Empire Life puts new spin on disability credit protection

Storied Canadian insurer expands on promise to protect middle-income Canadians with ‘DI Lite’ offering

Empire Life puts new spin on disability credit protection

With a history going back nearly 100 years, Empire Life has certainly cemented itself as a life and critical illness insurance provider focused on protecting everyday middle-income Canadians. And recently, it strengthened that commitment by launching a new rider for its retail life insurance clients.

“We've been doing Life and Health Insurance for a very long time. We've been around since 1923,” said Mike Stocks, vice president and chief marketing officer at Empire Life. “But providing an individual disability offering was something we felt would help enhance our product shelves, and help Canadians get the life and health protection coverage that they need as part of a sound financial plan.”

Based on regular feedback provided by clients and distribution partners to Empire Life, Stocks said basic disability coverage emerged as a recurrent concern for many Canadians. Mortgage payments, he said, was generally cited as a point of anxiety – not surprising, given that Canada’s market for mortgage creditor insurance is worth over a billion dollars on an annual basis. And with the impact of COVID-19 in 2020, awareness and conversations around life insurance and disability have kicked into high gear.

“Now more than ever, Canadians are looking for ways to protect their finances, and make sure that they're taking care of their loved ones in case the unexpected happens,” Stocks said. “That's why we embarked on a plan to cover to provide a simple, fast and easy solution for Canadians to obtain basic disability coverage protection

Empire Life’s new Disability Credit Protect rider, which it announced on November 19, was developed with some input and insights from the company’s Group Benefits division. One key finding, based on data from Statistics Canada, was that typical adults between 25 and 65 years old are 66 times more likely to have a disability (20%) than they are to die (0.3%).

“Many of our competitors offer excellent products, but it is a new area for the retail insurance division at Empire Life,” Stocks said. “We knew going into this, we didn't want to become a disability insurance company because our core business is life and critical illness. We decided to focus on providing our clients with the option of providing basic disability coverage, which like to refer to as ‘DI Lite.’”

To differentiate their Disability Credit Protector product from others in the market, Empire Life packaged it with a simple application process. Applicants for coverage are presented with a screening questionnaire consisting of simple yes-no questions; those who answer it appropriately to be eligible can attach the screening to a regular life insurance application, at which point Empire Life proceeds to underwrite the disability coverage along with the life insurance.

“When you combine that screening questionnaire with our electronic application, it provides a simple, fast and easy process to get disability coverage as well as life coverage,” Stocks said.

To make sure their offering is competitive, Empire Life benchmarked the offerings from banks and other insurance companies. That process led them to put in place a maximum monthly coverage of $3,500, or 3.5% of the amount of life insurance coverage purchased, whichever is lower. Applicants may choose a 12-month benefit period, the most affordable option in the market, or go closer to the 24 months that’s a generally accepted norm for credit-protection products offered by banks and insurance companies.

“We will cover most personal or corporate debts and some lease obligations, which is very different than what the banks do with their mortgage creditor insurance products,” Stocks said. “Things like personal or student loans and mortgages are included. We've also included vehicle leases, rent or residential properties, or leases, lines of credit or commercial loans as eligible debts.”

Another potential advantage of Empire Life’s Disability Credit Protect rider is that it pays out directly to the beneficiary, as opposed to products offered by banks or other financial institutions where the benefits are used to pay the mortgage outright. Policyholders also gain assurance from the fact that the coverage stays with them, even if they were to change lenders later on.

“In case clients go through the unfortunate experience of disability, we want to make the claim process simple, fast and easy as well,” Stocks said.

As a first step, those making disability-related claims would start the process by contacting Empire Life directly through its 1-800 hotline or sending an email; alternatively, they could speak to their advisor, who’d then initiate the process for them. From there, claimants would be provided with a list of forms they’d have to present, including a claimant statement, a statement of disability from their attending physician, and other requirements.

They would also have to submit financial documents, either by mail or email to support where they’d like to apply the benefit – an existing mortgage, a line of credit, or a lease, for example. Once Empire Life’s team receives the papers, they would be in a position to process the claims.

The company also considers claims related to mental illness under its eligibility definition for disabilities. As per the firm’s formal definition of “disability” or “disabled,” the life insured making a claim must prove that an illness or accident has caused a “total and continuous incapacity” that keeps them from performing the work for which they are gainfully employed, or from working for salary, wages, or commissions in any capacity, for any period of time.

“Currently, the rider is only available for new applications. But since we've launched, we’ve already had multiple inquiries asking whether we can add it to in-force policies,” Stocks said. “We want to get some experience with the product and determine whether we can add it to an existing policy … I anticipate that that's high on the likelihood perspective.”