'There's a huge intergenerational wealth transfer happening. This product is really designed to meet that need,' says BMO Insurance president and CEO
BMO Insurance has unveiled a suite of enhanced products designed to provide greater flexibility and certainty for its customers of the Whole Life product. The two enhancement offerings, the estate protector and wealth accelerator, aim to address the growing demand for tailored solutions that cater to diverse financial planning needs.
Rohit Thomas, president and CEO at BMO Insurance believes these enhancements provide greater protection and more value for policyholders with no change to the premium. He explains while the product is “fairly simple” in the calculation, BMO Insurance has designed it to be less volatile than other whole life insurance plans.
"With our product, we guarantee all the biometric risks, such as mortality, policyholder behaviour, and expenses," says Thomas. "The customer takes on the investment risk, which we call the 'performance bonus.' This bonus is declared annually and used to purchase additional death benefit, allowing the coverage to grow over time."
First launched in 2017, the BMO Insurance Whole Life product aims to provide “simple, flexible and guaranteed permanent insurance.” The organization says it’s a non-participating permanent insurance product that is designed for Canadians looking for permanent life insurance protection that’s simple to understand and adaptable to their changing needs.
“Whole life insurance plans offer permanent life insurance protection with fixed level premiums which are payable for a given number of years, while offsetting the impact taxes could have on overall estate values. This type of insurance can also be ideal as a source of funds for heirs to cover final expenses, offset taxes or leave a financial gift to a charity,” BMO Insurance said in a statement.
The estate protector option is designed to maximize the death benefit at the policyholder's life expectancy and provides increases to the death benefit of up to 18 per cent at age 85. Thomas explains this product strikes a balance between early cash values and the ultimate death benefit, making it an attractive option for those focused on estate planning and intergenerational wealth transfer.
For clients who are looking for more flexibility with a focus on cash value accumulation, Thomas says the wealth accelerator option is the more attractive choice. This product is tailored for those who want to access the policy's cash value, whether for borrowing purposes or other financial needs. This enhancement makes increases to the death benefit of up to 17 per cent at age 85.
While there are several reasons clients purchase the wealth accelerator option, Thomas says, "The wealth accelerator is more about maximizing the cash values as clients want a bit more flexibility. It really comes down to, at what point does the cash value exceed the amount of premiums you put in?” explains Thomas.
Both options are age and pay period dependent.
Thomas highlights the launch of these enhanced whole life products is a direct response to the changing landscape of the insurance industry and the evolving needs of BMO Insurance's customers.
"We know there's a huge intergenerational wealth transfer happening, and this product is really designed to meet that need," he says. "We wanted to create a solution that is transparent, less volatile, and easy to understand, being able to satisfy whatever estate planning needs a client will have as they pass their funds to the beneficiaries."
The company's decision to enhance its whole life offerings was also driven by a comprehensive review of market conditions, customer feedback, and a deep understanding of the evolving needs of its client base.
"We're constantly looking at research and optimizing our products based on either markets or how the environment's changed,” Thomas notes. “We're focused on setting up our products to meet that intergenerational wealth transfer. That's where we see it, both on the life insurance side and the wealth side.”
The organization is also focused on addressing the protection gap in Canada, an issue that Thomas says the company is working to resolve. "Addressing the protection gap is a key focus for us," he emphasizes. "You'll see some upcoming launches from us that will highlight what we’re actively doing to address that gap."
