The firm’s new insurance product includes a performance bonus and a premium-switch option
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BMO Insurance has made its first major push into the whole-life market with a new life insurance product.
A non-participating whole life insurance plan, the BMO Insurance Whole Life Plan is designed to present an increasing death benefit. It has guaranteed cash values as well as guaranteed level premiums, which are payable for 10 or 20 years or until age 100, after which time the policy becomes fully paid.
The plan also features a performance bonus, which is calculated annually and is automatically used to add paid-up insurance coverage, automatically increasing the policy’s available death benefit and cash value. The performance bonus depends on returns from fixed-income and enhanced equity investments, which are managed in cooperation with BMO Capital Markets and BMO Global Asset Management.
A minimum performance bonus rate of 5.5% will be guaranteed until April 30, 2020. It is also guaranteed to never be negative as long clients keep their policies. The performance bonus is derived by multiplying the performance bonus rate by the guaranteed cash value of the basic coverage.
The plan also includes a premium-switch option, which would allow clients to change to a lower-cost premium-payment schedule (from 10 years to 20 years) long after they buy their policy. Clients can manage the policy’s yearly cost without affecting the amount of their basic coverage.
Clients who want to stop paying premiums completely also have the option of reducing their basic coverage to a schedule of guaranteed amounts. The schedule will depend on the premium amount they’ve already paid up.
Once the policy has cash value, clients can also choose to take out a policy loan to either temporarily pay for their premiums or simply access funds for lifestyle purposes.
“This plan provides a competitive alternative to participating whole life plans,” said Peter McCarthy, president and CEO of BMO Insurance. “It's simple, transparent and flexible with built-in guarantees, designed for Canadians who are looking for permanent life insurance protection that is adaptable to their changing needs.”
The product also comes with a BMO Insurance Health Advocate Plan, which provides access to medical information and services, as well as personal assistance services.
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A non-participating whole life insurance plan, the BMO Insurance Whole Life Plan is designed to present an increasing death benefit. It has guaranteed cash values as well as guaranteed level premiums, which are payable for 10 or 20 years or until age 100, after which time the policy becomes fully paid.
The plan also features a performance bonus, which is calculated annually and is automatically used to add paid-up insurance coverage, automatically increasing the policy’s available death benefit and cash value. The performance bonus depends on returns from fixed-income and enhanced equity investments, which are managed in cooperation with BMO Capital Markets and BMO Global Asset Management.
A minimum performance bonus rate of 5.5% will be guaranteed until April 30, 2020. It is also guaranteed to never be negative as long clients keep their policies. The performance bonus is derived by multiplying the performance bonus rate by the guaranteed cash value of the basic coverage.
The plan also includes a premium-switch option, which would allow clients to change to a lower-cost premium-payment schedule (from 10 years to 20 years) long after they buy their policy. Clients can manage the policy’s yearly cost without affecting the amount of their basic coverage.
Clients who want to stop paying premiums completely also have the option of reducing their basic coverage to a schedule of guaranteed amounts. The schedule will depend on the premium amount they’ve already paid up.
Once the policy has cash value, clients can also choose to take out a policy loan to either temporarily pay for their premiums or simply access funds for lifestyle purposes.
“This plan provides a competitive alternative to participating whole life plans,” said Peter McCarthy, president and CEO of BMO Insurance. “It's simple, transparent and flexible with built-in guarantees, designed for Canadians who are looking for permanent life insurance protection that is adaptable to their changing needs.”
The product also comes with a BMO Insurance Health Advocate Plan, which provides access to medical information and services, as well as personal assistance services.
Related stories:
Canadian robo-advisor launches digital life insurance service
Foresters marries affordability and charity with new term-life product
