ETHICS - SEEWHY VIDS

Question 1

3 SOURCES OF CDN INS LAW (CCL)

Answer 1

1. CANADIAN CONSTITUTION
2. COMMON LAW
3. LEGISLATION AND REGULATION

Question 2

CANADIAN CONSTITUTION

Answer 2

• gives power to province to pass laws

- ins law–> provincial matter —> licensed in each prov

Question 3

COMMON LAW

Answer 3

• applies to all common provs—> so not quebec

- based on past decisions of the courts for current cases

Question 4

to enter contract, you must have

Answer 4

1. legal status

2. capacity to contract

Question 5

natural person vs legal person

Answer 5

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

Question 6

who is party to insurance contract

Answer 6

1. policy holder
2. life insurance
3. 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

Question 7

types of beneficiaries

Answer 7

• 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

Question 8

creditor proofing

Answer 8

• 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?)

Question 9

legal docs that affect life ins contract (4)

Answer 9

1. Power of Attorney (POA)
2. Enduring POA
3. last will + testament
4. dying intestate–> w/o will

Question 10

POWER OF ATTORNEY (POA)

Answer 10

• 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)

Question 11

ENDURING POA

Answer 11

• 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)

Question 12

Last will + Testament

Answer 12

• 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

Question 13

Dying Intestate

Answer 13

• Dying w/o a will

- assets divided by province

Question 14

Delivery of policy

Answer 14

• 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

Question 15

change in insurabilty

Answer 15

• 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

Question 16

unconditional policy delivery

Answer 16

• no requiremens, once premium rec’c, can deliver policy

Question 17

10 day free look

Answer 17

MANDATED BY CLIA

10 dan free look period after policy delivered, cust. can cancel w full refund

Question 18

CLIA

Answer 18

Canadian Life + health Insurance Association

Question 19

Material (material misrep.)

Answer 19

information that could have impacted underwriting (i.e declined)

Question 20

if material mis rep, underwriter can:

Answer 20

1. declinepolicy
2. add exclusion
3. rate policy

> > > no proof of fraud during INcontestability period<

Question 21

mis rep depends on:

Answer 21

• when ins co realized misrep

- if was intentional (fraud)

Question 22

contestability period

Answer 22

• 2 years
• dont have to proove fraud
• can: cancel policy or deny claim— even if mistake

Question 23

INcontestability period

Answer 23

• after the 2 years contestability period
• ## MUST PROOVE FRAUD to contest

Question 24

misstatement of age

Answer 24

• 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

Question 25

Suicide Exclusion period (incl reinstatement)

Answer 25

- 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

Question 26

assignment of policy: 2 types

Answer 26

1. collateral | 2. Absolute

Question 27

Collateral assignment

Answer 27

ins policy used as collateral for loa if insuraed dies, policy pays off loan and leftovers go to beneficiary

Question 28

Absolute Assignment

Answer 28

Change in ownership----> trf'e is new owner , can chg policy, borrow from policy, etc... taxable disposition limited in some prov + may be illegal

Question 29

prohibited sales practices (8)

Answer 29

1. tied selling 2. twisting 3. churning 4. premium rebating 5. fronting 6. trafficking in insurance 7. commission sharing\ 8. referral

Question 30

tied Selling

Answer 30

purchase of 1 product conditional on purchase of another

Question 31

twisting

Answer 31

replacing policy w policy from DIFF ins co LIRD required

Question 32

churning

Answer 32

replacing policy w policy from SAME ins co LIRD required

Question 33

LIRD

Answer 33

Life ins replacement declaration form helps protect client when changing policy (twisting/churning) discloses thins client should know before switch

Question 34

Premium Rebating

Answer 34

ins co refunds/rebates portion of premium to client

Question 35

fronting

Answer 35

agent signs application on behaf of another person (licenced or not) when the signing agent never met with the clients

Question 36

Trafficking in insuance

Answer 36

agent acts as middleman btwn policy holder selling policy and buyer illegal in newfoundland discouraged everywhere else

Question 37

commission sharing

Answer 37

- must be licensed | - must disclosed and agreed to b y client

Question 38

referral:

Answer 38

- 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

Question 39

ASO contracts

Answer 39

- Admin Services Only - ins co will: track who is covered, assess claims, etc.... - suitable for GIANT CORPS

Question 40

Assuris

Answer 40

- 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