Assuris Increases Protection Limits: A Win for Canadians

Assuris, the Canadian not-for-profit organization under federal regulation, steps in to protect policyholders when their life insurance companies go under. Acting as a safety net, it guarantees some benefits to policyholders should their insurance company become insolvent. Despite its important role, Assuris isn’t exactly a headline-grabber. But recent developments have pushed the organization into the limelight, with good reason.

Significant Increase in Assuris’ Protection Limits

Bruce Youngblood, Certified Financial Planner at Pension Solutions Canada, explains in the video above about a crucial change in Assuris’ policy… a substantial increase in its limits of protection for Canadian consumers!

This leap in protection limits includes a variety of insurance instruments and can have a significant impact on policyholders.

The death benefit limit on life insurance policies has been raised to one million dollars, ensuring policyholders receive the full amount from Assuris if their insurance company becomes insolvent. The limit on health expenses has jumped from sixty thousand dollars to an impressive two hundred fifty thousand dollars, providing a substantial increase in health-related benefits.

Cash value, if you own a segregated fund (eg. funds held with Manulife, Sunlife, Empire Life, Great West Life, Canada Life, etc), is now covered up to $100,000 (up from $60,000 previously).

However, the critical rise, especially for those with a copycat annuity or pension, is in the monthly income limit. Assuris now guarantees up to five thousand dollars a month or 90% of entitlement, a dramatic increase from the previous limit of two thousand dollars a month or 85% of entitlement.

Summary Of Changes

As of May 25, 2023 benefits are now covered up to the greater of 90% of the promised benefits, up from 85% prior to the change, or the following amounts:

  • Death benefit: $1 million (up from $200,000)
  • Health expense: $250,000 (up from $60,000)
  • Monthly income (e.g., from annuities): $5,000 per month (from $2,000 per month)
  • Cash value and segregated fund guarantees: $100,000 (from $60,000)

The Impact of the New Limits on Copycat Annuities and Pensions

This increase in monthly income protection is particularly significant for those in the copycat annuity and copycat pension market. Let’s say you retire from a company and decide you’d rather draw your company pension from an insurer. If your pension were four thousand dollars a month and your insurance company went bankrupt, Assuris would ensure you still received your full entitlement. If your pension were higher, say ten thousand dollars a month, you’d receive ninety percent of it due to the newly increased limit.

Addressing Concerns about Insurance Company Insolvencies

There hasn’t been an insurance company failure in Canada since Confed Life in 1989, which was absorbed by Canada Life and all its consumers received their entitled benefits. Nonetheless, many consumers understandably want assurance beyond industry reassurances about the low probability of insolvencies. The updated Assuris limits offer just that – facts and figures to provide concrete comfort, even in the face of unlikely company bankruptcy.

A Win For Canadians

In summary, Assuris’ decision to increase its protection limits is a significant win for Canadians. Whether you’re a policyholder concerned about your insurance company’s stability, a retiree drawing from a copycat pension, or an investor in segregated funds, these increased limits offer you a higher level of protection and peace of mind.

For more detailed guidance or to discuss your individual financial planning needs, the team at Pension Solutions Canada are available for a free 15-minute chat. Don’t leave your financial future to chance; take control, stay informed, and ensure your peace of mind.

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