Investor / Stranger Owned Life Insurance - Manulife's Compliance Policy
Thursday, February 22, 2007
Manulife has come out with a new compliance policy on investor-owned, stranger-owned life insurance it addresses a growing insurance issue: investor-owned (IOLI) or stranger-owned life insurance arrangements.
An IOLI arrangement is any program, sales concept, scheme or other arrangements designed to allow speculators and/or investors to own or have an interest in a life insurance policy on the life of a stranger, thereby allowing investors to profit from the death of the insured.
Life insurance is meant to protect families and businesses, enabling families to manage in the event an income-earner dies and businesses to continue should an owner or key employee die. In an IOLI arrangement, the sole purpose of the arrangement is to allow an investor to profit from the death of a stranger.
Manulife's position on IOLI arrangements is that Life insurance should not be a profit-making investment for someone who has no ties to an insured person and no interest in that person's continued health.
Manulife Financial prohibits the use of its life insurance policies for any IOLI activity. IOLI arrangements are an abuse of the social function life insurance, contravene Manulife's underwriting and administrative policies, and may be illegal or further some illegal activity.
A formal policy on IOLI arrangements has been added to the business policies manual on Rep source and procedures have been developed to uncover at-risk transactions during the underwriting process.
Under no circumstances may any Manulife-contracted advisor engage in any IOLI-related activity. The company has and will continue to take appropriate action on attempts to circumvent our position on these transactions.
Investor/Stranger Owned Life Insurance (IOLI) Programs
Definition Programs, sales concepts, schemes or other arrangements which are designed to allow speculators and/or investors to own or have an interest in life insurance policies on the lives of strangers and thereby profit from their deaths (including, but not limited to, stranger-owned life insurance programs and life policy re-marketing or trafficking programs).
Background Manulife does not support the use of its products in stranger-owned or investor-owned life insurance (IOLI) transactions. The company has and will continue to take appropriate action on attempts to circumvent our position on these transactions. Manulife Financial prohibits the use of its life insurance policies for such activity as it is an abuse of the social function life insurance performs and Manulife's underwriting and administrative policies and may also be illegal or in furtherance of an illegal activity.
Policy Under no circumstances may any Manulife contracted advisor engage in activity that supports, furthers, or in any way relates to, IOLI programs schemes or transactions involving policies issued by Manulife or any other insurance company, regardless of licensing, registration or legislation.
Consequences Failure to adhere to this policy will result in a referral of the advisor to the Manulife Producer Concerns Committee which may lead to sanctions including, but not limited, to reports to regulators, financial charge backs and termination of the advisor's Producer Agreements.
Below are two articles that deal specifically with an Ontario based Company dealing in viatical settlements. One is a decision by the Financial Services Commission of Ontario the other is from the Ontario Securities Commission. Please copy and paste the following into your internet browser,
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