When consumers are considering the purchase of a life or health insurance product, it is important that they have adequate information to fully understand their new insurance product, how it meets their needs, the company offering the product, the advisor and the advisor's business relationships. In certain jurisdictions, this disclosure requirement must be given in writing to the client prior to the sales transaction.
Regulators' principles clearly oblige advisors to make appropriate disclosure at point-of-sale. Consumers must be made aware of your business relationships and any conflicts of interests. At the same time, customers should be made aware if you may be eligible for non-monetary benefits, such as travel incentives, conference qualification, etc., if such benefits are based on volume of business that you place with a company during a given time period. Disclosure to the client is a condition of your eligibility for such non-monetary benefits.
The Representative Report section of our application forms contains statements that confirm that you have made appropriate disclosure to the client. Mainly, these statements confirms that you have disclosed:
- the company or companies you represent;
- that you will receive compensation (such as commissions or a salary) for the sale of the company products;
- that you may receive additional compensation in the form of bonuses, conference programs or other incentives;
- and any conflicts of interest you may have with respect to such transaction.
To assist you in meeting the various regulatory requirements and best business practices, The Canadian Life and Health Insurance Association (CLHIA) has developed a Reference Document with the cooperation of various industry groups. The Reference Document provides suggested wording to help you develop a disclosure letter, to suit your own situation.
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