Insurance, Estates, and Ethics in Canada

Table of Contents
Chapter 1: The Future Is Nearer Than You Think	1
Knowledgeable Agents	1
Acquiring Assets	1
Estate Planning	2
Wasted Dollars	3
Whishing Our Way into Retirement	4
Accurate Information Required	5
Estate Control	6
All Estates Need a Will	8
Determining An Asset’s Value	10
Chapter 2: Will You Outlive Your Assets?	12
Buying Power	12
The Bank of Canada and Inflation	13
Permanent and Variable Portfolios	14
What to Expect	14
Chapter 3: Recordkeeping and Wills	17
Record-Keeping: What to Keep	17
Where and How to Store	18
Access and Privacy / Retention and Review / Executor-Readiness	19
Wills	19
Conclusion	22
Chapter 4: Trusts in Canada	23
Agent’s Role: When a Trust May Help	23
Defining a Trust	24
Types of Trusts	25
Testamentary Trusts / Family Trusts / Irrevocable Trusts	25
Alter Ego Trusts / Joint Partner or Common-Law Partner Trusts	26
Henson Trusts / Qualified Disability Trusts (QDTs)	26
Agent’s Role: Special-Needs Planning	27
Insurance Trusts	27
Bare Trusts	28
Example:	28
Education Trusts (Informal “in-trust-for” accounts vs. Registered Education Savings Plans – RESPs)	29
Charitable Remainders Trusts	29
Employee Benefit Trusts / Health & Welfare Trusts (and Employee Life & Health Trusts – ELHTs)	29
Trusts for minors (simple “guardianship trusts”)	29
Money Management Tool / Probate Considerations	30
Agent’s Role: Beneficiaries, Ownership, and Probate	30
Additional Considerations	31
Example:	31
In Lieu of Trusts	32
Example:	33
Trust Distribution for Minors	34
Selecting Trustees	35
Canadian Legal and Tax Context	35
Proper Trust Use	36
Trust Misconceptions and Misrepresentation	37
Agent’s Role: Set Realistic Expectations	39
Some Truths About Trusts	39
Trusts in Practice: Realities and Cautions	42
Agent’s Role: Documentation and Coordination	43
Agent’s Role: Funding and Fit	44
Plan for Change	44
Creditors	45
Trust Use RE: Medicaid vs the Canadian System	46
Avoiding Probate Proceedings	46
Estate Privacy / Generation Skipping	47
Asset Management, Conservation, and Distribution	48
Agent’s Rold: Annual Reviews	50
In Conclusion	50
Chapter 5: Life Insurance	51
How Much Is Enough?	52
Premiums are a guaranteed cost / Insurance protects against a potential loss	52
Today & Future Monthly Expenses Charts	53
The Life Insurance Trust / Term Insurance	56
Annually renewable term / Level premium term	57
Example:	57
Cash Value Insurance	58
Three basic kinds of cash value policies:	60
Whole Life Policies	60
Example:	61
Advantages & Disadvantages	61
Three common forms of whole life insurance	62
Example:	62
Limited-Pay Whole Life (e.g. 10-Pay, 20-Pay, Paid-Up at 65)	62
Example:	62
Single-Premium Whole Life	62
Similar advantages	63
Example:	63
Universal Life Policies	64
Example #1: / Example #2:	64
Variable Life Policies	65
Example #1:	65
Example #2:	66
Other Types of Life Policies	66
Endowment Life Policies	66
Survivorship (Joint Last-to-Die) Life Policies	66
Example:	67
Joint First-to-Die Life Policies	67
Example:	67
Term-to-100 (T100)	67
Credit (or Mortgage) Life Insurance / Group Life Insurance	68
Policy Options	68
Nonforfeiture Options	68
Disability Waivers / Family or Child Riders	69
Payor Waiver of Premium / Guaranteed Insurability Option (GIO)	70
Accidental Death Benefit (ADB)	70
Accelerated Death Benefit (Living Benefit)	70
Critical Illness and Long-Term Care Riders	70
Deciding Which	70
The Agent’s Role	71
Chapter 6: Annuities & Client Best Interest	73
Retirement Risks	73
Immediate and Deferred Annuities	74
Side Note: What is Assuris?	75
Where does this leave the modern Canadian agent and advisor?	78
Group Annuities	78
Deferred Group Annuity Contracts	78
Deposit Administration Contracts	79
Immediate Participation Guarantee (IPG) Contracts	79
Canadian Context Today	79
Agent Note: How group annuities show up in a client conversation	80
Annuities in Canada: When They Make Sense & for Whom	81
Example #1 / Example #2:	83
Commission Surrender Periods	84
Commission chargebacks / Premature annuitization	84
Annuities as a Relatively Stable Retirement Tool	85
Key trade-offs	86
Example:	86
Bottom line	86
Annuity Product Evolution – Canadian Context	87
Surrender charges and early “bail-out” features	87
High-rate eras and balance-sheet discipline	87
Intex-linked crediting versus Canadian alternatives	87
Two-tier interest designs / Broader distribution, same licensing rules	88
Why do these changes matter?	88
Agent Note: Practical takeaway	88
Tax Treatment and Deferral	89
“Tax-deferred” does not mean tax-free	89
The benefit of deferral is straightforward	89
Safety Matters	90
Compounding power	90
The safety of investment is a primary goal	90
How Annuities are Backed	91
Avenue 1 – The portfolio that backs the annuity	91
Avenue 2 – Capital and surplus (the financial cushion)	91
Consumer protection and the “last line”	92
Periodic Annuity Withdrawals	92
Annuitization Options	94
Annuitization definition	94
Example:	94
Annuitization trades liquidity for lifetime security	94
Payout Options	95
Single Life (life only) / Joint-and Survivor (joint life)	95
Life with Guaranteed Period ) a.k.a. “life and period-certain”)	95
Cash-Refund (life with refund feature)	95
A few Canadian clarifications	96
Annuity Models	96
Deferred annuities – save now, decide later	96
Immediate annuities – income starts right away	96
Market-linked models – segregated fund contracts	97
Annuitizing a market-linked contract / Risk, guarantees, and taxation	97
Bottom line	97
Investment and Insurance Component	97
The insurance guarantees are a key differentiator	98
At the payout stage, annuitization is optional	98
Most contracts allow partial withdrawals ad fund transfers under stated rules	98
Costs reflect both investment management and insurance protection	98
Example:	99
Estate Considerations	99
Annuities are private insurance contracts	99
Private Annuities	100
Example:	100
To summarize:	101
Annuities, Positioning, Trade-offs, Costs, Liquidity, and Tax	101
Annuities Compete With GICs - Example:	101
Two broad annuity types - Example:	101
Term-Certain annuity - Example:	102
Segregated fund contracts and Liquidity limits - Example:	102
Tax Treatment - Example:	102
Costs are Embedded or Explicit - Example:	103
Estate and creditor-protection - Example:	103
Suitability is about matching the tool to the job - Example:	103
Investment Expenses and Loads	104
Regulation	105
Annuities as a Complement to Pensions and Other Retirement Income	106
Conclusion	107
Chapter 7: Retirement Funding Through Pensions	109
Pension Plan Players	109
Defined Benefit Plans	112
Agent’s Rold: Survivor choice versus “pension-plus-insurance”	115
Hypothetical:	115
Defined Contribution Plans	115
Agent’s Role: Turning accounts into income.	118
Example:	118
An Example of Both Types of Plans	118
Agent’s Role: Stitching DB and DC into one paycheque	119
Example continuation:	120
Protections	120
Inflation	122
Agent’s Role: Inflation hedging with product mix.	122
Example:	122
When There’s Trouble	124
Agent’s Role: Sponsor risk and commuted-value triage.	125
Example:	125
401(k) Plans	127
Collecting Pension Funds	128
Agent’s Role: Early retirement trad-offs and stop-gap insurance	128
Example:	128
At Retirement	132
Agent’s Role: Behaviour-proofing lump sums	132
Example:	133
Bringing it together, the agent’s checklist for pension-centered households.	134
Chapter 8: Other Financial Considerations	135
Tax-Free Savings Accounts / Agent Note	135
Spousal Planning	135
Agent Note	136
Withdrawal Order / Agent Note	136
Fees and Contract Terms / Agent Note	136
Workplace Plans / Agent Note	137
Public Pensions / Agent Note	137
Estate and Beneficiary Choices / Agent Note	137
Health Costs and Longevity	137
Agent Note	138
Client Behaviour /  Agent Note	138
Short-Term RRSP / Agent Note	138
Pooled Plans	138
Agent Note	139
Prescribed Annuities / Agent Note	139
Over-Contributions to RRSPs and TFSAs / Agent Note	139
CPP/QPP Timeing	139
Agent Note	140
Advising the Self-Employed: Insurance and Estate Planning Perspectives	140
Agent Note	140
Many owners incorporate as they grow. / Agent Note	140
Canadian Registered Plans	140
Agent Note	141
Incorporation / Agent Note	141
Canada Taxes Estates / Agent Note	141
Valuation	141
Agent Note	142
Minority Shareholdings / Agent Note	142
Remuneration Planning / Agent Note	142
Passive Investments / Agent Note	142
Beneficiary and Ownership Choices	142
Agent Note	143
Documentation Matters / Agent Note	143
Common Situations an Insurance Advisor May Encounter	144
Corporations	144
Legal Instruments in Estate Planning	147
When Death Occurs	149
General Steps are Consistent	149
Assets that commonly bypass probate	150
Agent Note	151
Canadians can transfer assets in several ways	151
Wills	153
Information to gather in advance	153
Agent Note	155
Example:	155
Agent Note	155
Practical Checklist	156
Chapter 9: Ethics – a Practical Approach	158
What We Mean By “Ethics” in the Insurance Profession	158
Duty	159
A useful way to see ethics “under the hood” is through three lenses:	159
Because ethics lives in real-world judgement, quick “pressure-tests” help	160
CISRO	161
CISRO Principle of Conduct Preamble	161
CISRO Principle of Conduct	162
Applying the CISRO Principles	163
1. Compliance/Outcomes Example 1:	163
Example 2:	164
Why it matters	164
2. Customers’ Interests / Example 1 / Example 1	164
Why it matters	164
3. Conflict of Interest / Example 1	164
Example 2 / Why it matters	165
4. Advice / Example 1 / Example 2 / Why it matters	165
5. Disclosure / Example 1 / Example 2 / Why it matters	166
6. Product and Service Promotion / Example 1 / Example 2	166
Why it matters	166
7. Claims, Complaints Handling, and Dispute Resolution	167
Example 1 / Example 2 / Why it matters	137
8. Protection of Personal and Confidential Information	167
Example 1 / Example 2 / Why it matters	167
9. Competence / Example 1 / Example 2 / Why it matters	168
10. Oversight / Example 1 / Example 2 / Why it matters	168
CCIR	169
Scope	169
Applying the CCIR Code of Conduct	171
Chart	171
Provincial and Territorial Oversight on Ethical Standards.	175
More Examples of “Legal but Maybe Not Ethical”	176
1) Technically suitable, but not the client’s best option.	176
2) Promotion that passes compliance but isn’t genuinely balanced.	176
3) A replacement that meets the letter of the rules but misses the spirit of fairness.	177
4) “Minium-compliant” privacy with risky day-to-day habits.	177
5) Slow, impersonal complaint handling that still meets the deadline.	177
Vulnerable Clients and Undue Influence	178
Agent Notes	179
AML/KYC Ethics Beyond Compliance	179
Agent Notes	180
Digital Advice, AI Tools, and E-Signatures	180
Agent Notes	182
Compensation, Incentives, and Conflicts	182
Agent Notes	183
Privacy in Practice: PIPEDA, Law 25 (Québec), and Retention	184
Agent Notes	185
Side Note – “Tokenizing” Chart	186
Due Diligence	187
Professional Representation	189
How an agent should act on a sales call	190
For Example:	191
Cold Calling	191
Getting in the Door	192
For Example:	192
For Example:	192
Organization	193
Full Disclosure	194
Product Replacement	194
The ethical risks can include:	194
Example 1: / Example 2:	196
Product Replacement Toolkit (how to do it ethically and clearly)	196
Agent Notes	198
Claims – Time Ethics and Beneficiary Issues	198
Agent Notes	200
Advertising and Social Media Ethics	200
Policy Delivery and Post-Sale Ethics	202
Periodic Reviews	203
Preparing for the Review	203
Conducting the Review / Documentation and Follow-Up	204
Why Reviews Matter to Ethics	205
Errors and Omissions (E&O) Insurance	205
Why E&O belongs in an ethics chapter	205
Typical allegations and the ethical duty behind them	205
Dual-role and conflict considerations	205
Authority, responsibility, and client expectations	206
Practical E&O hygiene that aligns with ethics	206
Canadian perspective on liability relationships	206
An example of apparent authority / Criminality vs. professional negligence	207
E&O coverage forms and why they matter ethically	207
Bottom Line	208
Giving Our Clients What Is Due Them	208
Conclusion	210
Last Page:	211

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