In response to lower interest rates and higher reserve requirements, Quebec City based SSQ Life Insurance Company Inc. has stopped new sales of its guaranteed income product.

As of May 18, advisors will no longer be able to sell SSQ’s guaranteed income fund known as ASTRA Guaranteed Income (AGI) II. Contributions to existing AGI II contracts will be capped at $25,000 up until Dec. 31, 2012.

On May 22, SSQ will launch a revamped version of its lifetime withdrawal amount (LWA) product called ASTRA Guaranteed Income 2.1. The LWA contract will offer clients a lifetime income payout of 4% when the client begins withdrawing at age 65, as opposed to 5% under AGI II. Pending regulatory approval, a guaranteed withdrawal amount benefit option will be added.

Management expense ratios are a bit more costly for this product. The MER for AGI 2.1 will range between 0.45% and 1.45%. Under the old products, they ranged between 0.35% to 1.40%.

On June 4, the company will apply fee increases on existing contracts of AGI (version I and II) of between 0.10% and 0.25%, depending on the fund held within the account. For example the fee on a Fiera Capital Bond fund held within an AGI I contract will rise to 0.45% from 0.35%.

Despite the changes to its guaranteed products, SSQ has made it clear it has no intention of leaving the GMWB business.

“Although current market conditions mean changes to certain features of the AGI product, we are committed to offering a flexible product that best meets the needs of your clients and one with which we can respect our past and future commitments,” SSQ said to its advisors in a note.

SSQ is following in the footsteps of The Standard Life Assurance Co. of Canada and Transamerica Life Canada, who suspended sales of its GMWB products earlier this year.

Manulife Financial Corp. and Empire Life Life Co. are among the remaining insurers to offer existing versions of their original GMWB products.

“The GMWB market is a $30 billion dollar business in Canada,” says Peter Wouters, director, tax and estate planning and retail insurance products, Empire Life. “We just need to find new ways to evolve the product.”

With files from Guillaume Poulin-Goyer, reporter at Finance et Investissement.