Personal Finance

Extremely high cost of conversion under Manulife Engineers Life Insurance

  • Last Updated:
  • Feb 14th, 2020 1:02 pm
Aug 10, 2018
72 posts

Extremely high cost of conversion under Manulife Engineers Life Insurance

Hi All,
I just want to share some information about Manulife group life insurance sponsored by Engineers Canada and specifically regarding conversion feature which is in my opinion doesn’t work properly at least from a client perspective. I don’t know if other group policies have the same approach but this information can be helpful for people to think twice before going to this group policy and to consider an individual policy regardless of higher initial cost since it’s long term estate planning which can strongly affect an insured person’s family members.

This is the group term life insurance till age 85. The premiums are increased every 5 years as the age progresses. The insurance cost is very attractive and much cheaper comparing to an individual T65 insurance for example between ages of 35 and 57 with the maximum difference at age 46(about 2 times) and non-difference at 35 and 57. After age 57 the premiums are getting higher and higher comparing to T65 Manulife has currently. After age 70 the premium increase is exponential(extremely high). If one decides to use a conversion option and switch to an individual policy(permanent or T65) without a medical examination it’s doable. But the catch is the premiums of the new converted T65 individual policy will be 8 times higher than the existing group policy at age 45 for example; or 4 times higher comparing to a new currently available with Manulife T65 for a healthy non-smoking male at age 45. I didn’t check a permanent life insurance since the term life is a cheapest option. So if somebody bought this “engineering” group policy, kept it for let say 10 years and decided to convert to an individual policy (because of the increasing every 5 years price) without the medical examination(for example his health condition has been changed which is pretty common in the middle age and later) this person is in a trap since the converted policy premiums are not affordable/realistic.

I’m just curious if the converted insurance premiums are regulated by the government? It’s also interesting if the sponsor of this group policy(Engineers Canada) is aware about potential financial loss of the members of this association….