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I’ve recently been on the blunt end of two instances of life insurance companies acting in a method that’s contrary to consumer’s best interests. While that’s bad enough, as best I can determine, there’s no recourse for consumers or their advisors who are attempting to stop these behaviours. Effectively the life companies are able to act with impunity.

  1. Buying insurance out of province
    In my first example, I sought to serve an out of province client. In Canada, life insurance advisors are regulated by province and contracted by company. As the client was not in a province I’m licensed in, I advised them that we could serve them as long as they purchased the insurance in Ontario (where I am licensed). It matters where they buy the insurance, not where they live.


    Except in this case, the company refused to accept the sale. They blamed it on government legislation. So, I took this to FSCO (the gov’t agency that regulates advisors and lifeco’s). Here was there response:

    Life agents must be licenced in the province where the contract for insurance is being signed – not in the province that the purchaser lives.

    In other words, I could make the sale exactly as intended. Unfortunately the lifeco’s response was that it didn’t matter – they refused to accept business. They further implied that discussions with their legal department would leave me without a contract with that company and thus unable to offer their products to my clients. (Curiously, this is the same company that has previously threatened to revoke my contract because I was publishing information on a website on a topic they require all their contracted advisors NOT discuss publicly. This sounds fairly Don Quixote, I wish it was that simple. I had to remove the website from the internet to get them off my back).

    In this case, the insurance companies can accept whatever business they like, under whatever conditions they life. That’s just the free market. But in this case, they simply choose to completely ignore the idea of consumers being able to purchase insurance across borders if that’s their preference. That’s very anti-market and uncompetitive behaviour, but there’s nothing I’m able to do about it.

  2. Placing onerous costs on a legislated conversion
    If you have life insurance at work and leave your employer, government legislation requires the lifeco’s to offer you an individual policy without a medical exam. The lifeco’s have to do this – it’s not optional.


    However I’m finding lifeco’s are now placing arbitrary costs on these conversions as part of the requirement for doing so. I recently had a client ask me to assist with a group conversion. The insurance company refused to allow the conversion unless the client had a form completed by a commission of oaths. In addition to the hassle of doing that, it requires the consumer to pay the costs associated with that commissioner. In short, an additional cost was implemented by the company. Don’t pay the cost, they refused to do the conversion.

    Their claim is that the requirement was part of the anti-terrorism and money laundering requirements. Except it’s not. I spoke personally with Fintrac (the gov’t agency that looks after the anti-terrorism and money laundering) and they specifically advised me that they don’t require this form for a group conversion.

    The life company’s response to this information was to ignore it and continue to demand the paperwork at the insured’s cost.

    So I offered an alternative method for the form. The alternative method is every bit as compliant with the anti-terrorism legislation as the form they proposed, but it placed the cost and effort back on the company instead of on my client.

    The life company’s response to this information was to ignore it and continue to demand the paperwork at the insured’s cost.

    So I called FSCO – the gov’t agency that regulates advisors and life companies, and spoke to their compliance department. I explained that the associated cost was arbitary and not required and was simply an impediment to consumers from forcing the lifeco’s to do what they are required to do by law. FSCO’s final answer on that was that they don’t have anything to do with any costs the companies may impose on insurers.

    In the end, I sent the form to my client and told them to pay the cost of the form if they want the conversion.

Unfortunately it seems that while a consumer can complain and get action against an advisor’s conduct in the marketplace, there’s no such limitations on life insurance companies. I’ve taken this as far as I can for my clients, I’m unable to rail against the marketplace over these issues beyond that. The insurance companies don’t care, and there’s no stick from the government regulators to force them to change.

Wrongful or criminal deception intended to result in financial or personal gain.


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