7 February, 2018 07:00
Evelyne Verrier and Jean-Sébastien Besner
If bill 150 passes the ramp, the assignment of police to a third party can do if the police has been issued for more than two years. Beyond this period, the insurer will have the right to match the offer of redemption.
Much maligned and even banned to the consultants by several insurers, the purchase of policies by a third party is to buy a font in which an insured no longer wants, at a market value determined by an independent appraiser, without the third party has interest in the life of the insured. Taxed to be a bet on the time of the death of an insured, or open the door to speculation, the purchase by a third party is permitted in several provinces, including Ontario. In Quebec, it vogue in a legal gray area since the practice exists.
The quebec section of thecanadian Association of insurance companies of persons (CLHIA Quebec) sought a ban. Its president, Lyne Duhaime, told the Journal of insurance that the current proposal is not such that the wishes of the industry. She did not want to comment further until it had completed its representations to the minister of Finance of Québec.
For a third party to be able to buy a policy, it is necessary that the insured person the him. However, the two changes proposed by the Finance minister in the Quebec civil Code are intended to prevent speculative trading. This is where the insurers will have the chance to match the offer of the third party. The articles 2417.1 and 2462.1 would be thus modified.
«The provisions on the assignment already existed in the civil Code. The bill 150 comes the tag and the frame, so that it can not be done for speculative purposes. The articles introduce a time limit, and new restrictions that constitute a protection against speculation, not only for the people in general, but also for those most vulnerable, whether they are elderly, sick or insecure financially, » explains Evelyne Verrier, a lawyer and a partner at Lavery.
The bill 150 research according to it a medium between a total ban and an exit door to the insured person who can no longer pay their premiums. «Encourage speculation, or, on the contrary, prevent any assignment are two extremes. The insurers would have wanted a total ban. This is not what happens. If the insurer wants to redeem, he can do it. This can be seen as a good compromise, » said Mrs. Verrier.
Distinguish the roles
According to Ms. Verrier, it would be commendable that the legislation specifies that a certified representative may be involved at any time, to ensure that the seller is well informed of the consequences of his decision. She adds that it is important to distinguish the role of a firm third parties such as Financial Group Besner, for example, that of a certified representative.
«To educate a vulnerable person, it takes a counselor is neutral and detached, to assert the disadvantages and benefits of sale, according to the situation of the consumer. The advisor needs to analyze its financial situation and see if there are other options. He asked if the transfer to a third party is in the best interest of their client, or if doing it for the right reasons. It’s a bit like the replacement of police, for which regulation requires explanation and a form that the insured must sign. The assignment must be done in full knowledge of the facts, » says the lawyer.
A third-party enthusiast
Active in Quebec in the time of the repurchase of police at a discount through a third party for several years, The Financial Group Besner enthusiastically welcomes the framework proposed. He does not see why insurers would be dissatisfied. «The insurer will have a right of first refusal, said in an interview in the Journal of insurance the CEO of Group Besner, Jean-Sébastien Besner. The insurers will refuse the offer of redemption made within two years of issuance of a policy and refund the premiums to the insured, or match my offer made in excess of two years. «
Mr. Besner said that he hoped that this will address the confusion that has given rise to the prohibition made to the councillors by some insurance companies to be involved in a process of redemption by a third party. «The counselors didn’t know on which foot to dance. In addition, the government and thefinancial markets Authority did not have a clear position. They said : it is not prohibited ! «
The bill would strengthen its position in the market, said Mr. Besner. «There, I can say to advisors and consumers that I assign a font is legal, and that the legislature will supervise this practice by adding two flats «, he explains.
The first is to prevent the transfer «organized» for the purposes of speculation. «I’ve heard that people offered to the elderly to buy a font in order to transfer it immediately to someone else. The police was not sold for the purpose of protecting the insured. My criterion has been not to ever buy fonts, including the date of issuance is less than 2 years. There is always a clause incontestability and suicide. I never wanted to take this bet, nor that the insured has made a false statement. I can understand that the insurers were in disagreement with this type of speculation, » says Mr. Besner.
The Financial Besner said, on the contrary, the purchase of policies in force for a long time. «At the end of 10 years, 15 years, 20 years, the need for insurance of an insured may have disappeared, and his situation changed, so that it becomes legitimate for him to consider giving up its police force,» says Mr. Besner.
It considers, however, more difficult to interpret the second downside that wishes to bring the draft law 150 of the repurchase of the police. «I understand that the government gives insurers a privilege to exercise a right of first refusal, the privilege to match the offer received from a third party by the insured. For example, an insured 65 years of age has purchased 12 years ago, a policy without cash surrender value, and I offer 25 000 $. The company may refuse the transfer of Mr. smith to Mr. Besner, and a cheque for $ 25,000 to the insured, » says Mr. Besner. Now, he says least understand that the insurers come to do the same practice as him.
Not only the benefits
Aware of the concerns of experts in the industry on the importance of the council, Mr. Besner remember that he is not a councillor. «The analysis of financial needs is not my work. When people communicate to me their intention to sell their policy, I didn’t do suggestion. I tell them to look at all their options before going forward, to talk to their family and to their advisor. It is inescapable : the transfer documents, go through them, » he says.
Evelyne Verrier of Lavery emphasizes that the assignment is not the only option. «The insured may, for example, simply let go of its police to the abandonment, because he has other fonts, or is surassuré, does it. Or, he could decide to ask his councillor to replace his policy by another. There may be other products that would be more appropriate, with premiums less expensive. «
Ideally, you should avoid dropping the police lapse, unless it is inadequate, think Ms. Verrier. «If the job has been done well at the start, we should advocate the maintenance of the police. It is necessary to pay attention when a customer is ready to let it all go because its financial situation is precarious «, she adds.
In addition, there are not only advantages to the transfer, believes the lawyer is concerned with approaches that do argue that this side of the coin. «This is equivalent to the analysis of financial needs and has the opportunity for an advisor shows both sides and offers the options,» she said. There is a good analysis to do. The conditions and restrictions proposed in bill 150 set the table to the basic principles of properly analyze the financial needs of the client. This must be combined with good communication in the industry and in the public. The protection of elders will be a different platform of awareness in this folder. «