Placing disability insurance for business owners will become more difficult now that Manulife Financial Corp. has stopped accepting new business for four products.
In a memo obtained by Advisor’s Edge, Manulife said that effective Sept. 30, it will stop selling Proguard, Venture, ExpenseComp and Buy-sell Plus. These disability insurance products are aimed at executives, incorporated professionals and business owners.
The memo stated that Manulife had made the change “in response to the shrinking demand for non-cancellable disability products.”
“Closing these products allows us to focus on the other areas, and we’ll continue to offer disability products through the other channels,” said Manulife in a statement confirming the memo’s contents. “We will continue to offer Affinity and Group Benefits disability products to Canadians as well as continue to provide coverage and fulfill the contractual obligations to those who already purchased disability coverage prior to and on Sept. 30, 2022.”
Non-cancellable is a type of individual disability insurance in which premiums cannot be increased, benefits cannot be reduced and the insurer cannot unilaterally cancel the contract.
Manulife’s decision leaves RBC Insurance and Canada Life as the other major insurers offering individual disability products, a spokesperson for New York-based brokerage and wealth management firm NFP Corp. confirmed in an email.
“The fewer players there are in the market, the less flexibility there is for consumers and the less incentive there is for evolution of products or pricing competitiveness. So it is never good when a company leaves the market,” said Lawrence Geller, a chartered life underwriter and president of Campbellville, Ont.-based L.I. Geller Insurance Agencies Ltd.
“I don’t know if this is a wave or if Manulife just said, ‘Hey, we’re not interested in this,” said Steve Meldrum, corporate insurance specialist and broker with Medicine Hat, Alta.-based Swell Private Wealth Ltd. Manulife’s decision could be based on considerations such as the increased difficultly in adjusting disability claims for people working from home, he added.
Meldrum said that non-cancellable policies are particularly attractive to professionals such as doctors, dentists and engineers who invested considerable amounts in their education and credentials.
“If you’re a doctor, you want to make sure that if you break your legs or hands or get sick or hurt, that you still have money coming in because you spent eight years in school making no money and then you get disabled and you also get no money,” Meldrum said.