Market volatility causes brokers to shift to whole life

The debate regarding Universal Life versus Whole Life has heated up during the past months. Though most brokers still prefer Universal Life, insurance companies are experiencing dipping sales with the product, and are witnessing better growth with Participating Whole Life.

And with Standard Life Canada’s withdrawal from the Participating (par) Whole Life market as well as Sun Life Financial’s upcoming absence from the par market this fall, the gaps are allowing other insurers to further capitalize on the products.

Great-West Financial is one example. The insurer is experiencing tremendous success with the par product. In its 2002 annual report, the company explains that it is focusing on its Whole Life business. It reads:

“Sales of participating policies increased 28% in 2002, and continued strong in the age 50 + wealth management market. The retrenchment of participating insurance sales in Canada by competitors, spurred by demutualization, continues to bolster the Company’s dominant market position of more than 40% of Canadian participating insurance sales.”

“Well I would say that, yes, par sales have increased fairly significantly each year for the last two to three years,” says Sandra Edwards, Director of Individual Life Insurance with Great West/London Life. She adds that the company’s sales are up 50% year-to- date over last year’s premiums.

As for the company’s universal life (UL) product DiscoverLife, Ms. Edward says that the Company currently does not have a competitive UL product. “We were the first company to come out with the product in the early ‘80s. But in the ‘90s - with the move to the level cost of insurance and those rates being driven down because of competition - we felt it was not a product we were comfortable with and felt that we wanted to stay out of that market for a number of years.”