How much do you know?
Do life insurance agents and companies need to be licensed to sell insurance in Ontario?
What Is a Life Insurance Agent?
Life insurance agents are persons licensed and regulated by the Financial Services Commission of Ontario (FSCO) to sell insurance in Ontario. Some agents represent one insurance company while others represent several companies. All life insurance agents must have completed the Life Licence Qualification Program (LLQP) and have passed the LLQP exam, and they are required to complete 30 hours of continuing education credits every two years.
Life insurance agents may also have achieved additional professional qualifications. Ask if they are a Chartered Life Underwriter (CLU), or a Chartered Financial Consultant (CHFC). These programs require several years of study and examinations. Additionally, ask if they are licensed to sell other products such as Mutual Funds.
A life insurance agent can play an important role in your purchase of a life insurance policy. Choose a life insurance agent that is right for you. Keep in mind most life insurance agents are paid a commission by the insurance company issuing the policy.
To find an agent near you visit FSCO’s Agents Licensed in Ontario.
What is a Life Insurance Company?
A life insurance company issues and sells comprehensive financial products including individual and group insurance policies to individuals and employers, and promises to pay benefits to holders of those policies. In Ontario, licensed insurance companies are regulated by FSCO. For a list of licensed companies visit FSCO’s Licensed Insurance Companies in Ontario database.
FSCO licenses and regulates life insurance agents and companies in Ontario to ensure consumers are protected and to enhance public confidence in the insurance sector. Being licensed and regulated by FSCO means safeguards are in place to protect your consumer rights. For more information about your rights as a consumer, visit Rights and Responsibilities.
Check that the insurance agent or company you want to work with is licensed by FSCO. FSCO’s Enforcement Online database also shows if any enforcement action has been taken against the insurance agent or company in Ontario. Enforcement actions, like having a license suspension, or the imposition of a fine (Administrative Monetary Penalty), may indicate issues in regards to compliance with legislation that were remediated through these sanctions. If a life insurance agent or company has had an enforcement action taken against them you should ask what it was for and how they fixed it.
Finding an Insurance Agent or Company
Finding a professional to work with is an important step. Ask friends and family for recommendations or referrals. Other trusted advisors like the family lawyer or your bank manager can help too, and you can also check the Yellow Pages, professional associations, articles from the media and annual reports from the companies themselves online. You could even do a search of one or more of FSCO’s licensee databases as a start. Make sure you call at least two or three agents or companies and see if you feel comfortable with them. Focus on getting sound advice rather than the lowest premium.
Ask them: How long have you been in business? Do you have any references I could review or contact? For which companies do you sell insurance? How/when can I contact you for advice both before and when I have a life insurance policy? For a full list of questions to ask, visit our list of Questions to ask about your life insurance
What to Expect When Working With a Life Insurance Agent or Company
When you have selected your life insurance agent or company you will discuss your health and life situation with them, and what coverage makes sense for you. It is important to be frank and open about your life, health and short- or long-term financial goals. This will help your agent or company recommend options that meet your needs and circumstances. You can expect that an agent will ask you personal questions, including what you can or cannot afford. Any information you provide is confidential.
Your life insurance agent or company will guide you through the following:
1. Financial needs analysis
This will help you get an idea of your assets, liabilities (debts) and income needs. When you provide accurate information to your insurance agent or company, they can make better recommendations for a policy that will fit your financial needs. One option is to use CLHIA's Financial Needs Analysis .
2. Risk assessment
Your insurance agent or company needs to assess the risk that you pose to the insurance company. You will probably have to complete a detailed health questionnaire. Be prepared to answer questions about your age, medical history, your family medical history and whether or not you smoke. Non-smokers often get substantially lower premium rates than smokers.
Depending on the type of policy you are applying for, you may have to get a medical exam to provide evidence of insurability. When you sign your application form, you authorize the insurance company to contact your physicians, hospitals and the Medical Information Bureau (MIB) . The insurer cannot decline your application based on the MIB report, but they can use it as a basis to request further information or increase your premiums.
Health isn’t the only risk. Your job, financial situation, dangerous activities and other factors are taken into account before your application is approved.
Most applicants receive the coverage they ask for, and receive “standard” premium rates. If the company thinks you present a higher risk, they may charge higher premiums, or alter the terms of the policy. Be sure to shop around as different insurers have different criteria.
3. Providing insurance options and policy illustrations
When presenting you with options and product recommendations, your insurance agent or company should provide you with written policy illustrations that help explain how the products they are recommending might perform over time depending on interest rates earned within the policy. It is important to understand that the illustrations are not part of your contract, as not all the features of an insurance policy (e.g cash value, dividends, premiums, death benefits) may be guaranteed. Insurance companies cannot predict the future any more than you can. They are making an educated guess about how a policy could perform.
Make sure you understand any assumptions that have been made to come up with proposed premiums and benefits by asking questions to gain a better understanding of the risks associated with each policy, and what happens to the different features if these assumptions change for the worse (e.g. interest rates decrease). For a full list of questions to ask, visit our list of Questions to ask about your life insurance.
Don’t feel pressured to accept the first policy that is presented to you. In fact, don’t work with an insurance agent or company who tries to sell you a policy without offering alternatives. Ask at least three insurance agents or companies for different policy options and illustrations on similar products so you can compare and find the one that best suits your needs.
4. Submitting the application
The application asks for your personal information such as your name, address, age, etc., and it describes the type of insurance policy for which you are applying. It will also ask for a beneficiary, your method of payment and a health questionnaire. Make sure all information is accurate before signing the application, and ask for a copy of the completed form for your records. Also remember that failure to provide accurate and complete information can invalidate your policy.
After you sign the application will then be sent to the underwriting department, where it is reviewed, the risk you pose is assessed, and a decision is made on whether the policy can be issued on the terms you requested.
5. Getting the life insurance policy
You should receive your policy within 30 days of your application. The insurance agent will deliver your policy and explain the terms, conditions and risks. If your policy is mailed to you, call your insurance agent when you receive it and ask them to go over the terms, conditions and risks with you. You should also check your personal information and policy information carefully yourself and report any errors. Check that the policy aligns with the information you submitted in your application and your expectations for coverage.
If you paid a portion of the premium with the application, you will usually receive a conditional or temporary insurance agreement that covers you while the company reviews your application. Check with your insurance company or agent for details.
All life insurance policies come with a rescission right, which means after you receive your policy, you have at least 10 days and in some cases 20 days to cancel it, and they will return any premiums you already paid. Visit How to read your insurance policy to learn what to look for when reviewing your policy.
6. Post-sale service
Your agent will provide you with their contact information as well as the insurance company’s information. You should always be able to access a licensed agent for advice during business hours. If you need to alter a policy, change a beneficiary, or make a claim, contact your agent or company.
Life Insurance Agent and Company Responsibilities
Life insurance companies have obligations and responsibilities to you, the buyer. They must:
- fulfil their responsibilities to you and follow through on their promises outlined in the insurance contract; and
- be licensed by FSCO and comply with the law.
Life insurance agents also have obligations and responsibilities. They are required to:
- be licensed by FSCO to sell life insurance in Ontario;
- comply with the Ontario Insurance Act and regulations;
- disclose to you in writing the names of providers of financial products, services, and insurers that they represent;
- disclose to you in writing any conflicts of interest that they may have; and
- have purchased errors & omissions insurance (E&O) so that you are protected if they are negligent or make errors selling you an insurance product.
In addition to legal requirements, insurance agents and companies should follow industry best practices. They should:
- provide a letter of engagement that describes the services you can expect from them during and after the sales transaction;
- provide written information about the products that they are recommending to you;
- ensure that a licensed agent is always available for consultation during business hours;
- provide their contact information, license number, and other information that you request;
- provide a copy of your application form and contract for your own storage;
- explain how your policy will work and recommend options based on your needs before you buy a policy;
- provide a clear statement of the insurance policy, its limitations, exclusions and terms;
- provide clear indication of which features and benefits are guaranteed, and which are not;
- allow you to change your mind and ask for a full refund at least 10 days and in some cases 20 days of receiving your policy. This is called a rescission right;
- review your life situation and circumstances and recommend necessary changes, during the life of the policy;
- keep records of your discussions; and
- help your beneficiary make a claim when the time comes.
What to Do If You Have a Complaint
If you have a question or complaint about a service or product that you purchased, you should talk with the life insurance agent or company first and see if they can resolve the issue.
If you want to file a complaint about any unresolved insurance business activity, you can follow the three steps on FSCO’s How to Resolve a Complaint about Insurance webpage.
Assuris protects life insurance policyholders in the event that their life insurance company should become insolvent. For more information visit Assuris’ website.
You may be interested in...
Life Insurance 101 Getting Started: make sure you understand the terminology in your policy.
Shopping for Life Insurance: get details on how to select an agent or company and how to comparison shop for life insurance.
Questions to Ask About Life Insurance: use our list of questions to ask your life insurance agent, company or HR representative.
Types of Life Insurance: learn about the different policy types before you meet with an agent.
Financial Literacy Portal: your one-stop shop for other kinds of financial information.
Glossary: Life Insurance: to better understand common life insurance terms, refer to this glossary.