Increasingly clients are looking for a certain type of insurance policy but so far advisors in Canada have been unable to meet their needs
In its latest fiscal year a Dai-ichi Life subsidiary generated more than $10 billion in fixed-premium, foreign-currency life-insurance products. Representing almost one-quarter the total revenue of Dai-ichi Life, the introduction of these products has made the company the largest private insurer in terms of premium income for the first time since World War II.
While foreign-currency life-insurance products are big business in Japan the same can’t be said here in Canada.
“The problem is there’s nobody in Canada with a U.S. dollar contract that I’m aware of,” Peter Tomlinson, a B.C. insurance agent, told LHP. “So to get one you have to get an American contract which isn’t a big deal. It’s not hard to do but from an agent’s perspective you cannot go out and solicit business from an unlicensed insurance company.”
For Canadians looking for a US Dollar Life Insurance Policy or who have been declined or highly rated, Prudential of America (US Dollar) accepts applications from those who come from Stable Countries. Residency in the USA is not required. The applications and medicals must be completed in the USA. The policy delivery must also be done in the USA.
US Carriers appear to be more liberal in their underwriting and with premiums being considerably lower in the US for those issued as Preferred Plus or Preferred the aggravation is most certainly offset by lower premiums and more liberal underwriting.
With so many Canadians spending time and money in the U.S. you would think that Canadian insurers would take advantage of the currency volatility that exists with the loonie. In the Japanese experience many of these products are sold through banks.
“There are a lot of challenges going forward, including how the sellers of these products—mainly banks—explain the products to customers,” said Natsumu Tsujino, insurance analyst at J.P. Morgan in Tokyo.
In these types of plans the insurance companies invest client monies in foreign bonds providing higher yields than are available in Japan. For example, a 10-year Australian government bond is currently yielding 2.74%, considerably higher than the same bond in Japan which yields a negligible 0.34%. That’s a big reason why they’re able to offer them.
So, is there a future for foreign-currency policies here in Canada?
“I don’t have a problem with Canadians purchasing U.S. dollar life insurance contracts. I even had a tax accountant here in Victoria look into it. He said there’s absolutely no problem with Canadians owning a U.S. contract,” said Tomlinson. “The only problem would be if you had a UL contract that was overfunded compared to Canadian regulations. In other words it went offside according to Canadian law but that would be almost impossible for it to happen.”
“I would love to be in a situation where people read news reports or money-type magazines in the U.S. where it says if you’re interested in purchasing a U.S. dollar life insurance contract, contact so and so in Bellevue, Washington.
While foreign-currency life-insurance products are big business in Japan the same can’t be said here in Canada.
“The problem is there’s nobody in Canada with a U.S. dollar contract that I’m aware of,” Peter Tomlinson, a B.C. insurance agent, told LHP. “So to get one you have to get an American contract which isn’t a big deal. It’s not hard to do but from an agent’s perspective you cannot go out and solicit business from an unlicensed insurance company.”
For Canadians looking for a US Dollar Life Insurance Policy or who have been declined or highly rated, Prudential of America (US Dollar) accepts applications from those who come from Stable Countries. Residency in the USA is not required. The applications and medicals must be completed in the USA. The policy delivery must also be done in the USA.
US Carriers appear to be more liberal in their underwriting and with premiums being considerably lower in the US for those issued as Preferred Plus or Preferred the aggravation is most certainly offset by lower premiums and more liberal underwriting.
With so many Canadians spending time and money in the U.S. you would think that Canadian insurers would take advantage of the currency volatility that exists with the loonie. In the Japanese experience many of these products are sold through banks.
“There are a lot of challenges going forward, including how the sellers of these products—mainly banks—explain the products to customers,” said Natsumu Tsujino, insurance analyst at J.P. Morgan in Tokyo.
In these types of plans the insurance companies invest client monies in foreign bonds providing higher yields than are available in Japan. For example, a 10-year Australian government bond is currently yielding 2.74%, considerably higher than the same bond in Japan which yields a negligible 0.34%. That’s a big reason why they’re able to offer them.
So, is there a future for foreign-currency policies here in Canada?
“I don’t have a problem with Canadians purchasing U.S. dollar life insurance contracts. I even had a tax accountant here in Victoria look into it. He said there’s absolutely no problem with Canadians owning a U.S. contract,” said Tomlinson. “The only problem would be if you had a UL contract that was overfunded compared to Canadian regulations. In other words it went offside according to Canadian law but that would be almost impossible for it to happen.”
“I would love to be in a situation where people read news reports or money-type magazines in the U.S. where it says if you’re interested in purchasing a U.S. dollar life insurance contract, contact so and so in Bellevue, Washington.
