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Volume 55, No. 2

10/2012

The British Columbia Gazette,

Part II

January 31, 2012

B.C. Reg. 10/2012 , deposited January 26, 2012, pursuant to the FINANCIAL INSTITUTIONS ACT [sections 177 (

a) and 289 (4) (

d) and (e)]. Order in Council 27/2012, approved and ordered January 26, 2012.

On the recommendation of the undersigned, the Lieutenant Governor, by and with the advice and consent of the Executive Council, orders that the Insurance Contracts (Life Insurance Replacement) Regulation, B.C. Reg. 327/90, is amended as set out in the attached Schedule.

— K. FALCON, Minister of Finance and Deputy Premier ; S. CADIEUX, Presiding Member of the Executive Council .

Schedule

Section 1 of the Insurance Contracts (Life Insurance Replacement) Regulation, B.C. Reg. 327/90, is amended by repealing the definition of "disclosure statement" and adding the following definition:

"declaration statement" means the declaration statement in the form set out in the Schedule; .

Section 2 is amended

(

a) in subsection (2) by striking out " No life insurance agent licensee shall induce " and substituting " A life insurance agent must not make a recommendation to or induce ", and

(

b) by adding the following subsections:

(3) A life insurance agent must not make a recommendation to an insured to lapse, forfeit or surrender for cash, or for paid up or extended insurance, or for other valuable consideration, the insured's contract of life insurance with an insurer in order to effect a contract of life insurance with another insurer unless replacement of the existing contract of life insurance with the new one

(

a) is not detrimental to the interests of the insured, and

(

b) is in accordance with

section 3.

(4) An insurer must not make a recommendation to or induce an insured to lapse, forfeit or surrender for cash, or for paid up or extended insurance, or for other valuable consideration, the insured's contract of life insurance in order to effect a contract of life insurance with that or another insurer unless replacement of the existing contract of life insurance with the new one

(

a) is not detrimental to the interests of the insured, and

(

b) is in accordance with

section

Section 3 is amended

(

a) by repealing subsection (1) and substituting the following:

(1) If an insured requests or makes an application for a replacement of a contract of life insurance that, in the opinion of an insurer or a life insurance agent licensee, would be detrimental to the insured's interests, the insurer or life insurance agent licensee must advise the insured of the advantages and disadvantages to the insured that would result from the replacement.

(

b) in subsection (2) by striking out " shall " and substituting " must ",

(

c) in subsection (3) by striking out " shall " and substituting " must ",

(

d) in subsection (4) by striking out " Where " and substituting " If " and by striking out " shall " and substituting " must ",

(

e) in subsection (4) (

a) by striking out " completed disclosure " and substituting " declaration ",

(

f) in subsection 4 (

b) by striking out " disclosure " and substituting " declaration ", and

(

g) by repealing subsection (5) and substituting the following:

(5) Once an insurer has issued a new contract of life insurance and given the contract to a life insurance agent licensee, the life insurance agent licensee must deliver the new contract to the applicant as soon as possible, unless the applicant has provided written instructions to the contrary to the life insurance agent licensee.

Section 4 is amended

(

a) by repealing subsection (1) substituting the following:

(1) A life insurer who is replacing a contract of life insurance must comply with the duties imposed on life insurance agent licensees under

section 3 (2) to (5) if there is no life insurance agent licensee involved in replacing the contract. ,

(

b) in subsection (2) by striking out everything after " 20 days " and substituting " of the date on which the applicant signed the declaration statement. ", and

(

c) in subsection (3) by striking out " Where " and substituting " If " and by striking out " shall " in both places and substituting " must ".

5 The

Schedule is repealed and the attached

Schedule substituted.

Schedule

Life Insurance Replacement Declaration

Do not cancel your existing policy until the new policy is in force and you accept it. Before you cancel your life insurance policy you should have answers to the questions below. Ask any insurance agent or broker, or an independent person, for help if you need it.

Questions about your present life insurance policy

1. Why do you want to replace your policy? Is the new policy better for you? How?

2. Should you just buy more insurance or change your policy? How much will these changes cost?

3. When should you cancel your present policy? When will your next annual dividend be paid? Will the timing affect your cancellation charges?

4. Will you pay more income tax if you cancel your present policy?

Questions on the advantages and disadvantages of a new life insurance policy

1. Do you understand the type of insurance policy you are buying? Is it a term life , whole life , or universal life insurance policy? You should know the differences.

2. Are there times when the new policy will not pay all the benefits that your present policy does? Examples are suicide and contestable periods and contractual exclusions.

3. Will the new policy pay as much as your present policy? Examples are death benefits, cash values, and dividends.

4. Does the new policy have the same extra, or optional, benefits as your present policy? Examples are waiver of premium, guaranteed insurability, accidental death, and family member riders.

5. Are there cancellation charges on the new policy?

6. What guarantees apply to your present and proposed policies? Which policy has the best guarantees?

7. Will either of the policy premiums (payments) increase? For how long will the premiums stay the same? How much will they increase?

Important: Please ensure that the agent or broker provides you with copies of the written explanation of the advantages and disadvantages of replacing your life insurance policy with a new policy.

I confirm that I have received this Life Insurance Replacement Declaration.

........................................................

Client's signature

.........................................

Date

I have given the client this document and a written explanation of the advantages and disadvantages of replacing their life insurance policy, before starting the application for a new policy.

........................................................

Agent or broker's signature

.........................................

Date

Note: Your agent or broker should deliver and review the new policy with you. If the policy is not satisfactory for any reason you may have a right to reject it and receive a full refund of premiums, under provincial or territorial law or under contract. Check the policy and the law for the right of rejection and the time limit for rejection.

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