Continuing Education for Financial Service Professionals
Fundamentals of Canadian Life Insurance
Fundamentals of Canadian Life Insurance
Fundamentals of Canadian Life Insurance
Life Insurance Terms in Plain English
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Fundamentals of Canadian Life Insurance
Fundamentals of Canadian Life Insurance Copyright © 2012 CLIFE Inc. Revised 2014 All rights reserved. Any reproduction of parts or all of this book and its contents by any means electronic or mechanical is prohibited.
The Fundamentals of Canadian Life Insurance is a collection of terms common to the Canadian life insurance industry and relevant to all those who work in the financial services industry or in association with life insurers. The definitions of the terms are “pure,” that is, they do not reflect the practices or policies of any insurance company. Thus, there may be some minor discrepancies between these definitions and how an insurer uses this terminology or interprets and applies these terms.
The information in this book is provided for educational purposes only; it should not be construed or interpreted as providing advice. Agents and advisors should always seek guidance from their principals and compliance experts in regards to informing themselves and others about details of the products they sell and other considerations of their business.
We welcome all feedback and suggestions for additions to the book. Please send your comments to info@clifece.ca. CLIFE INC. 1595 Sixteenth Avenue Suite 301 Richmond Hill, ON L4B 3N9 www.clifece.ca
The Fundamentals of Canadian Life Insurance continuing education credits for life agents, CFP s, and accident and sickness agents is provided upon satisfactory completion of an online test. Please see the website for details or email info@clifece.ca.
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Fundamentals of Canadian Life Insurance
Fundamentals of Canadian Life Insurance Table of Contents Accident and Sickness Accidental Death Benefit/Accidental Death and Dismemberment Insurance Adjusted Cost Basis Annuities Application ASO Plans Assignment Assuris Authority Automatic Premium Loan
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Beneficiary Business Disability Insurance Business Life Insurance Business Overhead
15 15 16 17
6 7 8 9 10 11 12 13 14
Canada Deposit Insurance Corporation 18 Canada Pension Plan 19 Canada Life and Health Insurance Association 20 Capital Accumulation Plans 21 Capital Gains 22 Cash Surrender Value 23 Certified Financial Planner 23 Chartered Life Underwriter 24 Churning and Twisting 24 Claims 25 Co-insurance 26 Compliance 26 Conflict of Interest 27 Continuing Expenses 27 Contract 28 Co-ordination of Benefits 29 Corporation 30 Cost Illustrations 31 Creditor Protection 32 Criminal Law 33 Critical Illness Insurance 34 Death Benefit Death Benefit Guarantee Deductible Defined Benefit Plan Defined Contribution Plan Definitions of Disability Deposit-based Guarantee Disability Income Insurance Disclosure Disposition
35 35 36 38 39 40 41 41 42 43
Earned Income Effective Date Equity Errors and Omissions Insurance Estate
44 44 45 46 47
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Ethics 48 Exclusions 48 Face Page 49 Fair Market Value Fiduciary Duty Fixed-income Investments Fraud Fund Facts
50 51 51 52 53
Grace Period Grandfathered Policies Group Disability Insurance Group Health Insurance Group Insurance Group Life Insurance Guaranteed Minimum Withdrawal Benefit Plans Guarantees
53 54 55 56 57 58
Holding Out Income Splitting Income Tax Incontestability Index-linked Annuity Individual Variable Insurance Contract Inflation Information Folder Insurable Interest Insured Insured Annuity Interest Irrevocable Beneficiary Joint and Last Survivor Annuity
61 61 62 63 64 64 64 65 66 67 68 68 69 70
Last Expenses Law of Agency Leveraging Life Annuity Life Income Funds Locked-in Plans LLQP Locked-in Retirement Accounts Long-term Care Insurance Long-term Disability
71 72 72 73 73 74 75 76 77 78
Marginal Tax Rate Maturity Guarantee Maximum Tax Actuarial Reserve Misrepresentation Mistake Money Laundering Morbidity
79 80 81 82 82 83 83
59 60
Fundamentals of Canadian Life Insurance
Mortality Mortgage Insurance Mutual Funds
84 85 85
Needs-based Sales Approach Net Cost of Pure Insurance Non-forfeiture Options Notional Units
87 87 88 89
Occupational Classification 90 Offset Old Age Security
90 91
Participating Whole Life Insurance Permanent Life Insurance Personal Contract 95 Policy Dividends Policy Loan Pooled Registered Pension Plans Power of Attorney Pre-existing Condition Premium 99 Prescribed Annuity Prescribed Retirement Income Funds Present Value of Money Privacy and Confidentiality Probate
93 94
Rated Contract Recurring Disability Registered Disability Savings Plan Registered Education Savings Plan Registered Pension Plans Registered Plans Registered Retirement Income Funds Registered Retirement Savings Plans Reinstatement Reinsurance Renewable Term Life Insurance Replacement Rescission
103 104 104 105 106 107 108 108 110 110 111 112 113
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95 96 97 98 98
100 101 101 102 103
Reset Residual and Partial Disability Benefits Riders Risk Tolerance Rule of 72
114 115 116 117 118
Sales Charge Segregated Funds Self-directed RRSP Settlement Options Short-term Disability Sole Proprietorship Spousal Plan Spousal Rollover Stocks Subrogation Suicide Exclusion Clause Suitability
119 119 120 121 121 122 123 124 124 125 126 126
Tax-free Savings Account Taxation of Life Insurance Temporary Insurance Agreement Term Annuity Term Life Insurance Term-to-100 Life Insurance Time Horizon Time Value of Money Trusts
126 127 128 129 130 131 131 132 133
Unbundling Underwriting Unfair Trade Practices Uniform Life Insurance Act Universal Life Insurance
133 134 135 136 136
Waiver of Premium Rider Whole Life Insurance
137 138
Yield to Maturity
139
BOOK ORDER FORM
140
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