Life Insurance has become an essential safety net on which many people in Canada rely to protect their families and ensure that their finances are secure. On the other hand, it is disquieting even to contemplate how life would be if your provider of Life Insurance went bankrupt. It is a situation that no one ever wishes to find themselves in, but it is fundamental to understand what would transpire if this happened. What if you pay premiums for years, trusting that your Life Insurance Policy in Canada will provide the necessary financial support when the time comes? What if that trust is suddenly shaken by the news of your insurer going bankrupt?
This is not a merely hypothetical concern, since quite to the contrary, it is very real, as it is frequent that at Canadian LIC—we deal with clients who come to us with such fears about the stability of their Life Insurance Providers. This blog will take you through what happens when your Life Insurance Provider goes bankrupt and ways to keep you and your family secure.
You might have heard those horror stories about companies going into financial trouble, and, of course, the feeling that it could just happen to your Life Insurance Provider touches a raw nerve. The good news is that Life Insurance in Canada is highly regulated, and the system includes protections for policyholders. But let’s face it: when clients come to Canadian LIC, they don’t always realize these protections exist, and they worry. It is part of our job to ensure that they understand how Life Insurance in Canada is secured, even in the improbable case of the insurer declaring bankruptcy.
Yet, when you are buying Life Insurance online or from the Best Life Insurance Brokers, long-term solvency is not one of those considerations. You want to assume that your insurer is going to be there when you need them most. Life is replete with surprises, and sometimes, companies run into financial quicksand.
Assuris is a non-profit organization responsible for protecting policyholders against Life Insurance company bankruptcies in Canada. In order to add further to your safety net, in case the worst happens, your Canadian Life Insurance Policy remains mostly intact. One common question we get from clients who come to the Canadian LIC pertains to what exactly it is that Assuris does—quite an understandable question, for sure, given how important such Life Insurance is.
Assuris steps in to protect policyholders either by transferring the policies to another insurance company or maintaining the policies under a newly formed company. Assume that you have a death benefit of $200,000; under such circumstances, Assuris ensures that at least 85% of your policy death benefit is covered. In most cases, policyholders get 100% of the promised benefits.
We once had a client who came in quite concerned, having heard a rumour that their Life Insurance Provider was in some financial trouble. They came into Canadian LIC in a panic, worried that their Life Insurance Policy in Canada was in jeopardy. We comforted them with an explanation of how Assuris works, including how their policy was protected. The relief was palpable, and it certainly put into perspective why educating our clients on these important aspects of their Life Insurance is so crucial.
Another popular question is regarding all the premium funds that one pays in over the years. What happens to it when your Life Insurance company goes bankrupt? The explanation at Canadian LIC is that the premiums you have paid still work for you. The new insurance company which takes over your policy will normally honour the original terms, so your coverage can continue without a break.
This was particularly the case with one of our clients who had been paying into his policy for over a full ten years. To think of losing that investment was terrifying. We were able to inform them of how Assuris ensures that the policy remains in force and the premiums continue to be used as they were originally intended. They left our office with peace of mind, knowing that their hard-earned money was still securing a bright future for their family.
The whole point of a Life Insurance Policy is to provide for your loved ones when you’re no longer around. Therefore, it naturally brings the question of what happens with your beneficiaries in case something terrible happens to your provider of Life Insurance. This is one concern we get quite often here at the Canadian LIC, where clients intend to make sure their families are taken care of.
If your Life Insurance company goes out of business, Assuris works to ensure your beneficiaries get the death benefit you intended. For example, if you have a policy with a $500,000 death benefit, Assuris ensures your beneficiaries will get at least $425,000 and likely more, depending on the situation.
Clients often ask us if the type of Life Insurance they have affects what happens during a bankruptcy. The answer is that protection in both term and whole life policies is in place, but there are some limited differences in how they’re protected. When it comes to Term Life Insurance, if your Life Insurance Provider becomes insolvent, Assuris will ensure your coverage continues for the same period as originally promised until the end of the term. Under Whole Life Insurance, which has a cash value element, Assuris protects not just the death benefit but actually ensures the cash value is transferred to the new provider.
At Canadian LIC, we help our clients understand the differences between the two products of Term and Whole Life Insurance, especially when questions about the financial capability of the insurer are raised. We once had a client with both types of policies and a potential bankruptcy. We explained that their term policy would stay as is and that the cash value and the death benefits in their whole life policies would be safe and transferred if they were to need long-term care. Understanding these protections gave them confidence in their decision to continue with their Life Insurance Plans.
When you buy Life Insurance online or through a broker, it’s easy to focus solely on the cost and benefits of the policy. But what about the stability of the provider? At Canadian LIC, we don’t just sell policies; we partner with clients to ensure they are with the Best Life Insurance Brokers who work with companies that are financially stable and reputable. We carefully vet the companies we recommend, taking into account everything from their financial ratings to their customer service records to their long-term viability.
For example, one day, a customer came to us, having been informed that the competitor was charging lower premiums. They were ready to switch providers to save a few dollars each month. We did some investigation into that competitor and determined that, for all intents and purposes, its financial stability was an open question. We made this client aware of the risks of switching to a provider that could become unstable and helped him find one more secure, if a tad more expensive, fit within his means. This experience reinforced for them the value of working with the Best Life Insurance Brokers who prioritize their clients’ long-term security over short-term savings.
While Assuris has an excellent safety net in place, it’s always wise to be proactive in protecting yourself and your family. Here are some steps you can take based on the advice we give our clients at Canadian LIC:
If you are concerned about the financial stability of your Life Insurance Provider, the best thing you can do is contact Canadian LIC. We’ll be happy to help review your current policy for the purpose of determining the financial health of your provider and exploring other options if necessary. It is our mission to ensure that your Life Insurance Policy in Canada remains something on which you and your loved ones can continue to rely, no matter what happens.
We have dealt with clients apprehensive about the financial situation of their insurer, and through our deliberation, they got the much-needed reassurance. Whether you want to buy Life Insurance online or review an existing policy, we’re here to guide you through it smoothly. Plan now and don’t be left regretting later, as this safeguards your family’s future with the best brokers of Life Insurance in Canada.
With Life Insurance, you should not have to worry about the solvency of your insurance company, but if you do, know there are protections in place, and you can take steps to protect your policy. At Canadian LIC, we’re committed to helping you understand these concerns and keeping your Life Insurance Policy in Canada a trusted source of protection for your family. Whether you are just now considering Life Insurance or have some apprehensions about your present provider, we will help you with all the guidance and support you need. Contact us today, and let’s plan your security for the future together.
By following these steps and working with Canadian LIC, one can be assured that in times of need, Life Insurance will be available for one’s family. Take control of your financial future today and partner with the Best Life Insurance Brokers in Canada to protect what really matters.
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These FAQs address common concerns that arise when thinking about Life Insurance Provider stability in Canada. By working with Canadian LIC, you can ensure that your Life Insurance is secure and that your family’s future is protected.
These resources provide valuable information for understanding how your Life Insurance Policy in Canada is protected and how to make informed decisions when choosing a provider.
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