Life insurance agent Martin Emery has been suspended for 30 days and fined $2,000 after the Insurance Council of Alberta found that he tried to avoid completing required forms for replacing a life insurance contract.
Alberta regulations require a life insurance agent to take a declaration statement from a client when the replacement of a life insurance contract is recommended by either the agent or the policyholder.
They also require an agent to obtain a statement from the client indicating the client’s intention to replace a life insurance contract.
“We are of the view that he explicitly acted in a manner so as to avoid completing the Replacement forms as required,” the council ruled. “As to the second allegation (that the agent falsely completed the applications so as to state that they were not replacements when, in fact, they were), we likewise find the agent guilty….
“It is the agent’s responsibility under the regulation to ensure that the applications are completed properly and truthfully.”
Alberta’s insurance council received a complaint from an insurance agent named ‘WW’ in the Council’s decision. WW alleged that a life insurance policy that he had sold to his client, ‘KF,’ had effectively been replaced by a universal life policy that Emery had sold to KF.
Part of the council’s analysis turned on a copy of Emery’s Equitable Life application for proposed coverage, signed and dated by KF on November 8, 2010.
“In section 16, question J – Will this contract, if issued, replace a Life Contract now in force, with this or any other company? – was initially answered yes, then crossed out and answered no,” the council wrote in its decision. “In the details area of section 16, it was initially completed indicating, ‘Replace existing term life @ $300,000’ which had a line through it and a sentence written underneath it indicating, ‘client decided to keep her current plan until it expires.’
KF said Emery had advised her that all she had to do when her universal policy was issued was to stop payment on her existing policy.
When contacted by council, Emery told them: “[KF] informed me that instead of replacing [her initial policy] outright, she was going to keep the insurance plan till she felt comfortable to let it lapse.”
The Agent further advised, “When it was to lapse, I was then going to do a replacement of insurance documentation. I was not informed (nor did I follow-up with [KF]) when the current term insurance lapsed; hence no form was completed. This, I recognize as a failure on my part, one of which I will not repeat.”
