LLQP Ethics and Professional Practice

Vocabulary flashcards defined verbatim from the LLQP Ethics and Professional Practice manual, covering legal principles, policy provisions, claims rules, and agent obligations.

Insurance contract

An undertaking by one person to indemnify another person against loss or liability for loss in respect of a certain risk or peril, or to pay a sum of money upon the happening of a certain event.

Natural person

A human being who, possessing legal capacity, has the ability to make decisions regarding their person and property and to bear the risks and rewards of those decisions.

Partnership

An arrangement between two or more parties carrying on business together with a view to making a profit.

Corporation

A legal person that exists as a separate legal entity from those who manage or own it, possessing property rights to enter into contracts, buy, sell, and own property.

Power of attorney

A legal document made by a principal appointing an attorney to deal with their business and property and make financial and legal decisions on their behalf, which terminates if the principal becomes mentally incapable.

Enduring power of attorney

A legal document appointing an attorney to make financial and legal decisions for a principal that explicitly continues to be effective even if the principal becomes mentally incapable.

Intestacy

The state or condition of an individual dying without a valid will.

Estate

The collection of property and property rights owned by a deceased individual at the time of death.

Executor

The person appointed under a will to be in charge of an estate, responsible for paying the deceased's debts and distributing remaining assets according to the will.

Tort

An action or omission that causes someone loss or harm for which the wrongdoer is civilly liable.

Limitation period

A statutory timeframe within which a court action must be started before the legal right to sue is lost forever.

Coordination of benefits

A process applied by benefit plan providers when an individual is covered under multiple health plans to determine primary payment and ensure second plans cover only remaining unpaid balances.

Policyholder

The individual or legal person (such as a corporation) who holds legal ownership of an insurance policy and exercises its contractual and statutory rights.

Life insured

The person whose life is covered under an insurance policy and upon whose death the insurance benefit is paid.

Successor policyholder

A person identified in advance by a policyholder (who is not the life insured) to receive ownership of the insurance policy if the original policyholder dies before the life insured.

Beneficiary

A person, other than the insured or the insured's personal representative, to whom or for whose benefit insurance money is payable in a policy or by a declaration.

Irrevocable beneficiary

A designated beneficiary whose status cannot be altered or revoked by the policyholder without that beneficiary's explicit written consent.

Contingent beneficiary

A secondary beneficiary designated to receive insurance proceeds if the primary beneficiary dies before the life insured.

Rescission

The withdrawal or annulment of an insurance contract, such as during the 10-day free look period, resulting in a full refund of all premiums paid.

Cash surrender value (CSV)

The net cash amount a policyholder receives upon surrendering a permanent life insurance policy prior to maturity, minus any outstanding loans or surrender charges.

Absolute assignment

The complete and permanent transfer of policy ownership from the original policyholder to a new owner.

Collateral assignment

The temporary transfer of an insurance policy's rights to a lender as security for a loan, restricting policyholder actions until the loan is satisfied.

Exclusion

A contractual provision in an insurance policy specifying hazards, perils, or circumstances under which coverage is not provided and no benefits are payable.

Administrative services only (ASO)

An arrangement where an employer self-insures employee benefits but hires an insurance company strictly to process, adjudicate, and administer claims.

Critical illness (CI) insurance

Insurance that pays a lump-sum benefit if the insured is diagnosed with a covered life-threatening illness and survives a specified waiting period, typically $30\,\text{days}$.

Long-term care (LTC) insurance

Insurance providing benefits when an insured person cannot independently perform specified daily living activities or requires constant supervision due to cognitive impairment.

Structured settlement

A single-premium, non-assignable, and non-commutable annuity arrangement designed to pay non-taxable periodic damages for personal injury claims.

Individual variable insurance contract (IVIC)

An individual annuity contract linked to segregated funds where policy value fluctuates according to underlying market performance, guaranteeing at least $75\%$ of premiums paid at death or maturity.

Defined benefit pension plan (DBPP)

A pension plan in which member benefit entitlements are calculated based on a fixed formula linked to earnings and years of service, rather than plan investment performance.

Defined contribution pension plan (DCPP)

A pension plan where eventual retirement benefits are determined by accumulated employer and employee contributions plus investment performance achieved on those contributions.

Deferred profit-sharing plan (DPSP)

An employer-sponsored plan allowing an employer to share business profits with employees by contributing to a plan set up through a group annuity contract.

Tax-free savings account (TFSA)

A registered savings vehicle into which non-tax-deductible deposits are made, with all investment growth and withdrawals remaining completely tax-free.

First Home Savings Account (FHSA)

A registered account for first-time home buyers allowing tax-deductible contributions up to $\$8{,}000$ per year (lifetime limit $\$40{,}000$) and tax-free withdrawals for a qualifying home purchase.

Locked-in retirement account (LIRA)

A specialized registered retirement savings plan used to hold transferred pension funds, subject to pension legislation restrictions that prohibit unrestricted early withdrawals.

Life income fund (LIF)

A retirement payout plan operating as a RRIF for tax purposes, holding locked-in pension funds subject to statutory annual minimum and maximum withdrawal limits.

Market conduct

The overarching product or service relationship between the insurance industry, insurers, agents, and the public, governed by laws, codes of conduct, and client expectations.

Politically exposed person (PEP)

An individual who holds or has held a prominent public office or position in or on behalf of a foreign or domestic state, subjecting transactions involving them to specialized PCMLTFA regulation.

Churning

The unacceptable sales practice of encouraging a client to give up an existing policy to purchase another policy from the same insurer primarily to generate a new commission for the agent.

Twisting

The prohibited practice of persuading a client to terminate or lapse an existing policy to replace it with a policy from a different insurer, often to the client's financial detriment.

Tied selling

The prohibited practice of making the purchase of one financial product or service conditional upon the purchase of another product or service.

Fronting

The improper practice where a licensed agent signs as agent of record on an insurance application solicited or completed by an unlicensed individual or another agent who did not meet the client.

Premium rebating

The prohibited or regulated act of an agent returning or offering to return any portion of an insurance premium or commission to a client as an incentive to purchase insurance.

Trafficking in insurance

The act of buying, selling, or trading existing life insurance policies or their benefits between policyholders and third parties for profit.

Assuris

A non-profit organization that protects Canadian policyholders by guaranteeing specified minimum protection levels if their life insurance company becomes insolvent.