Independent order of Foresters (Unity Life, Foresters) has just announced that they are no longer offering a term to 100 life insurance policy effective April 30, 2012.
This is one more in a long line of price increases and market exits over the last year and a half or so. Almost every insurance company in Canada has raised their premiums on these products or ceased offering them entirely. And rumours abound that the rate increases are not over yet – we may be seeing another 20-50% premium increase on new issues of these products in the next 1-2 years.
But consumers aren’t the only ones helping Foresters out in the belt tightening. From their release: “Further, we will be changing the first-year commission rates of our Advantage Series Whole Life and Passport Universal Life products”
While I personally ignore commissions (I don’t recommend products based on my commission), I can tell you this much. When a company tells you the numbers are ‘changing’ and don’t follow it with a marching band about rates doing down or commissions going up, then they’re telling you that commissions are going down. So, yes, commissions I assume are going down on these products.
And frankly, that’s fine with me. There’s a large disparity in commissions between term insurance and universal life and I’d be just as happy to see that financial motivation removed from the marketplace.
(note: there’s a common misconception that lower commissions=lower premiums. This is not the case – in fact frequently it’s just the opposite. )