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Have you ever wondered what would happen to your insurance policy if the insurance company became insolvent?
No? Maybe it’s just me.
But in case you’re worried, you’ll be glad to know that your policy is protected by an organization called Assuris.
What is Assuris and how much is the guarantee? Read on to find out.
What Is Assuris?
Life insurance companies have strict capital requirements. The types of investments they can make are also regulated. The low risk exposure ensures that they have enough money to pay claims.
But that doesn’t mean insurance companies can’t fail. If and when that happens, Assuris is there to protect policyholders.
Formed in 1990, Assuris is a not for profit organization that protects policyholders if an insurance company fails.
Similar to how the Canadian Deposit Insurance Corporation (CDIC) protects consumers’ deposits held at banks, Assuris does the same for policyholders of insurance contracts.
Protection offered by Assuris
Assuris guarantees that policyholders won’t receive less than 85% of their promised benefits from the insurance company if it goes belly up. Since Assuris is completed funded by insurance companies, this doesn’t come at an extra cost for policyholders.
There have only been 4 insolvencies of insurance companies since Assuris came into existence in 1990.
In the unlikely event that an insurance company becomes insolvent, Assuris will try to transfer your policy to another insurance company so that your coverage continues uninterrupted.
If that’s not possible, it will pay out the guarantees as per below.
There are five categories of protection depending on the type of policy you have:
- Death benefit: For life insurance policies.
- Health expense: For health insurance policies like critical illness or travel insurance.
- Monthly income: For policies that pay a monthly income like disability insurance or annuities.
- Cash value: For permanent insurance policies that have cash value and for segregated funds.
- Accumulated value: For investments within permanent insurance policies that are not tax-sheltered.
Here is a detailed look at the guarantees and limits provided under each category:
Death benefit
You get $200,000 or 85% of the death benefit, whichever is higher. For example, if your policy has a death benefit of $100,000, you would retain $100,000. However, if your death benefit was $500,000, it would be adjusted to $500,000 x 85% = $425,000.
Health expense
You get $60,000 or 85% of the benefit, whichever is higher. For example, if you have a critical illness insurance policy with a benefit of $50,000, you would get $50,000. However, if your benefit was $100,000, it would be adjusted to $100,000 x 85% = $85,000.
Monthly income
You get $2,000 or 85% of the death benefit, whichever is higher. For example, if you have a disability insurance policy with a monthly benefit of $1,500, your beneficiary would get $1,500. However, if your monthly benefit was $5,000, it would be adjusted to $5,000 x 85% = $4,250.
Cash value
You get $60,000 or 85% of the cash value, whichever is higher. For example, if you have a policy with a cash value of $50,000, you would get $50,000. However, if your cash value was $100,000, it would be adjusted to $100,000 x 85% = $85,000.
Accumulated value
You get the amount of your investment up to $100,000.
If you have more than one account with an insurance company, the protection applies separately. For example, if you hold segregated funds in an RRSP and a TFSA with one insurance company, each account will be protected separately.
However, if you have more than one policy with one insurance company, the death benefit is added up before the protection is applied. For example, if you have two policies, each with a $200,000 death benefit, the guarantee would be $340,000.
Assuris Members
Every life insurance company in Canada is required to become a member of Assuris. The protection applies to each insurance company separately.
Here’s a complete list of all the insurance companies in Canada covered by Assuris:
A
- Acadia Life
- Aetna Life Insurance Company
- Allianz Life Insurance Company of North America
- Allstate Life Insurance Company of Canada
- American Bankers Life Assurance Company of Florida
- American Health and Life Insurance Company
- American Income Life Insurance Company
- Assumption Mutual Life Insurance Company
- Assurant Life of Canada
- AWP Health & Life SA
- AXA Equitable Life Insurance Company
B
- Blue Cross Life Insurance Company of Canada
- BMO Life Assurance Company
- BMO Life Insurance Company
- British Columbia Life & Casualty Company
- Brookfield Annuity Company
C
- The Canada Life Assurance Company
- The Canada Life Insurance Company of Canada
- Canadian Premier Life Insurance Company
- Canassurance Hospital Service Association
- Canassurance Insurance Company
- La Capitale Civil Service Insurer Inc.
- La Capitale Financial Security Insurance Company
- Chubb Life Insurance Company of Canada
- CIBC Life Insurance Company Limited
- CIGNA Life Insurance Company of Canada
- Combined Insurance Company of America
- CompCorp Life Insurance Company
- Connecticut General Life Insurance Company
- Co-operators Life Insurance Company
- CUMIS Life Insurance Company
D
- Desjardins Financial Security Life Assurance Company
E
- The Empire Life Insurance Company
- The Equitable Life Insurance Company of Canada
F
- First Canadian Insurance Corporation
- Foresters Life Insurance Company
G
- Gerber Life Insurance Company
- Green Shield Canada
H
- Humania Assurance Inc.
I
- Industrial Alliance Insurance and Financial Services Inc.
- ivari
J
- Jackson National Life Insurance Company
L
- Liberty Life Assurance Company of Boston
- Life Insurance Company of North America
- LS-Travel, Insurance Company
M
- The Manufacturers Life Insurance Company
- Manulife Assurance Company of Canada
- MD Life Insurance Company
- Medavie Inc.
- Metropolitan Life Insurance Company
N
- National Bank Life Insurance Company
- New York Life Insurance Company
P
- Pavonia Life Insurance Company of Michigan
- PBC Health Benefits Society o/a Pacific Blue Cross
- Primerica Life Insurance Company of Canada
R
- RBC Life Insurance Company
- Reliable Life Insurance Company
S
- Scotia Life Insurance Company
- SSQ Life Insurance Company Inc.
- Sun Life Assurance Company of Canada
- Sun Life Insurance (Canada) Limited
T
- TD Life Insurance Company
- Trans Global Life Insurance Company
U
- The Union Life, Mutual Assurance Company
- United American Insurance Company
V
- Viaction Insurance inc.
W
- The Wawanesa Life Insurance Company
Conclusion
Life insurance companies in Canada becoming insolvent is rare. But in the event it does happen, you can rest easy knowing that Assuris protects your guarantees with the insurance company.
It’s like an insurance policy for the insurance company.
While we make every effort to keep our site updated, please be aware that timely information on this page, such as quote estimates, or pertinent details about companies, may only be accurate as of its last edit day. Brian So Insurance and its representatives do not give legal or tax advice. Please consult your own legal or tax adviser. This post is a brief summary for indicative purposes only. It does not include all terms, conditions, limitations, exclusions, and other provisions of the policies described, some of which may be material to the policy selection. Please refer to the actual policy documents for complete details which can be provided upon request. In case of any discrepancy, the language in the actual policy documents will prevail. A.M. Best financial strength ratings displayed are not a warranty of a company’s financial strength and ability to meet its obligations to policyholders.
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