QC Ethics and Professional Practice Flashcards
1
Q
Partnerships
A
A partnership is not a legal person.
General partnership: A group or persons, referred to as “partners,” who have come together to operate a commercial undertaking and earn a profit from it which they will share.
2
Q
Marriage
A
The legal union of two persons.
A marriage is dissolved by :
- The death of on of the spouses;
- Divorce
3
Q
Civil union
A
Union of two persons (enjoy the same rights and obligation under civil law as married spouses).
A civil union is dissolved when
- One of the spouses dies
- A court orders the dissolution
- The spouses make a joint declaration before a notary stating that their will to live together has been irretrievably undermined.
4
Q
Common law spouses (de facto spouses)
A
Does not exist in the CCQ, therefore they cannot assert rights under the rules for the partition of the family patrimony of the dissolution and liquidation of a matrimonial regime, do not have the right to obtain spousal support (alimony), nor do they have the right to inherit from their de facto spouse if he dies without a will.
Same rights for tax purposes.
- Irrelevant whether the spouses are married or not when it relates to children. *
5
Q
Community of property
A
Applied to spouses married in Québec before July 1, 1970 without a marriage contract.
The sole administrator, the husband, manages the common patrimony.
Upon dissolution of the marriage, the property acquired by the spouses during the marriage is partitioned equally.
6
Q
Separation as to property
A
Very popular - couples must enter into a notarized marriage contract for this to be an option.
Each spouse is responsible for the administration, enjoyment and free disposition of all his property. There is no partition of property when the marriage ends or in the event of separation from bed and board.
7
Q
Partnership of acquests
A
The current legal regime for coupled married after June 30, 1970 without a marriage contract and for couples joined in a civil union since June 24, 2002 without a civil union contract.
Property acquired during the marriage from the proceeds of work and other sources of income are acquests and thus may be partitioned upon the dissolution of the marriage or civil union.
All property owned by a spouse prior to the marriage or civil union & property inherited or received as a gift during the marriage is considered private property.
8
Q
Family Patrimony Act (July 1, 1989)
A
Since this regime is of public order, married or civil union spouses cannot renounce their rights in the family patrimony, whether by a marriage contract or otherwise.
The rules of family patrimony take precedence over the rules of matrimonial regimes.
List of property included under family patrimony:
- Principal and secondary residences of the family;
- Movable property located therein and which serves for the use of the household;
- Motor vehicles used for family travel;
- Benefits accrued during the marriage or civil union under a govt pension plan (ie. QPP);
- Benefits accrued during the marriage or civil union under pension plans offered by employers;
- Benefits accrued during the marriage or civil union under a registered retirement savings plan (ie RRSP, RRIF, LIRA, LIF, VRSP);
- Benefits accrued during the marriage or civil union under any other retirement savings instruments (ie. annuity contract)
NOT included:
- Cash and money kept in back accounts;
- Insurance contracts (including cash surrender value)
- Investments, shares, bonds and annuity contracts not included in an RRSP, RRIP, LIRA, LIF or a pension plan
- Deferred profit-sharing plans, retirement superannuation plans DPSP, TFSA and businesses.
- Earnings registered in the name of each party during the marriage, if the dissolution results from death
- Benefits accrued under a retirement plan which grants a right to death benefits to the surviving spouse, if the dissolution results from death
- Property received by one of the spouses as an inheritance or gift, before or during the marriage or civil union.
9
Q
Valuation date of the family patrimony
A
The property is valued at one of the following dates:
- Date of death
- Date of the institution of the action seeking separation from bed and board, divorce or nullity
- Date on which the spouses ceased living together, if it is prior
10
Q
Rules for partitioning the family patrimony
A
Steps:
- Determine the market value of all the property in the family patrimony;
- Determine total amount of the debts existing on the partition date that were incurred for the acquisition, improvement, maintenance and preservation of property included in the family patrimony;
- Deduct the debts from the market value, which allows the net value of the family patrimony to be determined;
- Apply the other deductions prescribed by the CCQ;
- Calculate the net value resulting from these steps and partition the family patrimony equally.
11
Q
Divorce and Separation from bed and board
A
Divorce dissolves a marriage. Federal.
Separation from bed and board does not dissolve a marriage, but it releases the spouses from the obligation to live together and results in the partition of the family patrimony and the dissolution and liquidation of the matrimonial regime. Provincial.
A legally separated spouse does not qualify as a “surviving spouse” (as it relates to the QPP) & unless they are the beneficiary, the separated spouse is not entitled to death benefits under other retirements plans (ie SPP).
12
Q
Divorce and Separation from bed and board
A
Divorce dissolves a marriage. Federal.
Separation from bed and board does not dissolve a marriage, but it releases the spouses from the obligation to live together and results in the partition of the family patrimony and the dissolution and liquidation of the matrimonial regime. Provincial.
A legally separated spouse does not qualify as a “surviving spouse” (as it relates to the QPP) & unless they are the beneficiary, the separated spouse is not entitled to death benefits under other retirements plans (ie SPP).
13
Q
Legal succession
A
Without a will.
The persons who inherit from the deceased are the spouse to whom the deceased was married/civil union and the persons related to the deceased by blood or adoption.
All children whose filiation is established (by blood or by adoption) have the same rights in the context of a succession without a will.
De facto spouses and in-laws excluded.
14
Q
Testamentary successions
A
Deceased prepared a will and names their heirs and legatees.
15
Q
Declaration of heredity
A
Sets out the deceased person’s heirs and their share of the succession, and the liquidator. Prepared by a notary or lawyer.
16
Q
Liquidator of the succession
A
Person appointed to liquidate the succession, whether it be legal or testamentary.
Must settle the succession as quickly as possible (although no exact time limit exists).
If the liquidator is not an heir, they are entitled to remuneration.
17
Q
Conventional appointment / Surviving spouse clause
A
Gift “mortis causa” (gift in the event of death) set out in a marriage contract or civil union contract which provides for the transfer of property to the surviving spouse.
Divorce entails the lapse (nullity) of gifts mortis causa. In the event of separation from bed and board, they remain valid, unless the Superior Court decides that they have lapsed.
18
Q
Trusts
A
Just like a legal person or partnership, a trust can be the holder of an insurance contract or annuity contract. It acts through the trustee, who acts for the good of the benefit of the trust. A trustee is an administrator of the property of others with full powers of administration.
19
Q
Contract
A
Most common source of obligations of natural persons and legal persons.
Agreement of will by which one or several persons obligate themselves to one or several other persons to perform an obligation. Formed by the sole exchange of consents (verbal or written) between persons having the capacity to contract obligations.
20
Q
Types of contracts
A
- Contracts of adhesion vs. Contracts by mutual agreement
- Synallagmatic (bilateral) vs. Unilateral
- Onerous vs. Gratuitous
- Commutative vs. Aleatory
- Instantaneous performance vs. Successive performance
- Consumer contracts
21
Q
Nominate vs. Innominate contracts
A
Nominate contracts (governed by CCQ, separate chapters for each):
- Sale
- Gifts
- Lease contracts
- Lease agreements
- Affreightment
- Carriage
- Employment
- Enterprise or service
- Mandate
- Association or partnership
- Deposit
- Loan
- Suretyship
- Annuity
- Insurance
- Gaming and wagering
- Transaction
- Arbitration
Innominate (governed by the CCQ’s general contract rules):
- Consignment
- Franchise
- Distribution
- Joint venture
22
Q
Simple administration vs. full administration
A
Simple administration: Must perform all the acts necessary for the preservation of the property or useful for the maintenance of the use for which the property is ordinarily destined.
Full administration: Preserve the property & make it productive or increased the patrimony. Right to dispose of or alienate the property.
23
Q
Mandate (POA)
A
Contract by which a person, the mandator, empowers another person, the mandatary, to represent him in the performance of a juridical act.
This power and the document itself are also referred to as a “power of attorney”.
If the mandatary notices that his mandator has become incapable, he must cease to act, because his actions may be challenged on the basis of nullity.
24
Q
Mandate in case of incapacity
A
Mandate given by a person of full age in anticipation of his incapacity to take care of himself or to administer his property must be made by a notarial act on in the presence of witnesses.
25
Annuity contract
A person, the debtor, undertakes, gratuitously or in exchange for the alienation of capital for his benefit, to make periodical payments to another person, the annuitant, for a certain times.
26
Civil liability
A person is responsible for the consequences of his actions in his dealings with others. Civil liability is the obligation to repair the injury caused when certain conditions are met.
27
Extinctive prescription
A means of being released from an obligation by the lapse of time.
Only the filing of a judicial application may interrupt prescriptions.
The day on which the right of action arises fixes the beginning of the period of extinctive prescription. An action to enforce a personal right is prescribed by three years, if the prescriptive period is not otherwise established. Where the right of action arises from moral, corporal or material damage appearing progressively or tardily, the period runs from the day the damage appears for the first time.
28
Public insurance and pension (or retirement) plans
Contrary to private plans which are contractual, public plans are legislative and regulatory.
Federal public plans
- Employment insurance (EI)
- Old Age Security (OAS)
- Guaranteed Income Supplement (GIS)
- Allowance and Allowance for the Survivor
- Canada Pension Plan (CPP) *does not apply in QC*
- Canada Health Act
QC provincial plans
- SAAQ
- CNESST
- RAMQ
- Quebec Prescription Drug Insurance Plan
- Quebec Pension Plan (QPP)
- Crime Victims Compensation Plan (IVAC)
- Last-resort Financial Assistance (BS)
29
Coordination of benefits: Public and Private Plans
Meant to avoid the duplication of benefits & to determine which plan will be the first payer.
Private insurance plans cannot deduct amounts received by an insured under BS from any disability insurance benefits to be paid under the private insurance plan.
*There is no legislative rule of priority between public and private plan or among the various private plans. However, insurers normally include co-ordination clauses in their insurance contrats to avoid the duplication of benefits and the reduce the cost of premiums.*
30
Type of coordination: Integration clause
By applying this type of clause, the insurer can reduce the benefits it pays.
31
Type of coordination: Limitation clause
Total benefits received from one or m0re sources of income must not exceed a percentage of the salary stipulated in the contract. Any excess will be deducted from the benefits paid by the insurer.
32
Insurers Act and Regulation under the Act respecting insurance
Sets out the rules relating to the creation and administration of Quebec-chartered insurers and governs all insurers operating in Quebec. Deals with certain powers of the AMF which, pursuant to the Act, is responsible for overseeing the activities of insurers in Qc.
33
Distribution Act
Important source of law with respect to the distribution of insurance in Qc.
34
An Act resecting the protection of personal information in the private sector (APPIPS)
Applies to every person who carries business in Qc. Applies to information allowing a natural person to be identified (name, address, including e-mail addresses, DOB, SIN...), therefore it does not protect information relating to businesses or legal persons.
35
An Act respecting prescription drug insurance
Stipulates that everyone must be covered by a private drug plan OR the public drug plan.
36
Supplemental Pension Plan Act (SPPA)
3 types of person plans:
- Defined contribution pension plan (DCPP);
- Defined benefit pension plan (DBPP);
- Combined DC/DB.
37
Canadian Charter of Rights and Freedoms
The Canadian Charter applies only to dealings between the State and individuals, while the Quebec Charter applies to everyone (including private dealings).
38
Insurance contract
A contract whereby the insurer undertakes, for a premium or assessment, to make a payment to the client or a third person if an event covered by the insurance occurs.
39
Necessary elements of an insurance contract
1. A risk
2. A premium
3. A payment
4. Insurable interest (not in CCQ)
40
Risk
An uncertain event, the occurence of which leads to a financial loss against which the client wishes to protect himself.
41
Premium
The amount which the client must pay the insurer and in consideration of which the insurer agrees to pay a benefit to the client (of to the designated beneficiary of the client's succession) when the insured risk occurs.
Must be proportional with the risk.
42
Benefit
The sum the insurer must pay upon the occurence of the insured event.
43
Insurable interest
The client has an insurable interest when that interest results from emotional economic or moral ties with the insured.
Life insurance or accident and sickness insurance may be taken out when the insured it:
- The client
- The client's spouse
- A descendant of the client
- A descendant of the client's spouse
- An employee or staff member of the client (when the client is a business)
- A person who contributes to the client's support or education
- A person in whose life of health the client has a pecuniary or moral interest.
An insurance contract is null if the client does not have an insurable interest in the life of health of the insured. In the absence of an insurable interest, the client must obtain the written consent of the insured for the contract to be valid.
The insurable interest if assessed when the insurance contract is signed or assigned, not when a loss occurs. Thus, the disappearance of the insurable interest after the policy has been underwritten will not put an end to the insurance.
44
Of the utmost good faith
Good faith governs the parties' conduct at all stages of the contract, including when it is entered into and during its performance. However, the degree of good faith required for insurance contracts is higher than for other contracts. As a result, it is said that an insurance contract is a contract "of utmost good faith."
Mostly applies to the client being honest during the application process.
45
Discrepancy rule
In the case of a discrepancy between the insurance policy and the insurance application, the application prevails unless the insurer has, in a separate document, indicated the particulars in respect of which there is a discrepancy to the client.
Every difference is not necessarily a discrepancy; there must be some incompatibility or a conflict between the policy and the application.
46
Characteristics of an insurance contract
1. Contract of adhesion: its essential terms were imposed or drafted by one of the parties, without being freely negotiated
2. Bilateral or synallagmatic: Both parties take on obligation
3. Aleatory: Contract is subject to uncertainty (risk)
4. Onerous title: Client has to pay the premiums
5. Consensual: Formed by simple consent of the parties as soon as the insurer accepts the client's application, subject to certain conditions
47
Relavant documents (to an insurance contract)
1. Insurance application
2. Medical questionnaire
3. Declaration of insurability
4. Insurance policy (document evidencing the existence of an insurance contract)
48
Relavant documents (to an insurance contract)
1. Insurance application (may be verbal, but is usually a form)
2. Medical questionnaire
3. Declaration of insurability
4. Insurance policy (document evidencing the existence of an insurance contract)
49
Parties involved in individual insurance
- Insurer
- Client
- Insured
- Designated beneficiary and subrogated beneficiary
50
Parties involved in group insurance
- Insurer
- Policyholder
- Participant
- Beneficiary
51
2 stages of the formation of the contract
1. Client's offer
| 2. Insurer's acceptance
52
General conditions for the validity of contracts
- Consent
- Capacity
- Object
- Cause
53
Consent
The consent may be express (clear and specific manifestation of a person's will) or tacit (manifestation of an implicit wish under certain circumstances from which the conduct of the parties is inferred.
Must be free and enlightened.
A contract affected by on of these defects of consent is not necessarily null. It will be deemed to be null only if one of the parties shows that his consent was vitiated due to an error, fraud, fear or lesion.
54
Defect of consent: Error
Involves a false view of reality, ie. error as to the nature of the contract.
55
Defect of consent: Fraud
Misrepresentations by on party
56
Defect of consent: Fear
When consent is obtained through moral or physical constraint
57
Defect of consent: Lesion
Results when one of the parties exploits the other, which leads to a serious disproportion of the obligations between the parties.
58
Capacity
Means that a person holds rights and has the ability to exercise them alone.
CCQ provides that minors (under 18 y.o., not emancipated) and incapable persons of full age cannot exercise their civil rights alone.
The Public Curator of Quebec maintains three registers (to allow insurance reps to check whether their client is subject to a protection regime):
1. A register of persons of full age under tutorship or curatorship;
2. A register of persons under homologated protective mandates;
3. A register of minors under tutorship.
59
Minors
- Less than 18 y.o.
- Not emancipated
Cannot take out insurance without the consent of their tutors, unless related to the practice of his craft or profession (as of 14 y.o.)
60
Object
The juridical operation contemplated by the parties at the time of its formation. Ie obligation to do or not to do something.
Characteristics:
- Must be licit (allowed by law)
- Must be possible
- Must be determined or determinable.
61
Cause
The reason that drove each party to enter into the contract. The premium is the cause of the contract for the insurer, and the benefit that will be received is the cause for the client.
62
Effective date
The date on which the contract of insurance take effect.
63
Effective date: Life insurance
3 essential conditions for the coming into effect of the contract:
- Acceptance of the application by the insurer, without modification
- Payment of the initial premium
- No change in insurability of the risk since the application was signed.
*Insurance rep should always have the policyholder sign and date an acknowledgement stating that he has received and accepted the policy.*
64
Effective date: A/S insurance
Takes effect upon the delivery of the policy to the client. Not necessary to pay initial premium for A/S insurance to come into effect.
65
Interim cover note
Contract pursuant to which the insurer offers immediate, but temporary coverage to the insured while his application is being reviewed.
If an insurance of persons rep fails to offer immediate coverage (if available), he could be sued for damages due to professional negligence if the client (or his succession) sustains harm as a result.
66
Declaration of risk
Includes the obligation for the client and the insured to relay to the insurer any fact which could impact its assessment of this risk.
- When filling out insurance application himself;
- When the insurance of persons rep fill out the insurance application;
- When, during the term of the contract, certain circumstances result in an aggravation of the occupational risk
67
Warranties
An obligation requiring the client to act prudently in order to reduce the risk. Must be express (not implied) and must be relevant to the risk.
68
Aggravation of the occupational risk
Change of circumstance which makes the initial declaration of risk inaccurate after the fact or which could generally change the assessment of the risk (if it lasts more than 6 months).
Not in life insurance, but applicable in A&S insurance.
No obligation to inform the insurer, but the benefit might be reduced after the fact if not declared to the insurer.
69
Contract annulment: 10-day rescission
Policyholder can cancel an insurance contract within 10 days of signing it, without penalty and with a reimbursement of the premiums paid.
IVIC: 2 days only
70
Contract cancellation
Only cancels the contract for the future = no premiums reimbursed.
IVIC: can cancel at any time and receive a reimbursement for his annuity - fees
71
Breaches of the client's obligation to represent facts
- Misrepresentation with respect to age (to cancel: insurer has 3 yrs of the effective date of the contract, provided it does so during the lifetime of the insured and within 60 days after becoming aware of the insured's real age)
- Other misrepresentations (to cancel: insurer must be invoked within 2 yrs following the effective date)
- Concealment (to cancel: insurer must be invoked within 2 yrs following the effective date)
- Fraud (to cancel: insurer can cancel at any time, but has the burden of proof)
72
Notorious fact
A fact that a reasonably competent insurer should know when it operates in a particular field (i.e. health risks related to asbestos)
73
Cancellation for non-payment of life insurance premiums
Non-payment of the premiums leads to the automatic cancellation of the contract after 30 days (grace period).
Cancellation is automatic and the insurer does not have to send a notice of default to the client.
In case of death within the 30-day grace period, the insurer is required to pay the insured amount.
If the life insurance has a cash surrender value (CSV), the insurer can pay the premium from the CSV in order to keep the contract in effect.
Cancellation is not always final, since the insurer is obliged to reinstate the individual life insurance if:
- Client applies for reinstatement within 2 years of the date of the cancellation;
- Insurer determines that the insured still meets the insurability conditions of the cancelled contract
- Pay the overdue premiums
- Repay the advances obtained on the policy
74
Cancellation for non-payment of A&S premiums
Non-payment of the premiums leads to cancellation only if the insurer gives the client 15 days' prior notice.
75
Assignment of policy
Consists in transferring the client's rights and obligations under an insurance policy to another person with an interest in the insured's life or health and thereby replacing the client.
Revocable beneficiaries = revoked
Irrevocable beneficiaries = not revoked unless the irrevocable beneficiary consents
Insurer must be notified
76
Hypothecation
A hypothec (mortgage) is a real right on property that guarantees the performance of an obligation.
A client can hypothecate his rights under the insurance policy in favour of one of his creditors in order to secure a debt.
77
Participation right
Some individual life insurance policies entitle the client to receive dividends.
78
Cash surrender value (CSV)
Client has the power to exercise his right to the CSV, in whole or in part. If he asks the insurer for the entire CSV, this puts an end to the life insurance policy. If he asks for only part of the CSV, the life insurance policy will remain in effect, but in most cases, he face amount will be reduced in proportion to the partial surrender.
Term life insurance policies generally do not have a CSV, unlike whole life (permanent) insurance policies.
79
Policy advance
When an individual life insurance policy has a CSV, the client can ask the insurer to lend him part of that value (with interest). If the insurer agrees, the policy remains in effect for the entire face amount.
80
Accessory
I.e. A&S coverage can be accessory in a life insurance contract (and vice versa)
81
Reduction vs. restriction
Both refer to a decrease in the coverage
82
Legal vs contractual exclusions
Legal (does not need to be mentioned in the contract, ie murdering the insured to receive benefits) vs. Contractual (set out by the insurer and pertain to an illness, the origin of the loss, or the circumstances in which it occurred, suicide or the commission of an indictable offence)
83
Suicide exclusion
Unless a life insurance contract contains a clause excluding suicide, the insurer cannot invoke suicide to refuse payment of the life insurance benefit (limited to 2 years)
84
Contract renewal
Renewal of an insurance contract is an agreement in and of itself
85
Right and capacity to designate a beneficiary
Holder: Yes
Mandatary: No
86
Life insurance payment to the succession
The face amount under an insurance of persons or annuity contract will be paid to the succession if the client has indicated that the benefit is to be paid to its:
- Succession
- Assigns
- Heirs
- Liquidators
- Legal representatives
- Successor at law
- Legateers
- Testamentary executors
- Trustees (in the absence of a trust that exists at the time of death)
OR
If the assigned beneficiary has died before the life insured, and where there is no contingent beneficiary
87
Revocable beneficiary
The client can change the designation of a beneficiary
88
Irrevocable beneficiary
A client who has designated his beneficiary irrevocably must obtain the beneficiary's consent if he wishes to change the designation.
A minor cannot consent to the revocation of his designation as an irrevocable beneficiary.
89
Presumption in favour of legal spouses
The designation of a person with whom the client is married or in a civil union as a beneficiary in a written document other than a will is irrevocable, unless otherwise stipulated in the document.
Divorce or annulment of marriage OR dissolution or annulment of civil union = automatic revocation of spouse as beneficiary
VS.
Separation from bed and board = Detailed in court ruling if designation is revoked
VS.
De facto spouses end relationship = Does not have the effect of revoking a designation of the beneficiary (applicable if designation happens before marriage too!)
90
Co-beneficiaries
Client designates several people as beneficiaries of his insurance
91
Will: Beneficiary revocability
A will (and a designation of a beneficiary in a will) is always revocable, even if the testator has specified that the designation is irrevocable.
Designation/revocation contained in a will do not take precedence over a designation of a beneficiary made prior to the signing of the will unless the will refers to the insurance policy in question or unless the intention of the testator is manifest.
92
Types of wills
- Notarial will
- Will made in the presence of witnesses
- Holograph will
93
Payment in full discharge
For the insurer, it is important to make a payment in full discharge, because it does not want to have to pay the insured amount twice.
Life insurance: 30 days maximum to pay the insured amount to the last known beneficiary
VS.
A&S insurance: 60 days maximum to pay the insured amount to the last known beneficiary
94
Preferred beneficiaries (life insurance)
Beneficiaries whose contract renders their rights unseizable
Types:
- Ascendant
- Descendant
- Legal spouse (married of civil union)
- Irrevocable beneficiary
95
Presumption of death
In QC, insured is presumed deceased at 100 y.o.
96
Proof of death
Document evidencing the occurence of the insured risk (usually a death certificate or a copy of the act of death)
97
Life insurance: Time limit after death
A person who has rights with respect to the proceeds of life insurance has 3 years from the date of the insured's death within which to take action against the insurer
(ordinary prescription period).
Any unclaimed amount is sent to Revenue QC, and the person entitled to the death benefit may claim this amount from Revenu QC at any time.
98
A&S insurance: Time limit after death
30 days to notify the insurer
90 days to provide all necessary documents to the insurer
Exception: Maximum 1 year *if* the person entitled to the payment of the benefit proves that it was impossible for him to act within the prescribed time.
99
Payment: Time limit after death
General rule (life and disability insurance): Insurer must pay the insured within 30 days after the receipt of the proof of loss.
A&S: 60 days after receipt of proof of loss
100
Disappearance of the insured
A Declaratory judgment of death can only be obtained after 7 years have elapsed since the disappearance. This period may be reduced where the death of the insured is considered to be certain.
101
Content of the policy
- Name of the policyholder and of the insurer
- Object and amount of the coverage
- Nature of the risks
- Time from which the risks are covered
- Term of the coverage
- Amount and rate of the premiums and the dates on which they are due
- Right to convert group life insurance into individual insurance
102
Discrepancies between the policy and the insurance certificate
Participants may invoke the one that is most favourable to them
Remember: A difference is not always a discrepancy
103
Own occupation disability
First 24 months: Total and continuous incapacity caused by an accident or illness that prevents you from performing any remunerative occupation for which your education, training or experience has reasonably prepared you, regardless of the availability of employment
104
Any occupation disability
After 24 months: Total and continuous incapacity caused by an accident or illness that prevents you from carrying out the main duties of your usual occupation
105
Loan insurance
Only a creditor can be a policyholder under insurance on the life or health of a debtor (loan insurance).
A creditor can be a credit union, a bank, a trsut company or any enterprise carrying on activities similar to those of a lender.
106
Call for tenders
When the policyholder if a public body such as a municipality, it must proceed by way of a public call for tenders. The contract must be awarded to the lowest compliant bidder, subject to a scoring system that also includes a qualifying component.
107
Group insurance: Proof of insurability
In group insurance, the proof of insurability of participants is often limited to their presence at work on the date the contract takes effect. The insurer assumes that if the person is working, he is in good health.
108
Conversion right
ONLY APPLIES TO LIFE INSURANCE
A participant who has been insured for at least 5 years before the end of a group insurance contract has the right without having to provide evidence of insurability, to convert his group life insurance coverage to individual life insurance within 31 days after the expiry of the master policy if the master policy is not replaced or if it is replaced by another group insurance contract that provides a lesser amount of life insurance.
The amount of insurance that may be converted must be at least 10 000 $ or 25% of the amount of the participant's life insurance on the expiry of the master policy, whichever amount is greater.
Conditions
- Less than 65 y.o.
- Must apply within 31 days of the end of his employment or affiliation with the group
- Minimum amount: 10 000 $
- Maximum amount: 400 000 $ or amount covered under the group contract (whichever is smaller)
109
Recurrence
The former insurer may be required to pay disability benefits again if a participant has a recurrence of the same disability, but only if the recurrence arises within 180 days after the end of the initial period of disability and provided the participant has not returned to work for 30 days of full-time work since the expiry of the former contract.
110
Comparable coverage
Protection is comparable if the content is the same despite differences in the amounts of insurance, the amounts of premium waivers or the conditions of eligibility.
111
Annuity contract
A contract by which a person, the debtor, undertakes, by gratuitous title or in exchange for the alienation of capital for his benefit, to make periodic payments to another person, the annuitant, for a certain time.
Used as investment, tax, retirement, financial planning, estate planning and asset protection vehicles.
Criteria:
- There must be a debtor
- There must be an annuitant
- There must be an alienation of capital
- There must be an obligation to pay an annuity
- There must be a specification of a periodic amount for a fixed term
- (If purchased from an insurer: There must be an insured life)
112
Life annuities vs. fixed-term (certain) annuities
Life: Payable by the insurer, during the payment phase, to the annuitant throughout the lifetime of the person on whose lifetime the duration of the annuity is based. Payments end upon the death of the person on whose lifetime the duration of the annuity is based.
VS.
Fixed-term: Payable by the insurer to the annuitant for a period of time determined by the parties in advance.
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Deferred vs. immediate annuities
Deferred: Capitalization phase and a payment phase
VS.
Immediate: No capitalization phase = payments start immediately
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Guaranteed interest account (GIA)
Both the capital and interest are fully guaranteed by the insurer out of its own general funds.
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Segregated funds
Funds which belong to an insurer but must be separated from its general funds. The value of the amounts received from an investor by the insurer varies based on the value of a particular group of assets.
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Individual variable insurance contract (IVIC)
Annuity contracts relating to segregated funds.
To be able to offer an IVIC, the insurer is legally required to guarantee the payment at maturity of a benefit equal to at least 75% of the premiums paid before age 75.
If an insurer fails, its segregated funds are not part of its assets that could be liquidated for the benefit of its creditors. The insurer's assets related to its segregated funds are reserved in priority for holders of annuity contracts or variable capital annuity or insurance contracts.
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RRSP
Contract between a carrier within the meaning of the act and an individual, under which the individual or his spouse pays amounts in order to give the individual a retirement income at the end of the plan.
Amounts accrue tax-free until they are paid out.
Must be closed by the year the annuitant turns 71. Choices:
- Convert to a life annuity, payable to the surviving spouse or not
- Convert to a fixed-term annuity
- Convert to a registered retirement income fund (RRIF)
- Withdrawal of cash amounts (less tax)
3 types of RRSPs:
1. RRSP with a licensed annuities provider (i.e. an insurer)
2. RRSP with a trustee
3. RRSP with banks or credit unions
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Spousal RRSP
Spouse A (the payor) contributes to an RRSP taken out in the name of spouse B (spouse B owns the RRSP).
This strategy is used to split the spouses' retirement income. That way, spouse B benefits from a lower tax rate when he withdraws the money, that is, during retirement, since spouse B normally earns the lower income of the two.
