O. Reg. 516/10: Replacement of Life Insurance Contracts

 

ontario regulation 516/10

made under the

insurance act

Made: December 15, 2010
Filed: December 17, 2010
Published on e-Laws: December 20, 2010
Printed in The Ontario Gazette: January 1, 2011

Amending Reg. 674 of R.R.O. 1990

(Replacement of Life Insurance Contracts)

1. Section 2 of Regulation 674 of the Revised Regulations of Ontario, 1990 is revoked and the following substituted:

Duties of Agent

2. (1) As part of an application for a contract of insurance, an agent for an insurer shall obtain from each applicant a statement, signed by the applicant, that indicates whether replacement of a contract of life insurance is intended.

(2) If replacement of a contract of life insurance is intended, the agent has the following duties before accepting an application for a contract of insurance:

1. The agent shall obtain from the applicant a list of all life insurance contracts intended to be replaced.

2. The agent shall complete and sign the following documents:

i. A life insurance replacement declaration in a form approved by the Superintendent.

ii. A written explanation of the advantages and disadvantages of replacing the contract of life insurance.

3. The agent shall review the completed life insurance replacement declaration and written explanation with the applicant and leave them with the applicant.

4. The agent shall obtain the applicant’s signature on a copy of the completed life insurance replacement declaration, attesting to the receipt of the completed declaration from the agent.

5. The agent shall obtain the applicant’s signature on a copy of the written explanation, attesting to the receipt of the written explanation from the agent. 

6. If the applicant is not the life insured, the agent shall obtain the signature of the life insured on a copy of the written explanation, attesting to the receipt of the written explanation from the agent.

(3) Within three working days after receiving an application for a contract of insurance, the agent shall forward a copy of each completed life insurance replacement declaration, as reviewed with the applicant by the agent and signed by the applicant, to every insurer whose life insurance contract is intended to be replaced.

(4) If the transaction involves borrowing on an existing contract of insurance, the agent shall caution the applicant that it is not usually advisable to borrow against policy loan values beyond the applicant’s expected ability or intention to repay.

2.1 The agent shall forward the following documents to each insurer who is requested to issue a new contract of insurance:

1. The application for a contract of insurance.

2. A copy of the completed life insurance replacement declaration and the written explanation, each as reviewed with the applicant by the agent and signed by the applicant.

3. A copy of all written proposals presented to the applicant by the agent during the solicitation of the application for a contract of insurance.

4. All written directions received from the applicant.

2.2 The agent shall deliver each new contract of life insurance to the applicant as soon as is practical in the circumstances after receiving it from the insurer, unless contrary written directions have been received from the applicant.

2. Section 3 of the Regulation is revoked and the following substituted:

Duties of Insurer

3. (1) If an insurer receives from an agent an application for a contract of insurance indicating that replacement of life insurance is intended, the insurer has the following duties:

1. The insurer shall ensure that a completed life insurance replacement declaration and a written explanation, each as reviewed with the applicant and signed by the applicant, are filed with the application.

2. The insurer shall keep a copy of all documents forwarded by its agent under this Regulation at the insurer’s principal office or place of business in Canada for at least three years after receiving the documents.

(2) Upon receiving and approving the application for a new contract of life insurance, the insurer shall issue the new contract of life insurance as soon as is practical in the circumstances.

3.1 (1) Upon request, an insurer shall provide such information as is necessary to other insurers or their agents to enable them to complete the life insurance replacement declaration and written explanation required by this Regulation and shall do so as soon as is practicable in the circumstances after receiving the request for the information.

(2) The insurer shall keep a written record of the information for at least three years after providing it to an insurer or agent.

3. Subsection 4 (1) of the Regulation is revoked and the following substituted:

(1) An applicant for replacement of a contract of life insurance may withdraw the application within 20 days after receiving the completed life insurance replacement declaration and written explanation required by this Regulation by notifying the insurer or any agent of the insurer of the applicant’s intention to withdraw the application.

4. Form 1 of the Regulation is revoked.

5. This Regulation comes into force on the later of April 1, 2011 and the day it is filed.