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AR 127/2001 REPLACEMENT OF LIFE INSURANCE CONTRACTS REGULATION

(Consolidated up to 39/2016)

ALBERTA REGULATION 127/2001

Insurance Act

REPLACEMENT OF LIFE INSURANCE
CONTRACTS REGULATION

Table of Contents

                1      Definitions

                2      Inducement or recommendation to replace contract

                3      Agent or insurer’s duty where replacement could be detrimental

                4      Agents duty where contract should be changed

                5      Declaration statement on replacement

                6      Agents duty on new contract application

                7      Delivery of contract

                8      No insurance agent

                9      Right to withdraw application

              10      Refund on withdrawal

              11      Transitional

              12      Repeal

              13      Expiry

              14      Coming into force


Definitions

1   In this Regulation,

                               (a)    “contract” means a contract of insurance relating to life insurance;

                              (b)    “replacement of a contract” or “replacement” means any transaction whereby life insurance is purchased in a single contract or in 2 or more related contracts by a person from an insurer and, as a consequence of the transaction, one or more existing contracts are

                                        (i)    rescinded, lapsed or surrendered,

                                      (ii)    changed to paid‑up insurance or continued as extended term insurance or under automatic premium loans,

                                     (iii)    changed in any other manner to effect a reduction of  benefits,

                                     (iv)    changed so that cash values in excess of 50% of the tabular cash value are released, or

                                       (v)    subjected to the borrowing of any policy loan value, whether in a single loan or under a schedule of borrowing over a period of time, whereby an amount in excess of 50% of the tabular cash value is borrowed,

but does not include a transaction whereby a new purchase is made pursuant to a contractual privilege being exercised by the policyholder under an existing contract or an existing contract is replaced by an annuity.

Inducement or recommendation to replace contract

2   An insurer or insurance agent must not, where it would be detrimental to the interests of the policyholder,

                               (a)    directly or indirectly induce or attempt to induce a policyholder to effect a replacement of a contract, or

                              (b)    recommend the replacement of a contract.

AR 127/2001 s2;154/2010

Agent or insurer’s duty where replacement could be detrimental

3   Where a replacement of a contract is initiated that, in the opinion of an insurer or an insurance agent, would be detrimental to the policyholder’s interests, the insurer or insurance agent must advise the policyholder of the advantages and disadvantages to the policyholder that would result from the replacement.

AR 127/2001 s3;154/2010

Agents duty where contract should be changed

4   Where it comes to the knowledge of an insurance agent that, due to a change in circumstances, an existing contract should be amended or replaced, the insurance agent must endeavour to have the existing contract amended or replaced by the insurer that issued it, in a manner that is consistent with the policyholder’s best interests and in such a manner that any values, credits or privileges in the existing contract are transferred to the amended or replacing contract.

Declaration statement on replacement

5   Where a replacement of a contract is recommended by an insurance agent or instructed by a policyholder, the insurance agent must, prior to taking a new application,

                               (a)    present to and review with the applicant a declaration statement in a form approved by the superintendent, and

                              (b)    obtain on the declaration statement the signature of the applicant or other person whose life will be insured under the replacement contract to indicate receipt of the declaration statement by the applicant or other person.

AR 127/2001 s5;9/2003;154/2010

Agents duty on new contract application

6   An insurance agent

                               (a)    must obtain as part of an application for a contract a statement signed by the applicant stating whether replacement of a contract is intended, and

                              (b)    must prepare and forward to the insurer with the application a statement signed by the agent stating whether replacement is intended.

AR 127/2001 s6;154/2010

Delivery of contract

7   Where an insurer has issued a contract and gives the contract to an insurance agent for delivery to the applicant, the insurance agent must deliver the contract to the applicant as soon as is practicable unless contrary written instructions are received from the applicant.

AR 127/2001 s7;154/2010

No insurance agent

8   Where there is no insurance agent, the insurer that is replacing an insurance contract must comply with sections 3 to 7 as if that insurer were an insurance agent.

AR 127/2001 s8;154/2010

Right to withdraw application

9   An applicant for the replacement of a contract may in writing withdraw the application within 20 days of the date on which the applicant signed the declaration statement.

AR 127/2001 s9;154/2010

Refund on withdrawal

10   Where the applicant withdraws an application under section 9, the insurer must refund any premium, deposit or other payment made by the applicant in respect of the proposed replacement, and if the application is for a single premium life insurance contract or a contract whose value depends on a stated rate of interest or a stated group of assets, the refund must be adjusted to reflect the change in the capital value of the contract.

AR 127/2010 s10;154/2010

Transitional

11   Any disclosure statement approved by the Minister under the Replacement of Life Insurance Contracts Regulation (AR 63/90) is continued as if it were approved by the Minister under this Regulation.

Repeal

12   The Replacement of Life Insurance Contracts Regulation (AR 63/90) is repealed.

Expiry

13   For the purpose of ensuring that this Regulation is reviewed for ongoing relevancy and necessity, with the option that it may be repassed in its present or an amended form following a review, this Regulation expires on April 30, 2018.

AR 127/2001 s13;95/2006;39/2016

Coming into force

14   This Regulation comes into force on the coming into force of any section of the Insurance Act (SA 1999 cI‑5.1).