranceINTEL also confirmed that on October 13, 2015, La Capitale discontinued the Accessible product because it was distributed only through La Capitale's exclusive agents (public service distribution network). The insurer told Insurance Portal that the long term care product is no longer offered in any of its distribution networks at La Capitale and SSQ Insurance.