The mind does not question naturally; most of the times it is on autopilot; assuming and then inferring
When Manulife introduced the new segregated fund named the Income Plus, it did a major change to the contract provision in relation to the way the income guarantee were affected by withdrawals. This change was a departure from a history of 20 years where segregated funds guarantee were reduced on a proportional basis. This was not true for the Income Plus anymore. If you took $1 dollar than the maximum allowed, the guarantee was reset to current market value of the fund. In my region, this change was never showed or presented. It was probably not on purpose and probably Manulife assumed that we would all read the marketing materials where the change was shown and explained. And for most of us, we did read the material, but no one caught the change. Why? I will discuss the reasons which are linked at how our minds work at the end of this text and what it means from a legal point of view and what should be done to increase consumer protection…
I am afraid that we will see more of this type of change implemented by insurers. Having studied insurance acts extensively for many years and being somewhat familiar with contract language used by insurers, it is easy to see how a slight unnoticeable wording change can have huge implications going forward.
Thanks Bob for the comment, and this is why I advocate for a benchmark life contract made of basic standard provisions and where the insurer would have to disclose how his contract is different than the benchmark because analyzing word by word each insurer contract separately is impossible for the consumer and the advisor….