How often should I review a policy I already own?

How it works

and what it ends

What a surrender actually pays

1. 01The accumulated cash valueWhat the contract holds.
2. 02Less any surrender chargeProvided by the contract.
3. 03Less anything outstandingOn an advance, with the interest on it.
4. 04What reaches youAny amount above the adjusted cost basis is taxable.

The annual reading is short: compare this year's four figures against last year's, confirm the people named are the people you intend, and note anything you cannot explain. The event driven reading is longer, because the events above change who should own the contract and who should receive it.

The annual statement itself is produced by the insurer, not assembled by the owner, and it typically sets out four figures worth comparing side by side: the current death benefit, the guaranteed cash value, the total cash value including anything not guaranteed, and the status of any outstanding advance together with its accrued interest. Reading it well means checking each figure against the same figure from the year before rather than looking at any one number in isolation, since a single year's figure means little without the trend behind it. The owner performs this reading, though a Financial Security Advisor can walk through it together when a figure does not make sense on its own.

The cost or the catch

and what does not change at all

What changes from one province to another

1. The regulator that licenses the agent
2. The titles an advisor may lawfully use
3. The cost of settling an estate
4. The contract itself does not change
5. The federal tax treatment does not change

The yearly reading costs an hour. Skipping it lets small drifts compound quietly: an address that stopped being current, a deposit that stopped in year four, a designation that outlived a relationship. Each is cheap to fix early and expensive to find at a claim.

Setting a specific date each year, rather than waiting for the statement to arrive by mail, turns this reading into a habit rather than a task that keeps getting postponed. Part of that annual check is confirming whether stopping the deposits and keeping the contract is even available, a question answered in can I stop paying and keep the contract.

The bad news, where a household has skipped several years of this reading, is that the drifts do not announce themselves. A beneficiary designation written years before a separation stays exactly as written until someone changes it, regardless of what has happened in the meantime, and an insurer pays according to what is on file rather than what the family now intends. Discovering this after death, at the point of a claim, cannot be corrected. It can only be explained, and the explanation rarely satisfies the person who expected otherwise.

What varies by contract, and what to ask

What the annual review needs to cover shifts with the contract's own wording and the province in which the owner lives. A designation made irrevocable cannot be changed without the named person's consent, so the review for that contract is a check that nothing needs changing rather than an opportunity to change it. Quebec's own rules on beneficiary designation and matrimonial regimes differ in specific respects from the rules in the other provinces where the firm places business, which is one more reason a review is read against the reader's own contract rather than against a general description.

Where a figure on the statement does not match what was expected, the question goes to the insurer first, in writing, asking for an explanation of the specific figure rather than a general reassurance. Where the question concerns whether a life event such as a separation or a new corporation should change who owns the contract or who is named on it, that question belongs with a lawyer or a notary, since ownership and designation carry legal consequences beyond what the insurer's statement itself addresses.

Who this matters to, and what it leaves out

conceded before anything is answered

What the critics get right

1. 01Early cash value is low against the premium paid
2. 02The commitment is long and costly to abandon
3. 03Costs are not disclosed line by line
4. 04A household without durable surplus has cheaper places to hold money
5. 05The comparison usually offered is the wrong comparison

An annual reading matters most to an owner who has been through a life event since the contract was issued, who carries an outstanding advance against the contract, or whose statement has shown a widening gap between the guaranteed and the total figures. It matters least to an owner whose circumstances have not changed, whose designations are already exactly as intended, and who is not drawing on the contract's value, though even that owner benefits from the hour it takes to confirm the fact rather than assume it.

What this page does not tell the reader is whether a specific life event should change who owns or who is named on a particular contract, since that answer depends on the reader's full legal and family situation and belongs with a lawyer or a notary. It also does not say whether the design itself still fits the reader's goals years after issue, a judgment the Financial Security Advisor makes together with the reader rather than one a general review checklist can settle. That advisor is compensated by commission from the insurer, a fact worth noting whenever a review conversation turns toward a new recommendation rather than a simple confirmation that the existing contract still fits.

Step by step, what the reader actually does each year

The sequence for the annual reading is short and repeats the same way every year. The insurer mails or posts online the statement showing the four figures, the owner sets aside the time to compare them against last year's copy, kept in the same file, and any figure that does not match an expectation gets written down as a question rather than left unresolved. Where nothing has changed and every figure moves the way it did the year before, the reading ends there, confirmed and filed. Where a life event has occurred, the same reading expands into a second step: contacting the insurer or the Financial Security Advisor to update the designation, the address, or the ownership on record before anything else is decided.

That second step, when it applies, is not something the owner completes alone. A change of beneficiary or owner runs through the insurer's own form, and where a lawyer or a notary is already involved because of the same life event, such as a separation agreement or a new will, coordinating the insurer's paperwork with that other document at the same time avoids the two ending up in conflict. An owner who treats the annual reading as a fixed date each year, rather than an occasional glance at whatever arrives in the mail, is the one most likely to catch a life event's effect on the contract before it becomes the kind of gap only a claim later reveals.

Where the household has moved to another province since the contract was issued, the annual reading is also the moment to confirm that the mailing address and the province of residence on file match reality, since certain rules on beneficiary designation and matrimonial property differ by province and the insurer's file should reflect where the owner actually lives rather than an address left over from years earlier. A move on its own does not change the contract's terms, but it can change which set of provincial rules would apply if a question about the designation ever needed to be resolved, which is one more reason the annual reading is not purely mechanical. Where more than one contract exists across different insurers, the annual reading is easiest to manage on a single date each year rather than staggered across several months, since comparing figures gathered at different times of year can make a genuine trend look larger or smaller than it actually is.