Advisors are giving a muted welcome to Sun Life Financial Inc.’s announcement in early October that it is now able to offer individual life insurance coverage up to $100 million.

They give Sun Life kudos for its marketing savvy, but, they say, the overall availability of this kind of insurance has not changed.

“I don’t think the capacity is more than was already there, but good for Sun Life for taking the initiative,” says Ashley Crozier, president of Toronto-based Crozier Financial Group.

Sun Life has established “a unique capacity” to meet the needs of what is known as the “large case” market — high net-worth clients who want large insurance policies.

It added $20 million worth of new capacity with reinsurer Munich Re Canada, says Mark DeTora, Sun Life’s senior vice president of individual insurance and investments. And it has new agreements in place with Swiss Reinsurance Co. Canada and RGA Life Reinsurance Co. of Canada to enable it to offer $100-million policies.

The increase will help advisors better serve their wealthy clients, says DeTora. Advisors seeking this level of coverage in the past had to place policies with more than one company.

Sun Life’s new life insurance policy capacity will add to the wide portfolio of company products that can be offered to clients, he adds.

The ability to qualify for such a sizable policy will be based on the usual factors, DeTora says, including age and health.

The premiums will be high, but DeTora could not give exact figures. They will depend on individual clients.

“They’ll be commensurate with the client’s wealth and objectives,” he says.

Coverage of $100 million could be used to cover a range of estate or succession planning needs, says DeTora. For example, the proceeds from the life insurance policy could pay capital gains taxes upon the client’s death, be used to make a charitable donation, insure a building the client wishes to donate to a university or buy out a corporate partner as part of a business succession plan.

In the wake of Sun Life’s announcement, advisors who typically serve high-end clients are quick to point out that other major insurers have access to the same group of reinsurers.

“Manulife has also been able to secure sizable amounts,” says Toby Hull, president of the Hull Group in Toronto.

Greg Cerar, vice president of new business and professional services at Manufacturers Life Insurance Co. in Kitchener, Ont., confirms Hull’s statement. His company recently lined up $99 million in coverage for a client.

“We also have strong relationships with the major reinsurers,” says Cerar.

Competition aside, advisors say the Canadian market for these large policies is meagre.

GO TO ONE INSURER

“There are not that many clients who will require this size of policy,” says an advisor. “On the other hand, that one $100-million policy will make up for a lot of other clients. It’s a great promotion.”

This announcement may mark Sun Life’s return to the large-case market. When the company purchased Clarica Financial Services Inc. in 2002, Clarica advisors became Sun Life’s captive workforce. Most independent advisors took their large-case business to other insurers.

This announcement notifies independent advisors that Sun Life wants to attract and rebuild its network of independents, he says.

“Sun Life is back in the large-case market,” says the advisor.

But no matter which company an advisor chooses for a large-case client, he or she should focus on one insurer instead of applying to several and jamming up the underwriting system, Cerar says.

“Advisors shouldn’t approach a large case in the same way as they would approach a small case,” he says.

“Go to one company,” he says. “Justify it to head office. Get it through underwriting. The worst thing you could do is have multiple insurers and reinsurers talking at the same time.”

The result, he says, would be “reinsurance gridlock.” IE