Life Insurance Distribution Channels in Canada

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Life insurance in Canada is called primarily through three distribution channels.

1. Captive agents – Captive agents are life insurance advisors who provide life and living benefit products primarily through one carrier. In certain instances, the agent’s company is allowed to offer products with other carriers if the primary carrier does not offer them.

Captive Life insurance agents often have a keen understanding of their product offering, given that they’re only offering insurance through one carrier. However, on the downside, the premiums are frequently uncompetitive.

Many captive agencies place a sales quota on the their advisors.  This can have negative ramifications for the advisor and the consumer.

2. Independent brokers – Independent brokers offer insurance through multiple insurance carriers. Some independent brokers are contracted with as many as 20 different insurance carriers. However, bonus structures can vary from one company to another, and certain agents place the majority of their business with one or two carriers.

3. Direct – Life insurance is also offered directly through select insurance carriers. At first glance, this would seem like the most cost-effective method for consumers, but direct carriers often charge higher premium than captive agents or Independent brokers. Moreover, direct insurance carriers do not offer preferred rates, which are given to prospective clients in very good health and with excellent family health history.

There are two downsides to buying direct: the product offering is usually very limited, and permanent policies are generally not offered on a direct basis. In recent years more and more and more insurance companies are making a stronger push of their products through thgir direct channel.  At first direct policies were limited to Guaranteed Issue and Simplified Issue offering but many carriers are selling larger and more products through their direct channel.

BMO Insurance as an example sells a Guaranteed Issue, Simplified Issue, Chidren’s Insurance Female Cancer IInsurance through their direct channel.  They also sell a variety of Term offering direct offerings.  Manulife Financial and RBC Insurance also offers similar products on the direct side.  RBC coupled their increase in direct policies with a decrease in the number of policies available through their broker channel.  They no longer offer Universal Life Insurance or Long Term Care Insurance through their broker network.

Many companies including Equitable Life, Empire Life,  Canada Life,  and Assumption Life remain 100% committed to their broker network and do not have a competing channel.

For more information on life insurance in Canada, please contact us at 1-866-899-4849, or visit our Term Life Insurance Instant Quote Page.

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