Bill 162, introduced in the Ontario Legislature on October 3, 2017, will amend section 115 of the Insurance Act to allow life insurance policyholders to sell their policy so long as they meet certain requirements under the Act.
Previously, only licensed insurers or their authorized agents could sell life insurance policies. The proposed rules allow an insurance policy to be sold if the policy is held by the original policyholder, or the original policy holder and a related person under the Income Tax Act (Canada), and if the person who purchases the policy meets prescribed requirements (which have yet to be defined).
The move is likely to have interesting estate and tax implications if policyholders can sell the policy prior to death. The Bill's sponsor, MPP Mike Colle, said: "if passed, this bill would allow Ontario seniors to do what they can do all over the United States... that is... at a certain time in their life they have the option to sell their life insurance policy so they can get their money back so they can take care of themselves or loved ones when their savings run out."
In any event, we will have to wait to see if the proposed changes eventually become law.
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