New dividend scale effective July 1, 2021
The Equitable Life Insurance Company of Canada Board of Directors has approved a change to the dividend scale for the period July 1, 2021 to June 30, 2022.
The dividend scale interest rate will decrease from 6.2% to 6.05%.
- All series of participating whole life policies issued in the 2012 series and beyond other than the most recent Equimax Estate Builder® series will see an improvement in the mortality component. The most recent Equimax Estate Builder series, for sale as of September 12, 2020, already incorporated better mortality and its mortality component will remain unchanged. Series issued prior to 2012 will see an increase in the overall dividends but results will vary by series and policy.
- Other factors used to calculate the dividend scale will remain unchanged.
- The interest rate for dividends left on deposit will decrease from 2.75% to 2.25% for all participating whole life policies.
- The policy loan rate will remain unchanged at 6.2%. This applies to all new and existing policy loans, including automatic premium loans on Equimax® policies that have a 9-digit policy number beginning with a “3” or an “8”. The policy loan rates on some older blocks of policies may increase or decrease because they are tied to the prime interest rate.
Policyholder dividends in the next dividend scale year would be approximately $85 million, compared to $67 million in the prior dividend scale year.
As a participating whole life policyholder, you are eligible to participate in the earnings in the participating account. The dividend scale is reviewed to ensure that it is set at an appropriate level. We use the dividend scale to determine the dividend payment. If a dividend is declared, it is credited to your policy as a dividend payment. Dividends are sensitive to all the factors that affect the participating account, but especially changes in investment returns.
The sustained low interest rate environment continues to put downward pressure on the experience in the participating account. If low interest rates continue, investment returns in the participating account will also be lower, and we may need to decrease the dividend scale in the future.
Equimax® participating whole life continues to deliver excellent value by providing you with lifetime protection and an opportunity for tax-advantaged growth.
How are dividends calculated?
Premiums paid for participating whole life policies cover benefits and expenses, as well as a contribution to the company’s surplus. The remainder flows into the participating account and is invested. The participating account is mainly impacted by returns earned on investments and by death benefits, but also other factors such as policy loans, terminated policies, taxes and expenses. Dividend calculations consider the difference between the assumed and actual experience of the participating account. That difference can have a positive or negative impact on the dividend paid.
It’s important to keep in mind that dividends and their future performance are not guaranteed and that dividends are payable at the sole discretion of the Board of Directors.
The illustration you received when you purchased your participating whole life policy was based on the dividend scale in effect at that time. It was neither a projection nor a prediction of future performance. The purpose of that illustration was to highlight that performance is based on both guaranteed and
non-guaranteed values. It shows how the policy would perform if the dividend scale illustrated remained unchanged for the life of the policy. The illustration also includes sample alternate dividend scale scenarios to help highlight the potential impact a dividend scale interest rate change has on the non-guaranteed values in the policy. It was not a prediction of the largest dividend scale change that could occur over the life of your policy.
What does this change mean to you?
Previously credited dividends are fully vested and are not affected by this change. Guaranteed cash values and guaranteed death benefit are not affected by this change. These guaranteed values within your policy will continue to grow as detailed in the ‘Table of Guaranteed Values’ pages in your policy contract.
Future policy values on a current illustration will generally be lower than those shown in the illustration you received when you purchased your policy due to the impact of the dividend scale change on the
non-guaranteed cash values.
Would you like more information?
You can contact your advisor or Individual Customer Service at 1.800.668.4095 for questions about the 2021/2022 dividend scale.
We work for you
Canadians have turned to Equitable Life® since 1920 to protect what matters most. We work with independent advisors across Canada to offer individual insurance, savings and retirement, and group benefits solutions to meet your needs.
Equitable Life is not your typical financial services company. We have the knowledge, experience and ability to find solutions that work for you. We’re friendly, caring and interested in helping. The Company is owned by our participating policyholders, not shareholders. This allows us to focus on management strategies that foster prudent long-term growth, continuity and stability.
Thank you for trusting Equitable Life to help you protect what matters most.