New dividend scale effective July 1, 2018
Equitable Life’s Board of Directors has approved a change to the dividend scale effective July 1, 2018. The dividend scale interest rate will change from 6.5% to 6.35%.
Participating whole life policyholders will receive a notice of the dividend scale change with their annual policy statement. View policyholder notice.
What does it mean to be a participating whole life policyholder?
Participating whole life policyholders can share in the earnings of the participating account. Premiums paid for participating whole life policies are deposited into the account and 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. A policyholder’s share of the earnings in the account is annually credited to their policy as a dividend payment. It’s important to keep in mind that a dividend is not guaranteed.
Every year, the dividend scale is reviewed to ensure that it is set at an appropriate level. Due to continuing low interest rates in the bond market, investment returns in the participating account are also lower. This is leading to a reduction in the dividend scale for 2018/2019.
What does this change mean to policyholders?
Future projected policy dividends will generally be lower than those projected when you purchased your policy.
If you selected a dividend option that uses dividends to pay premiums, you may be able to stop paying premiums for your policy at some point in the future. This is called the premium offset point. At that point, the projected dividends plus the non-guaranteed cash value within the policy may be sufficient to pay future premiums.
A decrease in the dividend scale may:
- Delay the premium offset point, requiring you to pay premiums for longer than previously projected
- Require you to resume paying premiums for a period of time if your policy has been on premium offset
If you are on premium offset and will be required to resume paying premiums as a result of this change, Equitable Life will automatically provide you with a new offset projection following your policy anniversary. This new illustration will provide you with updated projections of cash values and death benefits based on the new dividend scale.
Base insurance coverages, guaranteed values, and previously credited dividends are not affected by this change. The guaranteed values within your policy will continue to grow as detailed in the ‘Table of Guaranteed Values’ pages in your policy contract. Equimax® participating whole life continues to deliver excellent value by providing you with lifetime protection and an opportunity for tax-advantaged growth.
Would you like more information?
Please contact your advisor or the Individual Contact Centre at 1.800.668.4095 for:
- Questions about the dividend scale
- An updated illustration showing the projected date when the new premium offset point is expected to occur based on the 2018/2019 dividend scale
- An illustration showing updated projections of future cash values and death benefits for your policy based on the 2018/2019 dividend scale
- Clarification about whether your policy is impacted
View Equitable Life’s dividend policy for more information.