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Replacement Disclosure

Release Date: 09/05/2014
Staff Reference: Justin Glinski

Reference Document

A Guide to Preparing the Written Explanation
Required for the Life Insurance Replacement Declaration

Including guidance for completing the Notice of Replacement of Insurance of Persons Contract as required in Quebec by the Regulation respecting the pursuit of activities as a representative

1. Overview

This reference document was prepared jointly by Advocis, the Canadian Association of Independent Life Brokerage Agencies, the Canadian Life and Health Insurance Association and the Independent Financial Brokers. It is intended to assist agents in deciding what information to include in the written explanation of advantages and disadvantages of a proposed replacement.

Section 2 of the document provides background on the Life Insurance Replacement Declaration (LIRD) and general advice about the requirement in the LIRD to prepare a written explanation.

Section 3 provides an analysis of the questions on the LIRD and what factors should be taken into consideration when addressing the questions.

Section 4 provides sample explanations of hypothetical replacements that illustrate the advice in Sections 2 and 3. The inclusion of these samples is not intended to preclude other formats or ways of presenting the written explanation. For example, templates prepared by insurance companies or agencies or versions of the Basic Disclosure Statement could be used.

As a convenience, a summary of delivery requirements for all jurisdictions in which the LIRD is accepted or required for replacement disclosure is provided in Appendix 1. A copy of the LIRD is provided in Appendix 2. Finally, sources for additional information about replacement disclosure are listed in Appendix 3.

Use of the LIRD satisfies the replacement disclosure requirements in the common law provinces and Quebec. In 2013, Quebec amended its Regulation respecting the pursuit of activities as a representative to implement a new form. The key differences between this form and the LIRD are described in Appendix 4.