First

Session, 50th General Assembly

Elizabeth II, 2022

BILL 55

AN ACT TO AMEND THE

LIFE INSURANCE ACT

Received

and Read the First Time ................................................................

Second

Reading ............................................................................................

Committee .....................................................................................................

Third

Reading ...............................................................................................

Royal

Assent .................................................................................................

HONOURABLE SARAH

STOODLEY

Minister of Digital

Government and Service Newfoundland and Labrador

Ordered to be printed by

the Honourable House of Assembly

EXPLANATORY NOTES

This Bill would amend the Life Insurance Act to

prevent the use of universal

life insurance policy side accounts as investment vehicles; and

incorporate

gender-silent language.

A BILL

AN ACT TO AMEND THE LIFE INSURANCE ACT

Analysis

S.2 Amdt.

Definitions

S.3 Amdt.

Application of Act

S.4 Amdt.

Group insurance

S.8 Amdt.

Contents of group insurance

S.9 Amdt.

Insurable interest

S.10 R&S

Insurable interest defined

S.11 Amdt.

Contract taking effect

S.14 Amdt.

Disclosure

S.21 Amdt.

Designation of beneficiary

S.22 Amdt.

Designation of beneficiary irrevocably

S.25 Amdt.

Beneficiary predeceasing life insured

S.26 R&S

Right to sue

S.30 Amdt.

Transfer of ownership

S.32 R&S

Group life insured enforcing rights

S.33 Amdt.

Capacity of minors

S.34 Amdt.

Capacity of minor beneficiary

S.36 Amdt.

Place of payment

S.37.1 Added

Amount held in contracts

S.41 Amdt.

Presumption of death

S.47 Amdt.

Simultaneous deaths

S.48 Amdt.

Instalments

S.52 Amdt.

Where beneficiary a minor

S.54 Amdt.

Presumption against agency

Be it enacted by the Lieutenant-Governor and

House of Assembly in Legislative Session convened, as follows:

RSNL1990 cL-14

as amended

(1) Paragraph 2(

c) of the Life Insurance Act is amended by deleting the words "his or

her" and substituting the words "the insured's".

(2) Paragraph 2(

g) of the Act is amended by

deleting the words "his or her" and substituting the words "the

creditor's".

(3) Paragraph 2(

h) of the Act is amended by

(

a) deleting the words "his or her" and

substituting the words "the insured's"; and

(

b) deleting the number "1" and

substituting the word "one".

(4) Section 2 of the Act is amended by adding

immediately after paragraph (

h) the following:

(h.1) "exempt policy" means an exempt

policy as defined in the Income Tax

Regulations (Canada);

(5) Paragraph 2(

n) of the Act is amended by

deleting the words "him or her" and substituting the words "that

person".

(6) Section 2 of the Act is amended by deleting

the word "and" at the end of paragraph (w), by deleting the period at

the end of paragraph (

x) and substituting a semi-colon, by adding the word

"and" at the end of paragraph (

x) and by adding immediately after

that paragraph the following:

(y) "side account" means an account,

associated with or part of a contract, that may hold or receive funds in excess

of the maximum amount permitted to be held in an exempt policy.

2. (1) Subsection 3(1) of the Act is repealed and

the following substituted:

Application of

Act

(1) Notwithstanding

an agreement, condition or stipulation to the contrary, this Act applies to any

contract or side account made in this province after June 30, 1962 and, subject

to subsections (2) and (3), applies to a contract made in this province before

July 1, 1962.

(2) Section 3 of the Act is amended by adding immediately

after subsection (1) the following:

(1.1) The Securities

Act does not apply to exempt policies and side accounts which are subject

to this Act.

3. Paragraph 4(

b) of the Act is amended by

deleting the words "he or she became" and substituting the words

"of becoming".

Section 8 of the Act is amended by deleting the

words "him or her" wherever they appear and substituting the words

"the group life insured".

5. (1) Paragraph 9(2)(

b) of the Act is amended by

deleting the words "his or her" and substituting the words "the

person's".

(2) Subsection 9(3) of the Act is amended by

(

a) deleting the words "his or her"

wherever they occur and substituting the words "the person's"; and

(

a) deleting the number "1" and

substituting the word "one".

Section 10 of the Act is repealed and the

following substituted:

Insurable

interest defined

10. Without

restricting the meaning of the expression "insurable interest", a

person has an insurable interest in the person's own life and in the life of

(

a) the person's child

or grandchild;

(

b) the person's spouse;

(

c) a person upon whom

the person is wholly or in part dependent or from whom the person is receiving

support or education;

(

d) the person's

employee; and

(

e) a person in the

duration of whose life the person has a monetary interest.

7. Paragraph 11(1)(

a) of the Act is amended by

deleting the words "his or her" and substituting the words "the

insured's".

8. Subsection 14(1) of the Act is amended by

deleting the words "his or her" and substituting the words "each

of their".

9. Subsection 21(1) of the Act is amended by

deleting the words "his or her" and substituting the words "the

insured's".

10. Subsection 22(1) of the Act is amended by

deleting the words "his or her" wherever they appear and substituting

the words "the insured's".

11. Paragraph 25(1)(

c) of the Act is amended by

deleting the words "his or her" and substituting the words "the

insured's".

Section 26 of the Act is repealed and the

following substituted:

Right to sue

26. A

beneficiary may enforce for the beneficiary's own benefit, and a trustee

appointed under

section 24 may enforce as trustee, the payment of insurance

money made payable to the beneficiary in a contract or by a declaration and in

accordance with the contract or declaration, but the insurer may set up a

defence that it could have set up against the insured or the insured's personal

representative.

13. (1) Paragraph 30(1)(

a) of the Act is amended by

deleting the words "his or her" and substituting the words "the

insured's".

(2) Subsection 30(2) of the Act is amended by

deleting the words "his or her" and substituting the word "each

of their".

(3) Subsection 30(3) of the Act is amended by

deleting the words "his or her" and substituting the words "the

insured's".

Section 32 of the Act is repealed and the

following substituted:

Group life

insured enforcing rights

32. A

group life insured may in the group life insured's own name enforce a right

given to the group life insured under a contract, subject to a defence

available to the insurer against the group life insured or against the

insured.

Section 33 of the Act is amended by deleting

the words "his or her".

Section 34 of the Act is amended by deleting

the words "him or her" and substituting the words "the

beneficiary".

17. (1) Subsection 36(3) of the Act is amended by

deleting the words "his or her" and substituting the words "the

person's".

(2) Subsection 36(4) of the Act is amended by

deleting the words "he or she became" and substituting the words

"of becoming".

18. The Act is amended by adding immediately after

section 37 the following:

Amount held in

contracts

37.1

(1) In

this section, "actuarial basis" means the assumptions and methods

generally accepted and used by fellows of the Canadian Institute of Actuaries

to establish the cost of life insurance.

(2) With respect to a contract that is an exempt

policy, the amount that may be held in a side account shall not exceed the

lesser of

(

a) the sum of

(

i) the amount that would be required to pay

future costs of insurance, related premium taxes and administrative fees or

charges, and

(ii) any additional funds that could, in the

future, be eligible to be held in the exempt policy; or

(

b) the limit provided under the terms of the

contract.

(3) With respect to a contract that is not an

exempt policy, the amount that may be held in a contract together with an

associated side account shall not exceed the amount required to pay future

costs of insurance, related premium taxes and administrative fees or charges.

(4) The amounts in paragraph (2)(

a) and subsection

(3) shall be determined by the insurer on an actuarial basis using the

remaining lifetime of the persons then insured under the contract.

(5) Any amount that exceeds the limits in

subsections (2) and (3)

(

a) is not a premium;

(

b) is considered to have never been a premium;

and

(

c) cannot be held in a contract or side account

regardless of the date of issue of the policy.

(6) This

section does not apply to annuities.

(7) Notwithstanding anything in this section,

where, on the day this

section comes into force, a side account holds an amount

of funds in excess of the maximum amount permitted under subsection (2),

(

a) the amount is not required to be refunded in

respect of the funds held in excess;

(

b) additional funds may not be added to the

account until the amount of funds held in the side account is below the maximum

amount permitted under subsection (1); and

(

c) once the amount of funds held in the side account

is below the maximum amount permitted under subsection (1), the maximum amount

permitted under subsection (1) applies in respect of the side account.

Section 41 of the Act is amended by deleting

the words "his or her" and substituting the words "the person".

Section 47 of the Act is amended by deleting

the words "his or her" and substituting the words "the

person's".

Section 48 of the Act is amended by deleting

the words "his or her" wherever they appear and substituting the

words "the beneficiary's".

22. Subsection 52(3) of the Act is repealed and the

following substituted:

(3) An order is not

necessary for payment into court under subsection (1), but the public trustee

shall receive the money upon the insurer filing with the public trustee an

affidavit showing the amount payable and the name, date of birth and residence

of the minor and upon the payment being made the insurer shall immediately

notify a provincial director appointed under the Children, Youth and

Families Act and deliver to the provincial director a copy of the

affidavit.

Section 54 of the Act is amended by deleting

the words "he or she" and substituting the words "the

person".

Queen's Printer