The race to the bottom for permanent life insurance prices continues this week with two more Canadian life insurance companies raising their rates on these products.
Empire Life of Kingston Ontario and Waterloo Ontario based Equitable Life have both announced substantial price increases on their permanent life insurance policies, specifically their Term to 100/UL variations.
The continued low interest rate environment for long term investments is driving much of these price increases. Permanent life insurance polices profitability in the future depends heavily on earlier premiums being invested over the long term. When those investments are basically earning no real interest, something has to make up the difference. The other factors are mortality, expenses and profitability. As insurance companies have limited control over the first two and are unlikely to change the third, the only thing remaining that can budge is premiums.