Starting June 3, 2013, Industrial Alliance and Financial Services will offer a new universal life insurance product that allows clients to adjust their premiums should there be a long-term interest rate increase.
The new option, called Trend, lets policyholders benefit from guaranteed premium discounts for the first ten years of their contracts. Following that, they can then save more if interest rates start climbing. Their premiums will be adjusted using a formula specified in their initial contracts, which is based on a reference index. This index value is equal to the average of long-term provincial bond yields over the previous five years.
The company added to their lineup since the prices of guaranteed, permanent life insurance products have surged over the past few years due to floundering interest rates.
But “Canadians can expect [interest rates] to rise once the U.S. economic recovery has firmly taken hold,” says Clément Gignac, senior vice-president and chief economist of Industrial Alliance.
When a policy contract is issued for this product, a maximum premium will be established and guaranteed. The insured will never pay more than the amount specified.