Why You Need Assuris Protection for Life Insurance

Life insurance helps secure your family’s future if something were to happen to you. But what if your life insurance company suddenly became bankrupt and was unable to pay the claim? Who will protect your family’s financial wellbeing then? Such things do and can happen.

However, you do not need to worry because Assuris has your back. If your insurer were to suddenly become insolvent, Assuris ensures you receive the promised benefits. And the best part? You do not pay any extra to get Assuris protection. You automatically receive it when you buy life insurance inCanada.

Keep on reading to find out what Assuris is and how it protects you and millions of other Canadian insurance policyholders.  

What does Assuris protection mean?

Life and health insurance companies are strictly regulated in Canada to ensure they deliver on the promises made to the policyholders. Even so, they can fail. If that happens, Assuris will come to your aid.

Formed in 1990 and backed by Canadian insurance industry, Assuris ensures you receive at least 85% of your promised benefits if your insurance company goes bankrupt. Since Assuris is a not-for-profit and industry-funded compensation body, you get this protection at no extra cost. If you are a citizen or resident of Canada and have purchased a product from an insurer in Canada, you are automatically protected by Assuris.

Here is how Assuris protects you if your life insurance company becomes insolvent:

• When your insurer goes bankrupt, Assuris will try to transfer your policy to a financially sound life insurance company. It guarantees that you will be able to retain at least 85% of the promised benefits.

• If your policy amount is $200,000 or less, you will be able to retain the full death benefit amount.

Assuris provides the following five types of protection (discussed in greater detail in this section):

• Death benefit – This is for life insurance plans

• Health expenses – This is for critical illness insurance and other health insurance plans, such as travel insurance
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• Monthly income – This is for annuities, disability insurance policies, and other insurance products that give policyholders a monthly payment

• Cash value – This is for permanent life insurance plans that accumulate cash value

• Accumulated value – This is for investments products

How does Assuris protect Canadian policyholders?

Assuris protects Canadian policyholders in the following ways:  

Death benefit

Assuris will transfer your term or permanent life insurance policy to a financially stable life insurance company and guarantees you will retain at least 85% of the death benefit. For policies having a payout of$200,000 or less, the policyholders will be able to retain the full death benefit. For example, if you have a policy with a payout of $400,000 and your life insurance company shuts down, Assuris promises you will retain $340,000 of death benefit (i.e., 85% of $400,000).

Whole life and universal life policies allow policyholders to take a policy loan against their cash value. If you have taken a policy loanbefore your company became bankrupt, Assuris’ protection will apply to the net death benefit (Original death benefit – policy loan).

Let’s say you have a whole life or universal life policy with a death benefit of $300,000 and your policy loan amounts to $20,000. So, your net death benefit will be $280,000. As a result, you will get 85% of it —$238,000.

Health expenses

Assuris promises you will get at least 85% of your health benefit if your insurance company fails. For health policies with a benefit of$60,000 or less, the policyholders will get the full benefit amount. For example, if your health policy is of $50,000, you will get the same coverage with a new insurer. But if your plan has a payout of $200,000, your benefit will be adjusted to $170,000.

Monthly income

You will get at least 85% of your monthly benefit if your life insurance company goes bankrupt. For policies providing a monthly benefit of $2,000 or less, policyholders will get the full benefit amount. For example, if you have an annuity with a monthly payment of $1,800 you will get the full amount. However, if your monthly payment amounts to $3,000 you will receive$2,550 a month.

Cash value

If your permanent life insurance policy has cash value, you will get at least 85% of it. When the cash value totals $60,000 or less, Assuris guarantees you will get all of it. For example, if you have $55,000 in cash value and your life insurance company goes bankrupt, you will get the full amount. But if you have a cash value of $80,000, you will receive $68,000.

Whole life and universal life policies allow policyholders to take a policy loan against their cash value. If you had taken a policy loan, before your life insurance company became insolvent, Assuris’ protection will apply to the net cash value.

Let’s say you have a whole life or universal life policy with a cash value of $70,000 and you have taken a loan of $20,000. This means your net cash value is $50,000 (Original cash value – policy loan). Since your net cash value is less than $60,000 you will be able to retain all of it.

Accumulated value

Assuris protects your investments up to a maximum of$100,000.

It is important to note that if you have bought two or more insurance products from a life insurance company, all similar benefits will be added before Assuris’ coverage is applied. For example, say you have two term policies from an insurer, each with a death benefit of $150,000. So, your total benefit amount is $300,000. If your life insurance company goes bankrupt, you will get coverage for $255,000 (85% of $300,000).

However, if you have two or more investment accounts with a provider, you will be covered separately. For example, if you have a TFSA and an RRSP account with an insurance company, Assuris will protect each of these accounts separately.  

Why is Assuris protection important in the insurance sector?

Life insurance companies failing is a rare occurrence. Since Assuris came into being, only three insurers have failed — ConfederationLife (1994), Sovereign Life (1993), and Les Cooperants (1992). If the unexpected happens, Assuris’ coverage ensures it will not impact your financial wellbeing. Through these three bankruptcies, Assuris has protected the financial wellbeing of roughly three million policyholders.

What insurance companies are under the Assuris Protection?

Every life insurance company in Canada is required by law to become a member of Assuris. Also, members do not have the right to terminate their membership as long as they sell insurance products in Canada.

Here is a complete list of life insurance companies covered by Assuris.

A

• Acadia Life

• Allianz Life Insurance Company of North America

• Aetna Life Insurance Company

• Allstate Life Insurance Company of Canada

• American Health and Life Insurance Company

• American Bankers Life Assurance Company of Florida

• Assumption Mutual Life Insurance Company

• American Income Life Insurance Company

• Assurant Life of Canada

• AXA Equitable Life Insurance Company

• AWP Health & Life SA

B

• Blue Cross Life Insurance Company of Canada

• BMO Life Insurance Company

• BMO Life Assurance Company

• Brookfield Annuity Company

C

• The Canada Life Insurance Company of Canada

• The Canada Life Assurance Company

• Can assurance Insurance Company

• Can assurance Hospital Service Association

• Canadian Premier Life Insurance Company

• La Capitale Financial Security Insurance Company

• La Capitale Civil Service Insurer Inc.

• CIBC Life Insurance Company Limited

• Chubb Life Insurance Company of Canada

• Combined Insurance Company of America

• CIGNA Life Insurance Company of Canada

• Connecticut General Life Insurance Company

• Comp Corp Life Insurance Company

• Co-operators Life Insurance Company

D

• Desjardins Financial Security Life Assurance Company

E

• The Equitable Life Insurance Company of Canada

• The Empire Life Insurance Company

F

• Foresters Life Insurance Company

• First Canadian Insurance Corporation

G

• Green Shield Canada

H

• Humania Assurance Inc.

I

• ivari

• Industrial Alliance Insurance and Financial Services Inc.

J

• Jackson National Life Insurance Company

L

• LS-Travel Insurance Company

• Life Insurance Company of North America

M

• Manulife Assurance Company of Canada

• The Manufacturers Life Insurance Company

• Medavie Inc

• MD Life Insurance Company

• Metropolitan Life Insurance Company

N

• New York Life Insurance Company

• National Bank Life Insurance Company

P

• Primerica Life Insurance Company of Canada

• PBC Health Benefits Society o/a Pacific Blue Cross

• Pavonia Life Insurance Company of Michigan

R

• Reliable Life Insurance Company

• RBC Life Insurance Company

S

• Sun Life Insurance (Canada) Limited

• Sun Life Assurance Company of Canada

• SSQ Life Insurance Company Inc.

• Scotia Life Insurance Company

T

• Trans Global Life Insurance Company

• TD Life Insurance Company

U

• United American Insurance Company

• The Union Life, Mutual Assurance Company

V

• Viaction Insurance inc.

W

• The Wawanesa Life Insurance Company

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Conclusion

Life insurance companies in Canada generally do not fail because they are heavily regulated. But in the unlikely event of a failure, Assuris has your back. It minimizes the loss of benefits and ensures your policy is quickly and seamlessly transferred to a financially sound company. All the same, it is best to pick a life insurance company with a solid financial outlook, something Dundas Life can help you with. We work with the top Canadian life insurance companies to help you avoid any surprises down the line.