Life insurance for a baby might sound a little off, but fast-growing Greatway Financial says it's never too early to sign up.
Life insurance for a baby might sound a little off, but fast-growing Greatway Financial Inc. says it's never too early to sign up.
The Financial Services Regulatory Authority of Ontario alleges that Greatway has focused its sales almost entirely on universal life insurance, a complex financial product usually used by the wealthy for estate planning. It also alleges the company's training encourages agents to sell the same product to all consumers regardless of their income or needs.
Meanwhile, a report on the business model by regulators including the FSRA noted that a company matching Greatway's description mostly targeted newcomers to Canada with incomes generally ranging between $40,000 and $50,000. “You put that situation together with training materials that we believe to be inappropriate, then you have a recipe for customer harm.”There are numerous financial implications to Greatway's sales strategy. The regulator found that the company only requires training on selling 'overfunded' universal life insurance plans, where payments above the insurance premiums accumulate as tax-sheltered savings through a strategy called an insured retirement plan.
“It's potentially devastating,” said Cline. “When get to retirement and they need the money the most, the cost of the insurance inside these policies is so high that it quickly depletes the cash value that has built in these policies, to where these policies lapse." Those commissions can run up quickly in part because the payouts are front-loaded with such permanent life insurance products, said Jason Pereira, a financial planner based in Toronto. That means that rather than paying a small percentage of managed investments over a lifetime, the agent gets the bulk of it right away.
"But if you have an open mind, you will uncover, recover and discover this opportunity for sustained, profitable growth.”
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