Deeds

[Mbotha]

I'm trying to figure out the relevance of this section in the context of life insurance:

• How would deeds be used in the context of a life insurance policy (or in the broader context of SA2)?

The core reading in Custody of Documents states: "It's common for a life company...to accept custody of documents of title relating to transactions that are completed and closed."

• Does this section relate to deeds or to the life insurance policy?
• What kind of documents of title are being referred to here?

Furthermore, the core reading says: "...if any transfer of title can be proved..., that will speed up the payment process when a claim arises."

• What kind of transfer of title does this refer to?

 

[Lindsay Smitherman]

How would deeds be used in the context of a life insurance policy (or in the broader context of SA2)?

As some examples, deeds could be relevant in any of the following situations:
- Transfer of a life insurance policy into a trust (the trust deed will set out who is involved in the trust and how it will operate) - as described in Section 4 of the chapter
- Assignment of a life insurance policy ie changing the beneficiary, for example assigning a joint life policy to just one of the lives, perhaps following divorce
- As mentioned in the Core Reading, taking actions under a deed that sets out power of attorney.

 

[Lindsay Smitherman]

The core reading in Custody of Documents states: "It's common for a life company...to accept custody of documents of title relating to transactions that are completed and closed."

• Does this section relate to deeds or to the life insurance policy?
• What kind of documents of title are being referred to here?

Furthermore, the core reading says: "...if any transfer of title can be proved..., that will speed up the payment process when a claim arises."

• What kind of transfer of title does this refer to?

The documents could be the policy document and any related deeds that are not required for other purposes. So, for example, a deed assigning the policy to a single rather than joint life would be retained by the life insurance company after claim as it no longer has relevance to the individual. But the power of attorney deed would not be retained by the life insurer as the individual will need this for other purposes.

"Transfer of title" means transferring the policyholder to another beneficiary, such as under the joint to single life assignment that I mentioned above.

Hope that helps. This chapter is pretty heavy on legal terminology so don't worry if you find it hard-going - you are far from alone!

 

[Mbotha]

Thanks, Lindsay.

I'm also a little unclear on some of the discrimination descriptions:

1) Direct discrimintaion: differential treatment on the grounds of age isn't discrimination if it's a proportionate means of achieving a legitimate aim.

a) Is this just saying that prices can still be varied by age as long as it genuinely reflects risks or costs?
b) If this is the case, is the point here that any premiums varying by age need to be based on appropriate data​

2) indirect discrimination - please can you give me an example of such so that I can understand this better?

 

[Mbotha]

I forgot to add my question on the gender directive...
Reviewable premiums aren't treated as new business for the purposes of the legislation. Does this mean that gender can be used as a rating factor when re-pricing for reviewable premium policies?

 

[Lindsay Smitherman]

Yes: provided the policy was originally sold on gender-specific rates. The premiums will be reviewed and (if felt appropriate) adjusted in line with claims experience; for such policies (ie reviewable premium policies sold prior to 21 December 2012), this change in claims experience can be analysed by gender.

 

[Mbotha]

Yes: provided the policy was originally sold on gender-specific rates. The premiums will be reviewed and (if felt appropriate) adjusted in line with claims experience; for such policies (ie reviewable premium policies sold prior to 21 December 2012), this change in claims experience can be analysed by gender.

Thanks, Lindsay. Please can you assist with my question below as well?

I'm also a little unclear on some of the discrimination descriptions:

1) Direct discrimintaion: differential treatment on the grounds of age isn't discrimination if it's a proportionate means of achieving a legitimate aim.
a) Is this just saying that prices can still be varied by age as long as it genuinely reflects risks or costs?
b) If this is the case, is the point here that any premiums varying by age need to be based on appropriate data
2) indirect discrimination - please can you give me an example of such so that I can understand this better?

 

[Lynn Birchall]

Thanks, Lindsay. Please can you assist with my question below as well?

Hi
1 (a) yes, b) yes again
2. Indirect discrimination. I'll 'borrow' an example from the IFoA Match 2012 response to HM Treasury on the gender ruling. To quote from there:
"A review of the data may suggest that the health risk of a coal miner is greater than the health risk of the general population. Discussions with medical experts could suggest that the principal reason for the increased risk is the exposure to coal dust. However, it might also be argued that the risk is increased because the majority of coal miners are male, while the general population is made up of both males and females and so the observed mortality is compounded by the gender differential.
If a term assurance premium was calculated to meet the expected cost of claims, we would expect this to reflect both the exposure to dust and the gender mix. It may therefore be argued that this premium is indirectly discriminating against the coal miners on the basis of gender."

 

[Mbotha]

Hi
1 (a) yes, b) yes again
2. Indirect discrimination. I'll 'borrow' an example from the IFoA Match 2012 response to HM Treasury on the gender ruling. To quote from there:
"A review of the data may suggest that the health risk of a coal miner is greater than the health risk of the general population. Discussions with medical experts could suggest that the principal reason for the increased risk is the exposure to coal dust. However, it might also be argued that the risk is increased because the majority of coal miners are male, while the general population is made up of both males and females and so the observed mortality is compounded by the gender differential.
If a term assurance premium was calculated to meet the expected cost of claims, we would expect this to reflect both the exposure to dust and the gender mix. It may therefore be argued that this premium is indirectly discriminating against the coal miners on the basis of gender."

Thank you, Lynn