ETHICS - SEEWHY VIDS Flashcards
3 SOURCES OF CDN INS LAW (CCL)
- CANADIAN CONSTITUTION
- COMMON LAW
- LEGISLATION AND REGULATION
CANADIAN CONSTITUTION
- gives power to province to pass laws
- ins law–> provincial matter —> licensed in each prov
COMMON LAW
- applies to all common provs—> so not quebec
- based on past decisions of the courts for current cases
to enter contract, you must have
- legal status
2. capacity to contract
natural person vs legal person
natural person: A human being (legal age and has mental capacity– so not mentaly ill, disabled, drunk)
Legal person: i.e a corporation or partnership
who is party to insurance contract
- policy holder
- life insurance
- insurance co
BENEFICIARY is not party to the contract–> bc anybody can be beneficiary , incl those who are not legal age or dont have mental capacity
types of beneficiaries
- there are 3 types
- REVOCABLE: can be changed by policy holder
- IRREVOCABLE: cant be changed by policy holder + polcy holder cannot change or take away from policy, and cannot borrow funds from policy
- CONTINGENT BEN: next in line, if 1st ben. dies, cont. ben get DB
creditor proofing
- only if contract purchased in good faith– not just to hide money
- protected class: parent, spouse, child, grand child
- relationship btwn life insured and beneficiary deermines if protected class (except QC?)
legal docs that affect life ins contract (4)
- Power of Attorney (POA)
- Enduring POA
- last will + testament
- dying intestate–> w/o will
POWER OF ATTORNEY (POA)
- LEGAL DOC where 1 person give auth to another to act on their behalf
- can be for broad or specific tasks
- 3 q’s:
>do u trust this person to act for you?
>full POA? or just specific tasks?
>should they continue POA if you become mentally incapable (enduring POA)?
Note: POA cannot execute last will bc they may take advantage (too much power)
ENDURING POA
- continues (endures) even if person becomes mentally incapable
- must have specific wording: STATE that POA continues if mentally incapable, STATE when POA effective (right away? or only after mentally incapable)
Last will + Testament
- starts at death
- addresses many matters, ie guardian of kids, distribution of assets
- STATES: “I revoke all previous wills”
- Instructs executor to pay all o/s debts from estate
- strict laws to protect those they had moral obligation to: i.e married man cannot leave it all to mistress!!!
- if seperated: no impact, existing will stands
- if divorced: gets nothing
Dying Intestate
- Dying w/o a will
- assets divided by province
Delivery of policy
- policy not in force till delivered
- change in insurability == ins co CAN cancel
- when delivering policy–agent must ask if any change in insueability
- client must sign no change
change in insurabilty
- NEGATIVE change in health
- panned foreign travel
- change in occupation
- POSITIVE change in $$$ (i.e won lotto)
if any change ins co can: still issue, decline, add exclusions
unconditional policy delivery
- no requiremens, once premium rec’c, can deliver policy
10 day free look
MANDATED BY CLIA
10 dan free look period after policy delivered, cust. can cancel w full refund
CLIA
Canadian Life + health Insurance Association
Material (material misrep.)
information that could have impacted underwriting (i.e declined)
if material mis rep, underwriter can:
- declinepolicy
- add exclusion
- rate policy
> > > no proof of fraud during INcontestability period<
mis rep depends on:
- when ins co realized misrep
- if was intentional (fraud)
contestability period
- 2 years
- dont have to proove fraud
- can: cancel policy or deny claim— even if mistake
INcontestability period
- after the 2 years contestability period
- ## MUST PROOVE FRAUD to contest
misstatement of age
- if found, ins co will adjust coverage amount to reflect premium paid— so will get less death benefit to ref;ect premium paid
EXCEPTION: can cancel if misstmt of age if aplicant was above max age limit of issuing policy
Suicide Exclusion period (incl reinstatement)
- 1st 2 yrs of policy,
- if suicide—-> DB not paid
after 2 yrs, if suicide—|> DB paid
If policy lapsed and was REINSTATED: period starts over
assignment of policy: 2 types
- collateral
2. Absolute
Collateral assignment
ins policy used as collateral for loa
if insuraed dies, policy pays off loan and leftovers go to beneficiary
Absolute Assignment
Change in ownership—-> trf’e is new owner , can chg policy, borrow from policy, etc…
taxable disposition
limited in some prov + may be illegal
prohibited sales practices (8)
- tied selling
- twisting
- churning
- premium rebating
- fronting
- trafficking in insurance
- commission sharing\
- referral
tied Selling
purchase of 1 product conditional on purchase of another
twisting
replacing policy w policy from DIFF ins co
LIRD required
churning
replacing policy w policy from SAME ins co
LIRD required
LIRD
Life ins replacement declaration form
helps protect client when changing policy (twisting/churning)
discloses thins client should know before switch
Premium Rebating
ins co refunds/rebates portion of premium to client
fronting
agent signs application on behaf of another person (licenced or not) when the signing agent never met with the clients
Trafficking in insuance
agent acts as middleman btwn policy holder selling policy and buyer
illegal in newfoundland
discouraged everywhere else
commission sharing
- must be licensed
- must disclosed and agreed to b y client
referral:
- fee not contingent on sale– paid no matter what
- cant be % of commissions
- agent must ensure person referring didn’t engage if any ins related activities
- disclosed to and agreed to by client
ASO contracts
- Admin Services Only
- ins co will: track who is covered, assess claims, etc….
- suitable for GIANT CORPS
Assuris
- not for profit org
- protects cdn policy holders if ins co fails
- if ins co fails, assuris trfs policies to solvent ins co
- ALL ins co’s in canada MUST be part of Assuris
- bad in vestments NOT COVERED
