Ethics and professional practice

1 Ethics and professional practiceLife Licence Qualification Program (LLQP) Exam Preparation ManualE-112 7th Edition, 20207th Edition, 2020 Revised byMtre Dominic VeilleuxProject managementMarie Achard6th Edition, 2019 Revised byMtre Dominic Veilleux and Mtre. John Robert Kelly Project managementMarie Achard1st Edition and 2nd Edition, 2015 Written byJ-P Bernier , and Glenn M. Davis, , MTI, TEPC onsultation committeeAdrienne D. Benkson, MBA, & Sc., CIWM, Peter B. Goldthorpe, Gordon M. Hill, , , Me John Robert Kelly, , , , Steven G. Kelman, , MBA, CFA, David J. McKee, Rae Y. Sands, Gary Senft, Me Dominic Veilleux, Rocco Vetere, James D. H. Wood Project managementMarie Achard, Emily Harrison and Lucie RegimbaldFrench adaptation committeeMe John Robert Kelly, , , and Me Dominic Veilleux Autorit des mArch s finAnciers, 2020 All translation and adaptation rights, in whole or in part, are reserved for all countries. No part of the material protected by this copyright may be reproduced or utilized in any form or by any means, electronic or mechanical, including microreproduction, photocopying, recording or any information storage or retrieval systems, without permission in writing from a duly authorized representative of the Autorit des march s the preceding paragraph, an authorized course provider may use copyright material as permitted under a licence agreement entered into with the Autorit des march s deposit Biblioth que et Archives nationales du Qu bec, 2020 ISBN 978-2-551-26578-7 (PDF) Ethics and professional practiceFOREWORDThis manual is an exam preparation tool for future life insurance agents registered in the Life Licence Qualification Program (LLQP).

2 Its contents will help candidates develop the competency targeted in the Ethics and professional practice module of the LLQP Curriculum: Develop an ethical professional practice , in compliance with the rules governing the life insurance1 overview pageThe first page of every Chapter outlines the Curriculum module competency components and sub-components that will be covered. Highlighting which of the evaluation objectives are addressed in each of the manual s Chapters serves to identify the contents that are essential to attain these is thus recommended that candidates regularly review the competency components and sub-components in order to contextualize and assimilate them as they read each Chapter. This will help develop an understanding of the nature and scope of the evaluated competency. Candidates must have fully understood the knowledge, strategies and skills covered in each Chapter in order to successfully pass the corresponding module of the LLQP licencing this text, the masculine form is used for both men and In the context of the Ethics and professional practice module of the Curriculum, the term life insurance is used to refer broadly to all categories of individual and group insurance of persons, namely: life insurance , accident and sickness insurance (living benefits), annuity contracts (segregated funds, GIAs and immediate annuities) and supplemental pension and professional practiceiiiTABLE OF CONTENTSList of tables.

3 XiiiList of xivCHAPTER 1 LEGAL FRAMEWORK GOVERNING LIFE Life and accident and sickness insurance in its legal context .. Life insurance .. Accident & Sickness insurance .. Insurers .. Agency relationship .. Agents .. Independent agents .. Captive agents .. Managing general agent (MGA) .. Agency .. Regulation of insurance and licencing .. General legal principles applicable to a life insurance agent .. Capacity and status of persons .. Natural persons, partnerships and legal persons (corporations) .. Natural persons (individuals) .. Partnerships .. Legal person (corporation) .. Minors and guardians .. Power of attorney (PoA) and enduring power of attorney .. Power of Attorney .. Enduring Power of Attorney .. Marriage and common law spouse .. Divorce and separation .. Family property .. Wills, estates and successions .. Testate and intestate successions.

4 18 Ethics and professional Trusts and trustees .. Bankruptcy .. Legal principles required for the validity of the contract .. Civil fault .. Limitation periods .. Public insurance and retirement regimes .. Federally sponsored or facilitated programs .. Canada Pension Plan (CPP) and disability .. Old Age Security (OAS) and Guaranteed Income Supplement (GIS) .. Employment insurance .. Provincially or territorially sponsored or facilitated programs .. No-fault automobile insurance .. Workers compensation .. Universal health care and drug plan .. Other relevant provincial and territorial legislation for life insurance agents .. Privacy Act .. Personal Information Protection and Electronic Documents Act (PIPEDA) .. Human rights legislation .. Other relevant federal legislation for life insurance agents .. Criminal Code .. Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA).

5 National Do Not Call List (DNCL) .. Anti-spam legislation .. 32 CHAPTER 2 insurance POLICY Parties to an individual policy .. Insurer .. Policyholder .. Successor policyholder .. 37 Ethics and professional Life insured .. Beneficiary .. Irrevocable beneficiary designations .. Restriction in legislative definition of beneficiary .. Loss of protection .. Contingent beneficiary .. Group insurance policies .. Plan sponsor .. Insurer .. Members and scope of coverage to other insured persons .. Beneficiaries .. Formation of policy .. Rules about forming an individual insurance contract .. Application for insurance and representation of risk .. Temporary insurance .. Changes in insurability .. Approval of application by insurer .. Delivery of policy .. Term and termination of policy .. Rescission: 10-day-free look .. Surrender .. Expiry or termination.

6 Termination by the insurer .. Termination in the event of fraud, misrepresentation or intentional concealment .. During the application process .. Within the first two years .. After two years .. Termination for non-payment of sickness or accident insurance premiums .. Termination for non-payment of life insurance premiums .. Assignment of a policy .. Absolute assignment .. Collateral assignment .. 56 Ethics and professional Product specific policy provisions .. Individual life insurance .. Statutory conditions .. Reduction .. Exclusion .. Exclusions contractual or imposed by law .. Pre-existing condition exclusions .. Suicide clause .. Living benefits .. Cash surrender value (CSV) .. Distinction between collateral loans and insurance policy loans .. Riders (Policy amendments) .. Group life and health insurance .. Determination of the plan member group .. Premiums and cost sharing.

7 Types of group insurance .. Administrative services only (ASO) .. Certificates .. Booklets .. Access to copy of policy .. Laws applicable to members (residence) .. Term and termination .. Individual and group accident and sickness insurance .. Accidental death and dismemberment (AD&D) .. Disability specifics .. Drug insurance .. Critical illness (CI) .. Long-term care (LTC) .. Parties .. Rights of parties .. Effective date .. Termination of accident and sickness insurance .. Statutory conditions .. 70 Ethics and professional Annuities .. Parties .. The policyholder .. Annuitant (life insured) .. Payee .. Immediate annuities .. Group annuities .. Structured settlements .. Segregated funds .. Pension products and other group annuity products .. Defined benefit pension plan (DBPP) .. Defined contribution pension plan (DCPP) .. Pooled registered pension plan (PRPP).

8 Other products .. Deferred profit-sharing plan (DPSP) .. Tax-free savings account (TFSA) .. Registered retirement savings plans (RRSP) .. Registered retirement income fund (RRIF) .. Locked-in retirement account (LIRA) .. Life income fund (LIF) .. 79 CHAPTER 3 LIFE insurance , ACCIDENT & SICKNESS insurance AND ANNUITY CLAIMS-PAYMENT OF PROCEEDS Rules pertaining to claims and payment of benefits .. Claimant .. Insurer s records .. Notice of claim .. Proof of claim .. Documents required .. Probate .. Proof of age .. Proof of identity .. Accidental vs. natural causes .. 84 Ethics and professional Disappearance and presumption of death .. Death of two or more people .. Payment into Court .. Proceeds on deposit and payout options .. Time to pay claim .. Denial of claim .. Payment contrary to public order .. Accident and sickness claims .. Accident death and dismemberment claims.

9 Documents required .. Disability claims .. Documents required .. Medical and other examinations .. Segregated funds and annuities .. Death before retirement .. Death after retirement .. 93 CHAPTER 4 RULES AND PRINCIPLES GOVERNING THE ACTIVITIES OF LIFE insurance AGENTS AND ACCIDENT & SICKNESS insurance Role of the organizations that protect clients .. Provincial and territorial regulatory authorities .. Provincial and territorial insurance regulators .. British Columbia .. Alberta .. Saskatchewan .. Manitoba .. Ontario .. Qu bec .. New Brunswick .. Nova Scotia .. Prince Edward Island .. 101 Ethics and professional Newfoundland and Labrador .. Yukon .. Northwest Territories .. Nunavut .. Canadian insurance Services Regulatory Organizations (CISRO) .. Other authorities providing client protection .. Office of the Privacy Commissioner of Canada .. Financial Transactions and Reports Analysis Centre of Canada (FINTRAC).

10 Assuris .. OmbudService for Life and Health insurance (OLHI) .. Canadian Council of insurance Regulators (CCIR) .. professional associations .. International Association of insurance Supervisors (IAIS) .. insurance core principles (ICP) 18 and 19 of the IAIS .. Main responsibilities of life insurance agents .. Acting in good faith .. Duty of care .. Integrity .. Competence .. Managing conflicts of interest .. Priority of client s interest .. Disclosure of conflicts or potential conflicts of interest .. Product suitability .. Avoiding conflict-of-interest occupations .. Refraining from unfair or deceptive practices .. Tied selling .. Churning and twisting .. Premium rebating .. Trafficking in insurance .. Inducing to insure .. Fronting .. Unnecessary delay in delivering policies .. Misrepresentation .. Misappropriating client funds (commingling of funds) .. 126 Ethics and professional Making a false document (forgery).