New CLHIA/Industry Requirement - ‘Reason Why Letter’
Effective July 1, 2018, The Canadian Life and Health Insurance Association (CLHIA), industry regulators and insurance carriers will require advisors to ensure clients receive a ‘reason why letter’ which should provide a brief summary to help clients understand the product recommendation, the transaction being completed and the reasons why a product was purchased. This will give you plenty of time to implement into your practice.
Providing this letter to clients will assist you in providing better service to clients which can lead to increased sales. If an insurance carrier or regulator receives a complaint from a client, they will ask to see any documentation gathered through the fact finding process and will expect to see proof of this letter. This documentation can be very helpful in defending you against a claim that the product you recommended was not suitable for the client’s needs.
A Reason why letter should include:
|Fees (for seg funds only)|
You are not required to send a letter if:
- You already provide a communication to your client through a different process that contains the required information
- The Life Insurance Replacement Declaration (LIRD) outlines the required information
For more information, view the CLHIA document, The Approach: Serving the Client Through Needs-Based Sales Practices, in PPG secure advisor Virtigate or Carrier’s website or at the CLHIA website.
PPFS Management/Bridgeforce Pacific Place Inc.