Toronto-based Sun Life Assurance Co. of Canada announced on Monday a revamped underwriting process that will include fewer medical tests for applicants as well as changes to its lineup of life insurance products to meet the revised tax rules coming into effect early next year.
The insurer revealed that clients who apply for life insurance and critical illness (CI) insurance will no longer be required to undergo such medical tests as electrocardiograms (ECG) or stress ECGs, blood work, HIV tests, or provide urine and saliva samples as a routine part of the underwriting process.
Instead, only older clients and those applying for higher coverage amounts will be subject to the tests. For the remaining clients, Sun Life will complete underwriting based on their medical questionnaires, while tapping into data and medical research to assess the risks appropriately.
“We’ve looked at several decades of data, across hundreds of thousands of applications that we get each year,” says Kevin Dougherty, president of Sun Life Financial Canada. “As we’ve triangulated all of these data, we’ve come to the view that we can dispense with these requirements for a large part of the business that we’re issuing today.”
The changes apply to all of Sun Life’s life insurance and CI policies. The company estimates that more than half of life insurance applicants and 85% of CI insurance applicants will not be subject to the medical tests under the new approach, resulting in a faster and easier underwriting process.
“We think it’s going to be a lot easier for clients and a lot easier for advisors,” Dougherty says.
Sun Life also announced that it will begin offering life insurance coverage of up to $3 million for individuals living with HIV. Dougherty says this decision reflects on progress in underwriting, as well as medical advancements.
“We’ve looked at a lot of data around HIV and determined that for people living with HIV who are under treatment, there is good evidence that they’ll live well into their 70s,” Dougherty says. “We’re making great progress as a society, with medical advancements, and managing chronic diseases.”
Sun Life also announced on Monday that it’s making changes to some of its permanent life insurance products in order to adapt to the tax changes that are coming into effect on Jan. 1, 2017. The changes to the exempt test, which govern the amount of tax-exempt cash that clients can hold in permanent life insurance policies, are forcing all insurers to make changes to their permanent life insurance offerings.
“We’ve taken the opportunity to add [some] features and enhancements,” says Dougherty.
Sun Life’s changes include a revised universal life (UL) product, SunUniversalLife II. The product is designed with flexibility, enabling clients to tailor their policy to their needs.
For example, the product has two new death benefit options, including a return of payments option, and a “level plus adjusted cost basis” option, which aims to help business owners optimize the capital dividend account credit for their corporation.
The UL product also has new cost of insurance options, including limited pay options of 10, 15 or 20 years and different yearly renewable term options.
The product also features a new lineup of investment options, including Sun Life Diversified Account, which earns interest based on the average smoothed yield of a variety of investments, helping clients manage volatility within their UL portfolio.
Sun Life also has tweaked its participating life insurance products. Among other changes, it added new guaranteed 10-year paid-up premium options to its par products and introduced Sun Par Accelerator, which is guaranteed to be fully paid-up in eight years. That was developed, according to the company, in response to advisor input indicating that clients want the benefits of par insurance, but with the shortest premium commitment possible.
“It’s a great opportunity for advisors to connect with their clients to talk about some of these new features,” says Dougherty.
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