Few would be surprised to hear that Canada's aging
population has created challenges for many professionals,
particularly those who do estate planning.
Recent changes to Ontario's Insurance Act respond to some of those
challenges and will be of interest to insurers, financial planners
and insurance agents in Ontario. On July 1, 2016, amendments to
sections 221 and 322 of the Insurance Act took effect. These amendments
provide that where it appears to an insurer that a representative
of a beneficiary who is a minor may accept payments on behalf of
the beneficiary under the law of the jurisdiction in which the
beneficiary resides, the insurer may make payment to the
representative and the payment discharges the insurer to the extent
of the amount paid. Previously, these sections only applied to
representatives of beneficiaries under legal incapacity. You can
read a more in-depth review of the amendments here.
Sections 221 and 322 of the Insurance Act are important for two
In today's globalized world, it is not uncommon for people
who purchase insurance in Ontario to have beneficiaries elsewhere:
e.g. an Ontario grandfather has designated his mentally incapable
son in British Columbia and a minor granddaughter in New York as
the beneficiaries of his life insurance. Under the amendments to
the Insurance Act if the son has a guardian under
British Columbia law, and the grand-daughter a custodian under New
York State law, each of whom has the authority to accept payments,
the insurer may pay the funds to the guardians and be discharged to
the extent of the amount paid.
The Insurance Act provides clear direction on what
is required by an insurer to obtain a discharge where benefits are
to be paid out under a life and accident and sickness insurance
policy.1 In contrast, the Succession Law Reform Act ("SLRA"),
which governs the designation of beneficiaries to, among other
things, RRSPs and RRIFs, does not offer the same guidance as the Insurance Act does for how payment to a
beneficiary of a pension or RRSP is to be made upon the death of
the plan participant. One can only hope that the SLRA will
eventually be amended along the lines of the Insurance Act.
The Insurance Act is an excellent example of how
well-crafted legislation can help facilitate payments to
beneficiaries upon the death of the policy owner.
1.In addition to sections 221 and 322, see for example, sections
220 and 321.
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