{"id":17950,"date":"2020-04-03T03:04:45","date_gmt":"2020-04-03T07:04:45","guid":{"rendered":"https:\/\/lifeinsurance-orleans.ca\/Life-Insurance-Blog\/questions-raised-on-nova-scotias-bill-238\/"},"modified":"2020-04-03T03:04:45","modified_gmt":"2020-04-03T07:04:45","slug":"questions-raised-on-nova-scotias-bill-238","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2020\/04\/03\/questions-raised-on-nova-scotias-bill-238\/","title":{"rendered":"Questions raised on Nova Scotia’s Bill 238"},"content":{"rendered":"
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A newly passed bill in Nova Scotia that restricts third-party trades in life insurance<\/a> has unfairly limited policyholders\u2019 options in unlocking the value of their policies, says one advocate.<\/p>\n

Kahan owns Ontario Life Line, an actuarial consulting practice which provides actuarial Fair Market Valuation of life policies for donations to charities. Aside from having a subsidiary company called Atlantic Life Line Ltd. that’s still active in Nova Scotia, he has been working to create a virtual online exchange to match private lenders with policyholders to be based in the province.<\/p>\n

\u201cI\u2019m concerned that [the policyholders] weren\u2019t event consulted on whether they agreed [with this change],\u201d Kahan said in an interview with Life and Health Professional.<\/p>\n

Under the provisions of Bill 238, which received royal assent on March 10, any person other than an insurer or its authorized agent who deals or trades in insurance for the purpose of procuring the sale of insurance to the person<\/a>, among other types of transactions, is guilty of an offence.<\/p>\n

The bill affects a business model Kahan first introduced in the province in 1995, for which he requested and got a green light from Nova Scotia\u2019s Superintendent of Insurance.<\/p>\n

\u201cWhen I set up Canadian Lifeline, we called it a viatical loan company,\u201d he said. \u201cWe were doing loans, not life insurance settlements. But based on the wording of the amendment, it\u2019s illegal to even make a loan, as it prohibits the hypothecation or assignment of insurance to a third party.\u201d<\/p>\n

According to Kahan, his firm would act as an intermediary between policyholders and creditors willing to provide loans secured against their policies, in a transaction similar to a reverse mortgage. A private lender would charge a certain rate of interest per annum, which Kahan said was 8%. Through such transactions, some individuals can get access to much-needed liquidity during their lifetime, and the lender would be able collect the amount they\u2019re owed upon the policy holder\u2019s death.<\/p>\n

\u201cWe\u2019d give full disclosure to the policy holders, explaining the terms of the loan, what the interest rate is, and the expenses,\u201d Kahan said. \u201cAnd we\u2019d insist that they have a lawyer with them just so there\u2019s someone to provide independent legal advice.\u201d<\/p>\n

While Kahan acknowledged that insurance companies offer a living benefit, he said policyholders can\u2019t avail of that option unless they have less than one year or less than two years left to live, depending on the company. However, some medical professionals may not be willing to tell their patients that they will pass away in two years. \u201cWe didn\u2019t have that restriction,\u201d Kahan said.<\/p>\n

He added that while there are banks that offer loans for policies issued by certain carriers, such loans are given against a policy\u2019s cash surrender value. In contrast, the loans facilitated through Kahan\u2019s business are secured by the equity in the life insurance policy.<\/p>\n

\u201cYou can even have lenders who are willing to pay the premiums in case the policy holder is unable to,\u201d he added. \u201cIn those cases, the annual premium payment made by the lender is added to the principal of the loan.\u201d<\/p>\n

According to Kahan, there has not been much demand for life policy loans in Nova Scotia compared to previous years; many sought them as a solution in the \u201890s when AIDS was a widespread problem, but have fallen into decline as cocktails of drugs to combat HIV have been developed. But with the current COVID-19 crisis developing, he is concerned that some people may get sick with the coronavirus and consequently need money to offset the impact it would have on their finances.<\/p>\n

\u201cAs far as I know, there weren\u2019t too many people operating [to offer life insurance settlements and loans] in Nova Scotia, and I don\u2019t know if they\u2019ve had any complaints,\u201d he said. \u201cI didn\u2019t find out about the bill until after it was passed; if I\u2019d known about it, I would\u2019ve offered some comments.\u201d<\/p>\n

Read the original article at https:\/\/www.lifehealthpro.ca\/rss\/ <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

A newly passed bill in Nova Scotia that restricts third-party trades in life insurance has unfairly limited policyholders\u2019 options in unlocking the value of their policies, says one advocate. Kahan owns Ontario Life Line,...<\/p>\n","protected":false},"author":578,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/17950"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/578"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=17950"}],"version-history":[{"count":0,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/17950\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=17950"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=17950"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=17950"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}