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LLQP (life licence)

LifeLLQP Life Insurance✓A&SLLQP Accident & Sickness Insurance Seg FundsLLQP Segregated Funds & Annuities EthicsLLQP Ethics & Professional Practice (Common Law)

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Ethics and Professional Practice · Component 1: legal aspects of contracts (60%)

Legal Framework, Privacy & AML

The Ethics module starts with the law around every sale: who can contract, what makes a contract valid, how insurance law fits with provincial and federal law, and the privacy, anti-money-laundering and anti-spam rules that govern how agents collect information and contact clients.

Legal aspects of insurance and annuity contracts3 min read7 sections

Must-know for the exam

Contract law of life and A&S insurance is provincial: the Insurance Act plus common law. Quebec uses the Civil Code and is outside the common-law LLQP.
A valid contract needs offer and acceptance, consideration, capacity, a legal object and genuine consent.
A minor aged 16 or older can make an enforceable insurance contract (BC Insurance Act s. 72; same rule in other common-law provinces).
Age of majority: 19 in BC, NS, NB and NL; 18 in Ontario, Alberta, Saskatchewan, Manitoba and PEI.
PIPEDA's 10 principles include consent, limiting collection, limiting use, safeguards and individual access; access requests get an answer within 30 days.
Life agents report cash of $10,000 or more in one transaction to FINTRAC and keep records at least 5 years (PCMLTF Regulations ss. 18, 148).
Suspicious transactions are reported at any amount, even if only attempted; tipping off the client to prejudice an investigation is an offence.
An information record and identity check are needed when $10,000 or more will be paid into a policy over its life (PCMLTF Regulations ss. 22, 92).
CASL implied consent lasts 2 years after a purchase and 6 months after an inquiry; unsubscribes must be honoured within 10 business days.
Do Not Call List exemption for existing clients: purchase within 18 months or inquiry within 6 months (Telecommunications Act s. 41.7).

On this page · 7 sections

Traps that cost marks

Thinking insurance purchases are outside the anti-money-laundering rules.
Applying the large cash report to transfers that are not cash.
Looking only at the size of a single payment.
Believing suspicious transaction reports apply only at $10,000 or more.
Thinking clients must be told about reports.
Using the 7-year tax-records figure.
Confusing the PEP determination with large cash reporting.
Assuming the product type or payment method removes AML duties.

Why it matters on the exam

Ethics component 1 (60% of the module) opens with the legal framework. Expect short scenarios: a 17-year-old buying a policy, a client paying $12,000 in cash, an email campaign to old prospects, a stolen laptop full of applications.

Contracts and capacity

•Elements: offer and acceptance, consideration (premium and application statements), capacity, legal object, genuine consent.
•Insurance contracts are contracts of utmost good faith: both sides must disclose material facts.
•Policies are drafted by the insurer, so genuine ambiguities are read against the insurer (contra proferentem).
•Minors 16 and older can contract for insurance; a parent consents to insurance on a child under 16.

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Exam-style questions

Jerome has been a licensed life agent in Winnipeg for six years. A new client, Viktor, 52, owns two restaurants and wants a single-premium non-registered universal life policy to leave money to his nephew. At their second meeting Viktor hands Jerome $12,000 in Canadian bank notes for the premium, saying his business deals mostly in cash. No exception under the regulations applies. What must happen under the federal anti-money-laundering rules?
Meera, 64, is retiring from a Saskatchewan school board. She wants guaranteed income and decides to buy an immediate life annuity for $40,000, paid entirely by a direct transfer from her registered pension plan to the insurer. Her agent notes the amount is above $10,000 and wonders what the anti-money-laundering rules require for this purchase. Does the large cash transaction reporting rule apply?
Akira, 38, is a software developer in Halifax with two young children. He wants to save for retirement outside his RRSP and buys a non-registered deferred annuity from a life insurer, making deposits of $2,500 a year, which he plans to pay by pre-authorized debit from his chequing account for at least 20 years. Akira asks why the agent needs to see his photo ID. Under the federal anti-money-laundering rules, does the agent's firm have to keep an information record and verify Akira's identity?

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