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Tag seniors | Here lies your money

Outliving your money and government inertia

A grave secret: Life settlements were recommended by the Ontario Government 15 years ago – and they’re still a dead issue


Some gravestones are so old you can no longer read the inscription and yet, they stand as sentinels of history, so we don’t forget. Unfortunately, we have no such markers for government inactivity – of promises made, promises forgotten.


1994, 1995, 1997, 2000: The forgotten years for two million Ontario seniors


These years are when documented promises where made to our aging population and yet, inexplicably, “somebody” forgot to do anything about those promises. Was it a lack of political will? Or civil service incompetence? Either way, instead of having a viable and well-regulated life settlement industry in Ontario today (and Canada), we have a graveyard of empty promises buried under bureaucracy, incompetence and perhaps malfeasance.


A little background

Life settlements are some times referred to as viaticals and many people use the term interchangeabley, but they are, in fact, different. However, they have a common purpose: Allowing people who own life insurance to access the value in their policy before they die. And with life settlements that value is almost always more than the cash surrender value offered by the life insurance company.

  1. In the case of viaticals, they originated in the 1980s during the HIV epidemic and were transacted so that policy owners who were terminally ill could access much needed money in their policy, often to help pay medical expenses.
  2. Life settlements grew out of the realization that there was an inherent benefit for owners of life insurance if they could access the maximum value in their policy if they needed money before they died. It made sense to have a means to access the hard earned savings they had sunk into their policy and receive fair market value for their asset.
  3. Over the past two decades the value of life settlements to policy owners has proven invaluable, around the world. Today, in the United States alone, life settlements are estimated to pay out $140 billion in 2015, in a well-regulated secondary market. But not in Canada.


The evidence is in

elderl-paperThere is no shortage of documentation to show that the Mike Harris Conservative Government accepted the merits of a well-regulated life settlement industry (called viatical settlements at the time) and recommended going forward.

I haven’t spoken to Mike Harris but I am sure he meant, on behalf of Ontarian seniors, going forward before 2015.

Here’s some of the documentation:

  • 1994:  A reporter, James Daw,* wrote about activity as far back as 1994 and said, “Ontario suggested ‘that insurers make available at least half the face value of most policies at ‘reasonable interest’ when life expectancy is two years or less.” And yet, in the same article, Tory MPP, Frank Sheehan, who chaired a committee on this issue, said, “the government’s legislative agenda is too busy. We can’t just free (the market) up without giving thought to the potential abuse.” Surely 20 years is enough time to think about it?  *On March 3, 2015, Finance Minister Charles Sousa announced a panel of experts to review the Financial Services Commission of Ontario’s (FSCO) mandate and James Daw was named as a member of that panel. Let’s hope he is now well aware of the irresponsible, insidious delays and that he demands that the offensive sabotaging of government process is rectified. The intent of the government is obvious and the saboteurs are just as obvious (see year 2000 below).
  • 1995: An exemption to section 115 of the Insurance Act was applied for but did not succeed; however, the committee recommended that the Ministry of Finance look further into changing the Insurance Act. Nobody looked and nothing changed.
  • 1997: Living Benefits and Viatical Settlements in Ontario is a feasibility report of April, 1997, which recommended, in part, that the government: “Permit, and establish regulations for, viatical settlements in Ontario. It further stated: Recent experience in the US shows that viatical settlement companies, when appropriately regulated, can act in the consumer interest and provide a valuable service, filling any gaps left by insurance company programs. Problems arise when, as in Ontario now, viatical settlement companies operate from outside the jurisdiction without regulation.” The government intent is clear.
  • 2000: Bill 119 of the “Red Tape Reduction Act of 2000, Schedule G: Schedule G (if you can find it. It’s a little blurb in the midst of hundreds of pages) sets out a mechanism whereby a viatical industry in Ontario would be made legal if a licensing scheme is first put in place by the Ministry of Finance. Other documentation states, in part: “The Commission has been asked to recommend repeal of section 115 of the Insurance Act in order to allow a viatical industry to be established in Ontario … (and) recommends the Commission supports establishing the viatical industry in Ontario … and the Ministry of Finance should develop options to allow this industry to operate in Ontario.” On Dec. 5, 2000, Bill 119 passed by a vote of 46 to 38. That said, Schedule G of Bill 119 was not proclaimed and has not come into effect. It was decided to recommend to the Minister of Finance that the new provisions (Schedule G) not be proclaimed until the insurance industry was given a chance to examine and comment on the regulations that would govern the licensing of the new viatical industry. Mark Daniels of the Canadian Life and Health Insurance Association (CLHIA) indicated that it was expected that, prior to proclamation, the draft regulations concerning how viatical settlement companies will be licensed and regulated will be distributed to the insurance industry for comment. That was almost 15 years ago. So much for good intentions when they get buried in a bad process.


It is the responsibility of the Financial Services Commission of Ontario (FSCO), under the Ministry of Finance, to oversee and act on anything related to life insurance, but FSCO appears to be a quicksand of incompetence and a massive bottleneck that is blocking the improvement of Ontario seniors’ financial well being.


Seniors, here lies your money – stuck in a hen house influenced by insurance companies

fox-salesSomebody in the FSCO hen house is selling somebody a “bill of goods” that is not good for seniors. And it’s got something to do with the foxes – in this case, the insurance companies and their lobby. Because someone in the “hen house” has been sitting on what could be a golden egg for seniors for 15 years. FSCO has not yet done the right thing and the likely excuse will probably be related to the insurance industry not yet having provided “comments” on the government recommendations and intentions in 2000. Or some other irrational excuse.


Where’s the evidence?

It’s buried in the fine print. Schedule G represents typical legislative fine print and it seems as if only the committee and the CLHIA were aware of it. Also, the only delegation to the committee was made by Mark Daniels of CLHIA. That’s a little one sided. Who was advocating for seniors? Why was the Canadian Association of Retired People (CARP) not there? Why were representatives of Canada’s financial planners (Advocis) not looking out for the best interests of their customers, seniors? It was a stacked deck and there was no serious interest in furthering a life settlement industry that could significantly assist financially struggling seniors and would move money from insurance company balance sheets into seniors’ bank accounts. That is the crux of the issue.

Why else would FSCO take no action in 15 years? From an Ontario seniors’ perspective that is beyond incompetence and knee-deep in malfeasance.


2014 Auditor General’s Report

Bonnie Lysyk, Ontario Auditor General

Bonnie Lysyk, Auditor General of Ontario, Sept. 2013

In 2014, the Ontario Auditor General’s report (Chapter 3, Section 3.03), strongly criticized FSCO’s performance and addressed their lack of oversight, supervision and control of its own hen house. And yet, there is no mention of section 115 of the Insurance Act. It would appear that the oversight of the overseers remains an egregious lack of foresight for the financial needs of seniors, despite the fact that government has been trying for two decades to do something. The question is: Are the inmates running the hen house or is it their “friends” the foxes?


In the Auditor General’s report it is suggested that the insurance industry might consider some form of self-regulation because FSCO is perhaps too bureaucratic – ya’ think?. And get this. The self-regulating organization (SRO) would be overseen by FSCO, which, in turn, would be overseen by the Auditor General. And guess who might be a potential SRO? Advocis, the Financial Planning Association of Canada, an association directly tied to insurance companies. So the foxes not only get to stay in the hen house, they get to self-regulate it. Geez, perhaps we should rename it, FIASCO.



LISAC logo stack-smallest copyEnough! The lack of advocacy for seniors on this most important financial issue is blatantly obvious. We don’t need anymore evidence to demonstrate that the current batch of self-proclaimed advocacy groups – CARP, Advocis, CLHIA – have little to no interest in discussing, analyzing or “commenting” on the potential benefits of life settlements for seniors, even in the face of the good intentions of successive governments (Conservative and Liberal). I’ve said it before, and I’ll say it again, it is shameful. The opposite of a fair and just society.


The Life Settlement Association of Canada (LISAC) has been established to advocate on behalf of Canadian seniors on this issue, but we also need political will within government – advocates – who will override FSCO and its lobbyists and stop the perversion of the process, and justice. It requires strong voices at the Ministry of Finance, the Ministry Responsible for Seniors Affairs, the Ministry of Health and the Auditor General of Ontario.


After two decades, the time is now!


The elephant in the room for Canadian seniors …



 Why is no one talking about a great source of cash for seniors – life settlements?

Over 600,000 Canadian seniors are living in poverty. Another 600,000 are still in the workforce. Many more are struggling financially. And the government and advocacy groups like the Canadian Association of Retired People (CARP) seem to be scrambling to help them. And yet, no one is talking about an asset class that belongs to millions of seniors who own a life insurance policy – life settlements.


elephant-cartoonFour times the cash value

For those of you who are not aware of the elephant in the room – life settlements – let me briefly explain.


A life settlement pertains to the sale of an unneeded in force life insurance policy for an amount that is more than the policy’s cash surrender value but less than its death benefit. A study by the London Business School of over 9,000 life insurance policies that had been transacted as life settlements showed that, on average, those polices received more than four times the cash value that they would have received as cash surrender value from the insurance companies. And, of course, many term policies would have received nothing.


The elephant

The problem is that life settlements are not available to Canadian seniors. And that’s an egregious oversight by governments and advocacy groups.


Oliver-1Pre-election budget to benefit seniors

Worse, no one is talking to seniors about the financial upside that life settlements could offer them. In an April 17, 2015 Globe and Mail article by Bill Curry, Pre-election budget to benefit seniors, including relaxation of RRIF rules, there is a lot of talk and hope about new budget measures – and that is good – but it is obvious that life settlements are not part of the conversation – yet.



In a word, ignorance. Governments are either uninformed or misinformed and abdicating their responsibility to seniors. And advocacy groups like CARP and the Financial Planners Association of Canada (Advocis) are not acting in the best interests of their members by ignoring the benefits life settlements can offer seniors.


Where do senior elephants go for honesty?

Why are we keeping seniors in the dark?


Where do seniors go for honesty?

Seniors are kept in the dark, having no idea what life settlements are about or how they could benefit from them. And the insurance companies intend to keep it that way as long as possible.


Don’t get me wrong. Life insurance and life insurance companies are very important to over 21 million Canadians and I have been proudly affiliated with the industry for over fifty years. Life insurance companies provide a valuable service and do many good things – except on this issue of life settlements. On this, they are failing their customers. They are serving their own self-interests, not those of their customers, their representatives (financial planners and brokers), their shareholders or their country.


If seniors have heard anything about life settlements from their insurer or financial planner or broker it is probably erroneous and misleading information about how life settlements are a “serious risk” (see CLHIA lawyer letter below and my response). That is nothing but propaganda and spin. It only benefits the insurance companies and deprives policy owners of their right to receive fair market value for an asset they own – their life insurance policy. I have covered all the fundamentals about this in my book, Why Are Canadian Seniors Worth More Dead Than Alive?, and numerous blogs and media coverage (see Media).


globeandmail-logoThe media?

The Canadian media have ignored this issue for years. They too are either ignorant of the facts or uninspired to dig into them. This is an example of where a little investigative journalism is needed. Or as Pulitzer-Prize journalist, Seymour Hersh says, “Our job is to find out for ourselves, our job is to go beyond the debate and find out who’s right and whose wrong about issues. That doesn’t happen enough.” And I, as an advocate for Canadian seniors, say that there’s no debate in the media about life settlements. It is not happening and yet, it would go a long way in serving the public interest, especially millions of seniors in need of financial help, now, not after they’re dead.


Around the world, well-regulated life settlement industries are providing billions of dollars to seniors, which in turn streams money into the economy and relieves the cost of government programs. As I have said before, it is a win-win-win.


Instead, it remains the elephant in the room for Canadian seniors.


BraidOpportunity – it’s election time

We all know that the one time elected officials pay extra attention is during election campaigns so now is the time to bring out the elephant. And seniors can bring a large elephant to the ballot box. As Bill Curry points out, 75 per cent of voters aged 65 to 74 cast ballots in the 2011 election.

It’s time to ask every candidate, and every MPP – election or no election – where they stand on life settlements. And politicians like Peter Braid, MP in the Kitchener-Waterloo riding where many insurance companies reside, should have answers. He used to be in the insurance business and is head of the Conservative’s insurance caucus. I intend to see him at some all-candidates meetings because he has yet to respond to any of my correspondence and questions. Also, he “unsubscribed” from this blog, which I expect will mean he remains uninformed about how life settlements could help his senior constituents.



Of course CARP advocates for seniors and their VP for advocacy, Susan Eng is out front talking to government officials and the media about all they are doing for Canada’s aging-population. According to Bill Curry’s report, Ms. Eng said her preference would be to get rid of the RRIF rules altogether, but a softening of the withdrawal rates would be an improvement over the status quo.


Question for Ms. Eng

I ask Ms. Eng, again: Why are you not advocating “to get rid of” the insidious regulations in provincial legislation that prevent seniors from accessing the fair market value for an asset they already own. And the recent Ontario election would have been a great opportunity to address this issue because Premier Wynne has said the financial problems for seniors is becoming a huge economic burden. But nothing on life settlements from CARP. Ms. Eng is quoted in the article:

“Seniors are really clear-headed about this now (RIFFs). It used be you could say the word ‘seniors’ in your announcement and they’re all for you … There’s going to be no chance you can get away with just saying: ‘We love seniors.'”

This raises a similar question: Why does CARP’s advocacy not include pursuing changes in the regulations so seniors could receive increased cash value  through life settlements? Perhaps Ms. Eng thinks she can “get away with just saying: ‘We love seniors'” and ignore the elephant in the room.


Seniors need to take this issue to their CARP membership meetings, and the ballot box, even if their advocates won’t.