Principal Issues: A hypothetical universal life policy providing for multi-life coverage specifically provides for the addition of life insureds. The policy is owned by an individual, H, and provides for individual coverage of $100,000 on each of H and his wife, W. If the policy is amended to add $100,000 of coverage on a joint last to die basis and to drop the individual coverages, is there a disposition for the purposes of section 148 of the Act? Does paragraph 148(10)(d) apply by virtue of the provision providing for the addition of lives? Would it be relevant if the policy contained a provision permitting the substitution of lives insured?
Position: It is a question of fact whether or not changes to a particular policy are sufficiently material to cause a surrender of an interest in that policy and the acquisition of an interest in a new policy. This determination can only be made on a case by case basis, having regard to all the provisions of the policy. In this case, it would not be relevant whether or not the policy contained a provision allowing the addition of lives insured or the substitution of lives insured.
Reasons: The CCRA's view is that a change in the lives insured under a policy would be a sufficiently material change to cause a surrender of an interest in that policy and the acquisition of an interest in a new policy. However, the CCRA considers joint last to die coverage to be insurance in respect of each of the lives subject to the joint coverage. Thus, the addition of joint last to die coverage to a policy providing for multi-life coverage on the same individuals would not constitute the addition of a life insured. For this reason, in this case a provision in the policy providing for the addition or for the substitution of lives would not be relevant in assessing whether or not the change was sufficiently material to cause a disposition for the purposes of section 148.
