Register for a variety of Canada Life events for advisors and access on-demand recordings here.

Advisors who follow a holistic approach to financial planning remind clients to consider both their wealth goals and insurance needs. So, when recommending life insurance, it’s important to consider each product’s full value proposition.

That’s certainly true with participating life insurance (par life), which has benefits such as potential dividends, a guaranteed insurance payout and portfolio diversification.

The par life insurance market has expanded recently, with many new products available to advisors to choose for their clients. While there are multiple factors to assess when choosing the right par life solution for a client, it’s not unusual for par life to be positioned based on illustrated values.

Those illustrations include several assumptions, such as the dividend scale interest rate (DSIR), which is used in calculating the investment component of the dividend scale. The DSIR is used in illustration software as a constant and is projected at the same level over a long time horizon. It is an important metric but shouldn’t be the only deciding factor.

The dividend scale, including the DSIR, is reviewed annually, so it only provides a picture for one year. A one-year window over the lifetime of a possible 30- to 40-year policy may not provide the client with the full picture of what this product is going to look like.

Furthermore, illustrated values don’t reveal all that’s needed to know about a product and the company that supports it. Looking at the historical performance, including the dividend payouts over time, will give a much more holistic valuation of the product.

In fact, the historical average for DSIRs are similar across the major Canadian insurers who disclose this information and who are active in the par life space, as all are operating in the same investment environment. So, what other factors should matter to advisors when choosing a par life product?

Why experience in this market matters

Experience makes a difference when providing long-lasting financial solutions to clients. Some insurers go in and out of the market. Advisors should ensure they’re tapping into a company that has the know-how and the solvency to pay claims and can provide growth over the lifetime of a policy.

Strong and stable par account management has been a long-term focus at Canada Life. We have been in the par life market consistently for more than 170 years, and have paid out dividends in each one, through different economic situations.

The current account for Canada Life’s par life products sits at more than $45 billion, with more than $1.2 billion in dividends paid out in 2020.

Canada Life and design are trademarks of The Canada Life Assurance Company.