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Life Insurance

Requirement to Represent an Insurance Company

A life insurance agent must have written authorization to represent at least 1 insurer authorized to do life insurance business in B.C. Where the agent no longer has such authorization for a period exceeding 21 calendar days, the licence is automatically suspended and the agent is required to notify Council within 5 business days of the suspension.

Replacement

Agents replacing existing insurance must abide by the Replacement Regulation and ensure the replacement is genuinely beneficial to the interests of the insured. Where replacement could be detrimental to the interests of an insured, an agent must make every reasonable effort to maintain the existing policy in force.

This Regulation is intended to ensure the client receives full disclosure of the details, including the advantages and disadvantages of both policies, to allow an informed decision on whether to replace existing insurance.

A replacement occurs when, as a result of the purchase of a life insurance policy, any existing life insurance contracts are:

• rescinded, lapsed, or surrendered;
• changed to paid-up insurance or continued as extended term insurance or under automatic premium loan;
• changed to reduce benefits or release over 50% of the cash values; or
• subjected to substantial borrowing.

The Replacement Regulation applies when the policy to be replaced is a:

• life insurance contract;
• temporary or interim life insurance contract*; or,
• a rider to a life insurance contract.
  

*A temporary or “interim” contract exists where a client has applied for insurance with and paid money to an insurer. Agents replacing such a contract must comply with the Replacement Regulation.

The Replacement Regulation does not apply when:

• the existing policy is an annuity; or,
• the new or existing policy is group insurance; or,
• the new policy is an exercise of a contractual privilege under an existing policy with the same insurer.
  

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