Equitable Life of Canada® maintains dividend scale for 2020/2021The Equitable Life Insurance Company of Canada is pleased to announce that its Board of Directors has approved continuing the current dividend scale for the period July 1, 2020 to June 30, 2021.
• The dividend scale interest rate* will remain unchanged at 6.2%.
• The mortality component, along with other factors that are used to calculate the dividend scale, will remain unchanged.
• The interest rate for dividends left on deposit will remain unchanged at 2.75% for all participating whole life policies.
• The policy loan rate will decrease to 6.2% (from 6.7%) effective July 1, 2020. 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.
*The dividend scale interest rate is not the same as the participating account rate of return in any given calendar year. The dividend scale interest rate smooths out the ups and downs experienced by the participating account.
Total dividend payments to policyholders from July 1, 2020 to June 30, 2021 are expected to increase to approximately $44.3 million compared to $39.1 million for the same period in 2019/2020.
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. At the time of writing, the COVID-19 related equity market correction is also expected to have a negative impact on the experience in the participating account, making a future reduction in the scale even more likely.
No change will be made to the Equitable Sales Illustrations system at this time. At the next available opportunity, we will update the system to reflect the decreased policy loan rate. In the meantime, any illustration run will assume the higher rate and therefore provide your clients with a more conservative illustration.
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