Life Assurance (Provision of Information) Regulations provide mandatory disclosure and prior information at the point of sale, prior to sale of life assurance policy. The Regulations do not apply to life assurance sold to persons resident outside the State, a life policy where none of the clients is an individual, life assurance sold to trustees of occupational pension schemes, contractors for creditor insurance, other than contracts in connection with entry into a housing loan.
In the case of life assurance issued in connection with a housing loan, where the client is the lender or a person other than the mortgagor, the Regulations do apply. Contracts for creditor insurance are contracts which are entered for the purpose of insuring repayment of a loan where it is intended that the contract could be assigned or deposited with the lender or where the lender is policyholder by mortgage protection policies as.
The general principle is that before a client signs a proposal or an application form for policy of an insurance, the insurer is to provide the specified information below. It is to be provided in writing, in a clear and accurate manner and in the form specified in the legislation. When the information is provided, the insurer or insurance intermediary must give the client a declaration, in the format provided by the Regulations, for completion by the client.
Where, illustrative tables are provided to a client in accordance with the form, the values given by the insurer in the illustrative tables shall be specific to that client and the premium proposed by the client.
Where, the client signs a proposal form or application form for a policy of life assurance, and it is not practicable to give the values above in the illustrative tables, the values given by the insurer in illustrative tables in relation to the policy may be values which apply to a standard policy of that type and to the premium payable in relation to that standard policy.
Where, a client signs a proposal or application form for a life assurance policy and it is not practicable to give the values above, the insurer must provide the client illustrative tables giving those values when issuing the life assurance policy or a copy of the life assurance policy related to the proposal submitted by the client.
Deviations in the form of the illustrative tables must be subject to actuarial advice. When giving advice, the actuary must have regard to the guidance notes published by the Society of Actuaries in Ireland for that purpose.
Illustrative tables of projected benefits, expenses and charges, intermediary remuneration and sales remuneration must be prepared by the insurer in the specified format with the advice of the actuary. The actuary must act in accordance with Society of Actuaries of Ireland Guidance Notes.
Certificate & Declaration
The actuary is to furnish a certificate to the insurer in the form set out in the Regulations in respect of each financial year of the insurer, stating that his advice has been given with guidance notes issued by the Society of Actuaries in Ireland, have been complied with by the insurer and the actuary shall include in the certificate such qualifications, amplifications or explanations in relation to that advice as the actuary considers appropriate.
The insurer shall furnish a declaration in the form set out in the legislation in respect of each financial year, stating that all information requested by the actuary has been provided and is accurate. The insurer shall include in the declaration such qualifications, amplifications or explanations as it considers appropriate.
The certificate and declaration above must be submitted to the Minister for Jobs, Innovation yearly.
The declaration is to be completed by two directors, and the chief executive, of the insurer. There are separate requirements in respect of external insurers. In the case of external assurers, the declaration is to be including those carried out through a branch or agency in the State. The declaration is to be signed by an authorised agent, or by an officer or employer of the insurance, who either alone or jointly, is responsible for the conduct of the whole of the insurance business of the insurer in the State.
In the case of a policy, other than an industrial assurance policy, which has a surrender or maturity value, the insurer is to give the client with an annual written statement containing the current premium payable, current surrender or maturity value, such further information as the insurer considers appropriate.
Similar but differing provisions apply to industrial assurance policies.
The information to be provided to the client pursuant to the above obligations is set out in the Schedule to the Regulations. Prominent titles and warnings are to be included. The following details are to be included.
Under heading “Make Sure The Policy Meets Your Need!” purpose and intention of the policy, type of policy, nature or terms of a policy under which commitment is given by the client to pay a premium in a lump sum, or regularly, including a statement indicating that unless the client is fully satisfied as to the nature of the commitment, having regard to its needs, resources and circumstances, the client should not enter the commitment.
Where the proposed life assurance policy replaces an existing policy with the insurer or any other insurer which has been cancelled or reduced, that the insurer or insurance intermediary, insofar as they are aware or ought to be aware of such existing policy, has advised the client as to the financial consequences of replacement and possible financial loss as a result of replacement, and a declaration and warning in prescribed terms:
If you propose to take out this policy in complete or partial replacement of an existing policy, please take special care to satisfy yourself that the policy meets your needs. In particular, please take care that you are aware of the financial consequences of replacing your existing policy. ”
It must set out “What happens if the policy is to be cashed in early or premiums are stopped being paid?” There must be a statement in a prominent position indicating whether or not the policy has maturity value, 0consequence of non-payment, early surrender value, either voluntarily or as a result of non-payment and that it may result in a return less than the amount of premiums paid.
A statement of Projected Benefits
This is to include a Statement of Projected Benefits and Charges in a tabular form specified. Where the policy does not have a surrender or maturity value, this is to be stated.
The Illustrative Table is to include prominent warnings including in particular that, “the assumed rate of interest is for illustration purpose and is not guaranteed and the actual investment growth will depend on the performance of the underlying investments and may be more or less than illustrated.”
The table is to include in tabular form in respect of each year, each of the first five years, year 10, 15, 20 and maturity if later.
- The total amount paid into with the policy to date.
- Projected investment growth to date.
- Projected expenses and charges to date.
- Projected cost of protection benefits to date.
- Projected policy value.
There is to be a prominent statement in relation to the non-guarantee of return, if this is the case. It may state that the premium may need to be increased to achieve the benefits illustrated.
There the policy is a unit-linked protection policy, under which the insurer may increase the premium payable for the same level of cover or where the cover may be reduced, a statement must appear in a prominent position to the effect accompanying the illustration indicating the period, if any, during which the insurer may not increase the premium.
Particulars of circumstances in which the policy may be amended or canceled by the insurer must be set out. A statement shall be included as to the consequences of failing to disclose material facts and of providing incorrect information when completing a proposal or application form for life assurance.
Information must be set out in relation to taxes including the circumstances under which tax reliefs available on premiums and pension product contributions and the extent of such reliefs;the circumstances and extent to which the proceeds and benefits are taxable.
The required information on service fees charged by the insurer or intermediary. It must be disclosed in writing and it shall be expressed as a monetary amount whether in relation to the initial service fee or in relation to an assumed renewal or annual service.
Information must be provided to the client about the insurer or the intermediary. This must include details of their name, address, legal form, whether they are tied agents or untied insurance agents, contact details, details of head office of State, any delegated authority appointed by the insurer.
The tables required in Schedule 2 are to set out illustrative table of projected benefits and charges. This provides for projected investment growth to date, projected expenses and charges to date, projected cost of protection benefits to date, projected policy value.
A rate not exceeding 8%, before deduction of all anticipated expenses and charges, intermediary remuneration and sales remuneration, shall be used as the assumed projected rate of return.
The Illustrative Tables of Projected Benefits and Charges shall indicate the surrender or maturity value of the policy after the penalties, if applicable, at the end of each of the five years, and at the end of 10, 15 and 20 years after inception and maturity, where appropriate. These are to be shown opposite the total amount of premiums, projected investment growth, projected expenses and charges to date, projected cost and protection benefits to date, in respect of each of those years.
The difference between the sum of premiums paid and projected investment growth, and the corresponding projected surrender or maturity values is accounted for by either life assurance cover or protection benefits and charges and management expenses associated with the policy and surrender penalties. In illustrating the projected benefits of a unit-linked protection policy, the period of time for which cover can be maintained by the premium shown, based on the assumptions underlying the illustration, shall be specified if this is less than the term of the policy. The illustration shall state that an increased premium may be required to sustain the cover beyond the period shown.
Where the policy includes insurance cover for both critical illness or permanent health insurance, the effects of a claim under the insurance cover on the projected surrender or maturity value shall be specified.
In the case of investment policies, the effect of all deductions, excluding deductions for protection benefits, on the projected investment yield on the gross premiums paid shall be stated in a prominent position in the Illustrative Table.
In the case of pension business contracts, an illustration shall be provided to the client indicating the projected tax free sum available at retirement, where relevant, the projected balance of the fund available to purchase an annuity and examples of projected monthly and weekly annuity payable at the illustrative rates of return.
The illustration is to be accompanied by a warning in a prominent position as to the rate of return assumed, that the rate is for illustrative purposes and is not agreed, and that the actual investment growth will depend on how the investment performs and may be more or less than illustrated.
A statement shall be included that the premium payable includes the cost of the protection benefits, and all charges, expenses, intermediary remuneration and sales remuneration, where applicable.
Remuneration of Intermediaries
There is to be a prominent table setting out sales remuneration payable. This is to include a statement in respect of each year of the policy, in this above terms, the premium payable and the projected total intermediary sales remuneration or brokerage fee payable in respect of that year.
The Illustrative Table of Intermediary Remuneration and Sales Information shall state the projected premium payable and projected total cost of payments, benefits and services payable to intermediaries or sales employees to cover intermediary remuneration or sales remuneration in connection with the policy in the year in question.
Where an arrangement exists between an insurer and an insurance broker or agent other than a tied insurance agent under which payments, may be provided by the insurer contingent on a minimum level of business, then, where the policy contributes to the achievement of these payments, benefits or services, a statement describing the arrangement shall follow the Illustrative Table. Scheduled 3 require information for policyholders.
The following is to be communicated to the policyholder before the contract is concluded or during the term of the contract respectively (separate obligations). It must be provided in a clear and accurate manner, in writing, in an official language of the Member State of the commitment. The information may be in another language if the policyholder so requests and the law of the Member State so permits or the policyholder is free to choose the applicable law,before the contract, certain information about the assurance company and the commitment including its legal form, place of establishment, address in the State, branch or agency.
In relation to the commitment, it is to include details of the terms of contract, means of terminating, means of payment, surrender and paid up values, information on premiums, definition of units in the case of unit-linked funds, indication of the nature of the underlying assets, arrangements for application of cooling-off period, general information on tax, arrangements for complaints handling, law applicable
In addition to policy conditions, the policyholder must receive the following information during the term of the contract:
- any changes in the identity of the insurer;
- information above in the event of a change or amendment;
- annually, information on the state of bonuses.