I am sure that you have all noticed the banking collapses that have recently occurred in the United States. It all started on March 10th with Silicon Valley bank (SVB), then came Signature Bank a couple of days later on March 12, followed again a few weeks later by First Republic Bank on May 1st. It has come to be known as the “2023 Banking Crisis”. It sounds like a horror movie title and especially so, if you had deposits in these now collapsed banks.
The spotlight soon turned to the Federal Deposit Insurance Corporation (FDIC) to bail the account holders out, up to the threshold of US$250,000 per account.
Here in Canada, our banks seem prepared and there have not been many ripples so far. Our own Canada Deposit Insurance Corporation (CDIC) will be there to backstop any bank failures up to the $100,000 per account Canadian threshold.
What About Life Insurance?
Part of any well-prepared estate plan will probably include some form of life insurance to take care of your loved ones and pay the bills when you are gone, but what happens if a life insurance company goes bankrupt in Canada?
The life insurance industry has their own bankruptcy protection fund, and it is called Assuris.
Assuris is a member-funded not for profit organization that protects policyholders if a life insurance company fails, and there is good news! Assuris has raised its guaranteed protection levels.
Benefits are now covered up to the greater of 90% of the guaranteed benefits (up from 85% before to the modification) or the following amounts as of May 25:
- Death benefit: $1 million (which is up from $200,000)
- Health Insurance Expense: $250,000 (which is up from $60,000)
- Monthly Income from Annuities: $5,000 per month (which is up from $2,000 per month)
- Segregated Fund Guarantee: $100,000 (which is up from $60,000)
“Assuris is confident that this enhanced policyholder protection strengthens public confidence in the industry,” the non-profit said in a release.
Every carrier that writes life and health insurance in Canada must join Assuris, whereas fraternal benefit societies and prepaid medical services firms can choose to join.
With all the headline-grabbing attention the 2023 US Banking Crisis is getting you may be wondering if a Life Insurance company has ever failed in Canada? Union of Canada Life Insurance, which went bankrupt in 2012, and Confederation Life, which went bankrupt in 1994, are two examples of Canadian life insurer failures.
If you would like to talk about life insurance for yourself, please feel free to book a free fifteen minutes with me here: 15-MINUTES FREE
I wish you Health and Happiness always.
With Gratitude,
Kevin-Barry Henry.
THIS ARTICLE IS PROVIDED AS A GENERAL SOURCE OF INFORMATION ONLY AND SHOULD NOT BE CONSIDERED TO BE PERSONAL INVESTMENT OR LEGAL ADVICE. READERS SHOULD CONSULT WITH THEIR FINANCIAL OR LEGAL ADVISOR TO ENSURE IT IS SUITABLE FOR THEIR CIRCUMSTANCES.