Generally, life insurance is a pretty straight forward thing – you pay either for a term or a whole life policy and assuming you’ve kept up your policy, money is paid out to the people you nominated on your death, whether that should happen a week after you took out the policy or eighty years later. However, one area where a lot of people aren’t sure where they stand when it comes to life insurance is the situations insurers won’t pay out in.
Hi Bob. Your understanding of a TIA would be true for a career sales force like Sun Life, where the first premium is taken, and monthly premiums are withdrawn from the account even before the policy is issued. Then the policy is back-dated to the date of application. For broker policies this is not the case. No PAC is set up until the policy is accepted and put in force. The first premium is held in trust and applied to the first month, sometime in the future when the policy is issued. Then, the premium taken at application for the TIA is applied to the first month, and PAC withdrawals start in month 2 following the issue date. There are advantages both ways. I think Sun Life's TIA would provide a strong level of insurance coverage for the client, since premiums in effect have already begun. For budgeting and cost control during the underwriting period the broker way is more effective.
Add a comment...