Letter to Ontario MPPs Re: Bill 219, Life Settlements and Loans ActRelease Date: 01/25/2021 Staff Reference: Susan Murray
Sent by email
January 25, 2021
I am writing to you on behalf of Canada’s life and health insurers to raise our concerns with Bill 219, Life Settlements and Loans Act, a private member’s bill that poses a risk of real harm to Ontario seniors and others.
Bill 219, if passed, would amend section 115 of the Insurance Act to permit trafficking in life insurance policies. This practice, also referred to as “life settlements” is currently prohibited in Ontario, as it is in almost every province. Under these life settlement contracts, individuals sell their life insurance policy to a third party in exchange for a cash payment, usually substantially discounted below the face value of the policy; this valuation is entirely non-transparent to the policyholder – there is no fair and transparent market for the “trading” of life policies.
US-based or US-backed life settlement companies typically target low-income seniors and those with medical conditions who may be expected to die sooner.
Bill 219 would expose an extremely vulnerable population to potential financial exploitation, often without the knowledge of the individual’s family or loved ones. In the context of COVID-19, life settlement companies are anxious to open up markets in Ontario and Canada as more Canadians are struggling financially, providing more opportunities for financial exploitation.
To protect consumers, the majority of provinces prohibit life settlements. In recent years, both New Brunswick and Nova Scotia have prohibited the practice outright. Were Bill 219 to pass it would bring Ontario offside most other jurisdictions in Canada.
Insurers already offer safe, regulated and viable solutions to the policyholders: our clients can apply for living benefits under the policy, take out a policy loan or reduce the policy’s face amount to make premiums more affordable. For our vulnerable clients, these options are preferable to selling their policy at a discounted price, taking a tax hit and giving up their privacy rights. A trusted insurance advisor can help clients decide which of these options will suit their needs.
We urge you to maintain the current protections so that Ontario seniors are no less well protected than those of the majority of provinces and territories in Canada, and vote ‘no’ to allowing investors to profit from the deaths of Ontario’s seniors.
The industry appreciates the opportunity to share our serious concerns about Bill 219. We would be pleased to meet or provide further detail about the risk of permitting life settlements in Ontario.