Premium offset class actions
regarding Canada Life policies in Canada
Please read this entire notice carefully. It may affect your legal rights.
Why you have received this notice
You have received this notice because you own one or more participating whole
life insurance policies issued in Canada by The Canada Life Assurance Company
(Canada Life) between January 1, 1980 and December 31, 1997, that either
- were in effect on February 1, 2001 or
- ended between January 1, 1992 and February 1, 2001 because they lapsed or
were surrendered.
This notice does not apply to any policy you may own that was originally issued
by New York Life Insurance Company, New York Life Insurance Company of Canada
or Crown Life Insurance Company.
Class action legal proceedings were initiated in Quebec, Ontario and British
Columbia against Canada Life relating to the sale of these participating whole
life policies.
A class action is a legal proceeding started by one or more people on behalf
of a larger group. This group is called a class. You have received a copy of
this notice because you own one or more of the policies listed above. This makes
you a member of the class affected by these legal proceedings.
The letter from Canada Life in this package includes a list of the policies
you own that meet the above criteria, and whether you are a member of the Quebec,
Ontario or British Columbia class.
This notice:
- informs you that the courts have authorized (or certified) the legal proceedings
as class actions. This means that the courts have decided that these lawsuits
meet the requirements to be designated as class actions
- informs you that a settlement agreement to resolve these legal proceedings
has been reached between Canada Life and the plaintiffs, the individuals who
began the lawsuits against Canada Life in Quebec, Ontario and British Columbia
- informs you that the courts in these provinces have approved the settlement
agreement
- informs you that Canada Life, with the courts’ approval, has decided
to extend the same settlement terms to policyholders in all other provinces and
territories in Canada
- describes your rights and options as a class member under the settlement
agreement.
In this notice, you and your refer to you, the policyholder and class member.
The reason for the legal proceedings
The legal proceedings were initiated by certain policyholders who feel that
they were given incorrect or incomplete information about premium offset or premium
abridgement when they bought their policies. This information relates to the
number of premium payments policyholders would have to make.
The settlement agreement
The settlement agreement applies to the owners of participating whole life
policies described above. Canada Life has entered into the settlement to provide
a fair response to policyholders’ concerns and to resolve the lawsuits,
not as an admission of liability.
The courts approved the settlement agreement, and authorized the class action
proceedings on the following dates:
- in Quebec, on March 30, 2001 by the Honourable Mr. Justice Crête
- in Ontario, on April 4, 2001 by the Honourable Mr. Justice Cumming
- in British Columbia, on April 2, 2001 by the Honourable Chief Justice Brenner.
What the settlement agreement means to you
Under the settlement agreement, Canada Life will provide settlement benefits
that will be added to the benefits provided under your policy. This applies to
any policy you own with Canada Life that meets the criteria listed above. If
you accept the settlement benefits under the settlement agreement, you won’t
be able to start legal proceedings or make any other claim against Canada Life
relating to the sale of your policy, other than what is provided for in the settlement
agreement.
You have three options under the settlement agreement. You can:
1. Receive the general settlement benefits.
You don’t have to do anything to receive the general settlement benefits.
See the section General settlement benefits for a description of what
you’ll receive.
2. Request an independent review of your situation.
You may want to choose this option if you feel you received incorrect information
about premium offset when you bought your policy. Depending on the outcome of
your review, you may receive additional settlement benefits as well as the general
settlement benefits.
See the section Independent review process for information on what
you have to do to initiate this review.
3. Opt out of the settlement agreement.
Choosing this option means that you will not be part of the class action and
you don’t agree to the terms of the settlement agreement. You won’t
receive any settlement benefits under the settlement agreement if you choose
this option.
See the section Opting out of the settlement agreement for information
on what you have to do to choose this option.
General settlement benefits
General settlement benefits for class members who still owned their policy
on February 1, 2001.
You will receive the first benefit listed below and, depending on your policy,
you may also receive the second benefit. You don’t have to do anything to
receive these settlement benefits. They will be automatically applied to your
policy, unless you opt out of the settlement agreement.
1. Increase in your annual policy dividend
Since you are a participating policyholder, you receive policy dividends annually.
Dividends vary from year to year and are not guaranteed. Under the settlement
agreement, your annual dividend will be increased. Canada Life will calculate
the dividend by using an interest rate that is 0.25% higher than it would otherwise
have been. This increase will apply for three years, starting on the anniversary
of your policy after December 31, 2001.
2. Reduction in the cost of additional term insurance
Some policies use policy dividends to buy additional one-year term insurance,
for example, policies with an enhanced coverage option. If your policy currently
uses dividends in this way, under the settlement agreement Canada Life will reduce
the cost of this term insurance by 10%. You will receive this reduction for three
years, starting on the anniversary of your policy after December 31, 2001.
General settlement benefit for class members whose policy ended between January
1, 1992 and February 1, 2001 because it lapsed or was surrendered.
Under the settlement agreement, policyholders in this category may buy a new
life insurance policy and Canada Life will reduce the amount of the premium for
the first year by 50%. You must meet Canada Life’s standard requirements
for issuing a policy.
Independent review process
You may submit a claim to have your situation reviewed through the independent
review process if you want to apply for additional settlement benefits as well
as the general settlement benefits.
What is the independent review process?
The independent review process provides you with an opportunity to have your
claim reviewed by an independent adjudicator. The independent adjudicator will
assess your claim based on criteria approved by the courts.
Depending on the outcome of the review, you’ll receive the additional
settlement benefits described below as well as the general settlement benefits.
Why would you participate in the independent review process?
You may want to participate in the independent review process if you feel
that the sales representative who sold you your policy made a misrepresentation
about premium offset to you. For this purpose, the misrepresentation must be
an incorrect statement that meets all of the following conditions:
- the sales representative told you that one of the following was fixed and
could not change:
– the date on which dividends accumulated in your policy, together with
future dividends, would be sufficient to pay all future premiums. This is called
the premium offset date or abridgement date
– the number of payments you would have to make to pay for the policy in
full
- the sales representative made the misrepresentation to you before you bought
your policy, or at any time up to 10 days after your policy was delivered, and
- you relied on the misrepresentation when you bought your policy, or when
your policy was delivered and you decided to keep it.
- What do you need to do to participate in the independent review process?
- If you want to participate in the independent review process, here are the
steps you’ll need to follow:
- complete the election form on page 3 of your letter from Canada Life, indicating
you would like to make a claim
- tear off the form and return it to Canada Life within 45 days of receiving
this notice.
Canada Life will then send you a claims package, including a policyholder
claim form. You must fill out this form, ensure it is fully and properly completed,
and attest to the truth of the contents of the form. To do this, you must go
to someone authorized to administer oaths. You must then return the form to Canada
Life within 30 days of receiving it.
On this form, you must state that a misrepresentation as described above was
made and that you relied on it when you bought your policy. You will also need
to include any relevant written evidence, which will be explained on the claim
form.
Once Canada Life has received your claim form, they will send a form to the
sales representative who sold you your policy. If Canada Life doesn’t receive
the completed sales representative form within 30 days of sending it, you will
have an opportunity to follow up with the representative. Canada Life will send
the sales representative form to you along with that person’s last known
address. If you want the independent adjudicator to review evidence from the
sales representative as part of your claim, you’ll then have 30 days to
locate the sales representative, have them complete the form and return it to
Canada Life.
How will the independent adjudicator review your claim?
The independent adjudicator will review all the documents relating to your
claim. These documents will consist of your completed claim form, a completed
sales representative form if one is provided, evidence you give to Canada Life
and any evidence from Canada Life’s files.
The independent adjudicator will group the evidence as follows:
- written evidence that clearly and unambiguously confirms the misrepresentation.
This evidence must have been given to you before the sale of your policy or at
any time up to six months after your policy was issued
- written evidence that clearly and unambiguously contradicts the misrepresentation.
This evidence must have been given to you before the sale of your policy or at
any time up to six months after your policy was issued
- other evidence that tends to confirm the misrepresentation, called plus factors
- other evidence that tends to contradict the misrepresentation, called minus
factors.
The courts have approved a list of the specific plus and minus factors as
part of the settlement agreement. Please see Appendix A at the end of this notice
for a list of these factors.
Once the evidence relating to your claim has been sorted into the above groups,
the independent adjudicator will decide what additional settlement benefits you
should receive.
If there is written evidence that clearly contradicts your claim, your claim
will be dismissed.
When you bought your policy, your sales representative may have given you
sales materials produced by Canada Life or a printed document (called an illustration)
showing the payments you would have to make on your policy and when the premium
offset date could occur. If the sales materials or illustration are the original
standard ones used by Canada Life and haven’t been changed in any way, they
will not count as written evidence.
What are the additional settlement benefits you may receive from the independent
review process?
Depending on the strength of the evidence in your claim, claimants will be
assigned to one of the following four categories. Claimants in all categories
will receive the general settlement benefits. Claimants in Categories A, B and
C will also receive additional settlement benefits, consisting of a new premium
offset date guaranteed by Canada Life, called the guaranteed premium offset date.
Category A
Claimants in this category will have all of the following:
- a fully completed policyholder claim form
- written evidence that clearly confirms the misrepresentation, or at least
three more plus factors than minus factors
- no written evidence that clearly contradicts the misrepresentation.
If the independent adjudicator concludes that you’re in this category,
you won’t have to make any cash premium payments after the premium offset
date you were advised of when you bought your policy. This date will be your
guaranteed premium offset date.
Category B
Claimants in this category will have all of the following:
- a fully completed policyholder claim form
- at least two more plus factors than minus factors
- no written evidence that clearly contradicts the misrepresentation.
If the independent adjudicator concludes that you’re in this category,
you won’t have to make any cash premium payments after a date determined
as follows:
- Canada Life will first calculate the number of months between the premium
offset date you were advised of when your policy was issued and the premium offset
date determined on February 1, 2001
- Canada Life will then calculate the number of months equal to 30% of this
number
- Canada Life then adds the additional number of months to the premium offset
date you were advised of when your policy was issued.
This new date will be your guaranteed premium offset date.
Category C
Claimants in this category will have all of the following:
- a fully completed policyholder claim form
- one more plus factor than minus factors
- no written evidence that clearly contradicts the misrepresentation.
If the independent adjudicator concludes that you’re in this category,
you won’t have to make any cash premium payments after a date determined
as follows:
- Canada Life will first calculate the number of months between the premium
offset date you were advised of when your policy was issued, and the premium
offset date determined on February 1, 2001
- Canada Life will then calculate the number of months equal to 70% of this
number
- Canada Life then adds the additional number of months to the premium offset
date you were advised of when your policy was issued.
This new date will be your guaranteed premium offset date.
Category D
Claimants in this category will have one or more of the following:
- a number of minus factors that is equal to or more than the number of plus
factors
- written evidence that clearly contradicts the misrepresentation
- a claim that doesn’t meet the definition of misrepresentation as described
above
- an incomplete policyholder claim form.
If the independent adjudicator concludes that you’re in this category,
you will only receive the general settlement benefits described above.
Canada Life may, at their discretion, give increased benefits to policyholders
or award them the benefits under Category A without a review by the independent
adjudicator.
Conditions for receiving the additional settlement benefits
Once the independent adjudicator has completed their review, Canada Life will
send you an agreement that you must sign before you can receive any additional
settlement benefits awarded. The agreement states that:
- You will pay premiums in cash up to the guaranteed premium offset date you
are awarded in the independent review process. After the guaranteed premium offset
date, premiums will be paid from the annual dividend and built-up dividend values.
If the annual dividend and built-up dividend values are not sufficient to pay
the premiums, they will be paid from an additional dividend from Canada Life.
If you have paid premiums after the guaranteed premium offset date, they will
be refunded to you out of the dividend values.
- Canada Life will not be required to award the guaranteed premium offset date
if you do any of the following:
- borrow from, withdraw or surrender the dividend values of your policy
- change your policy’s dividend option
- transfer the policy to another person or make any other changes unless Canada
Life agrees
- fail to pay premiums when they are due, up to the guaranteed premium offset
date.
However, you may still change your beneficiary, borrow against the policy’s
guaranteed cash value and surrender the policy.
- You will transfer to Canada Life your rights against the sales representative.
This means you can’t start any legal proceedings against the sales representative.
Can you appeal the decision of the independent adjudicator?
You can appeal the decision of the independent adjudicator to the court and
the rules of the court will apply. Your appeal will succeed only if the decision
is clearly unreasonable.
Other information about the independent review process
If you’ve made changes to your policy that could have caused the premium
offset date to be delayed, you must, at your expense, reverse the change and
put your policy back to the way it was before the change was made before you
can receive any additional settlement benefits in the independent review process.
For example, if you borrowed money from your policy, you may have to pay the
loan back in full.
You can’t participate in the independent review process if:
- you’ve already made a claim or submitted a complaint to Canada Life
about your premium offset date, and
- Canada Life agreed that you wouldn’t have to pay any premiums after
the premium offset date you were advised of when you bought your policy.
If you’ve already made a claim or submitted a complaint to Canada Life
about your premium offset date but Canada Life did not adjust your premium offset
date to the date you were advised of when you bought your policy, you can still
receive additional settlement benefits in the independent review process. However,
if Canada Life adjusted your policy in any other way, you must reverse the change
and put your policy back to the way it was before the change was made, at your
expense, and pay a $200 fee to Canada Life. You must also give up your rights
to any other benefits you received.
You can’t participate in the independent review process if, at the time
you bought your policy, you were:
- a licensed life insurance representative
- a corporation controlled by a licensed life insurance representative
- a spouse or child of a licensed life insurance representative.
- If your policy ended between January 1, 1992 and February 1, 2001, because
it lapsed or you surrendered it, you may only receive additional settlement benefits
if:
- the lapse or surrender was a result of a misrepresentation made to you as
described above under Why would you participate in the Independent review process?
and
- you put your policy back to the way it was before it lapsed or you surrendered
it, at your expense.
Opting out of the settlement agreement
If you wish, you may choose to opt out and exclude yourself from the settlement
agreement. If you do this, you will not be entitled to receive any of the general
settlement benefits provided under the settlement agreement or make a claim under
the independent review process.
However, you will be entitled to exercise any other options available to you
as a policyholder, such as starting your own legal proceeding or making any other
claim against Canada Life or a sales representative regarding your policy.
To opt out, you need to do the following:
- fill out the opt out section on the election form on page 3 of your letter
from Canada Life
- tear off the form and return it to Canada Life within 45 days of the day
you receive this notice.
Other considerations
You are bound by the terms of the settlement agreement, unless you opt out.
This means that you will not be able to initiate any other claim or legal proceedings
against Canada Life or their sales representatives for:
- anything that was represented, misrepresented or omitted when you bought
your policy
- anything that may occur as a result of offering or administering the settlement
benefits under this settlement agreement.
If there is any difference between the settlement agreement and this Notice
of certification and approval of settlement agreement, the terms in the settlement
agreement will apply.
Canada Life isn’t responsible for any income tax consequences as a result
of any settlement benefits you receive. You may wish to consult a tax adviser
about your situation.
If you have questions or need help
If you have any questions about the settlement process or would like to receive
a copy of the settlement agreement, you can call the Canada Life toll-free information
line at 1-866-285-5502. Please note that there is a $20 charge to cover the cost
of copying and mailing the settlement agreement. You can also read the settlement
agreement at www.canadalife.ca/en/premoffset.
The law firms representing class members in Quebec, Ontario and British Columbia
are also available to answer any questions you have about the settlement process
and the independent review process. However, they are not able to assist you
in preparing a claim in the independent review process. Their contact information
is on the next page. Canada Life will pay the reasonable legal fees and expenses
of these law firms, for services in connection with negotiating and implementing
the settlement agreement.
You don’t need to have a lawyer to participate in the independent review
process. However, if you decide to hire a lawyer, you’re responsible for
paying their fees and expenses.
The following courts have approved the publication of this notice:
Ontario Superior Court of Justice
361 University Avenue
Toronto, Ontario M5G 1E6
Case name: Gibbs and Jarvis v. Canada Life
Court file number: 1712/97, Hamilton
Supreme Court of British Columbia
The Law Courts
800 Smithe Street
Vancouver, B.C. V6Z 2E1
Case name: Godding v. Canada Life
Court file number: C975356, Vancouver registry
Quebec Superior Court
1 Notre Dame Street East
Montreal, Quebec H2Y 1B6
Case name: Cope v. Canada Life
Court file number: 500-06-000051-975, Montreal.
Law firms representing the class members
Listed below are the law firms representing the class members in the three
class actions. These law firms are available to answer any questions you have
about the settlement process and the independent review process.
Ontario
Scarfone Hawkins LLP
Barristers & Solicitors
Standard Life Centre
Suite 1050
120 King Street West
Box 926, Depot #1
Hamilton, Ontario L8N 3P9
Telephone number: (905) 523-1333
Fax number: (905) 523-5878
Website: www.classactionlaw.ca
Quebec, New Brunswick, Newfoundland, Nova Scotia
and Prince Edward Island
Lauzon Belanger
Barristers & Solicitors
511 Place D’Armes, bureau 200
Montreal, Quebec H2Y 2W7
Telephone number: (514) 287-1000
Fax number: (514) 844-7009
Website: www.lauzonbelanger.qc.ca
British Columbia, Alberta, Saskatchewan, Manitoba,
Yukon, Northwest Territories, Nunavut
Poyner Baxter Poyner
Barristers & Solicitors
408 – 145 Chadwick Court
North Vancouver, B.C. V7M 3K1
Telephone number: (604) 988-6321
Fax number: (604) 988-3632
Website: www.poynerbaxter.com
Law firms representing Canada Life
If your lawyer wishes to discuss the settlement agreement
with the lawyers representing Canada Life, they may contact them at the addresses
and numbers below.
McCarthy Tetrault
Attention: Tom Curry
Suite 4700, Toronto Dominion Centre
T-D Bank Tower
Toronto, Ontario M5K 1E6
Telephone number: (416) 362-1812
Fax number: (416) 601-8245
McCarthy Tetrault
Attention: Louis Brousseau
1170 rue Peel
Montreal, Quebec H3B 4S8
Telephone number: (514) 397-4100
Fax number: (514) 875-6246
Branch MacMaster
Attention: Ward Branch
1210-777 Hornby Street
Vancouver, B.C. V6E 3G2
Telephone number: (604) 654-2966
Fax number: (604) 684-3429
Appendix A
Plus and minus factors
If you submit a claim to the independent review process, an independent adjudicator
will review your claim based on the evidence submitted. This may include evidence
which can be categorized as plus and minus factors. Below is a list of the specific
plus and minus factors that have been approved by the courts.
For complete details on the independent review process, including an explanation
of misrepresentation, please see the section Independent review process.
Plus factors
Evidence that tends to confirm that a misrepresentation was made as described
in the section Why would you participate in the independent review process? is
called a plus factor. A plus factor must meet one of the following conditions:
- any written document that the sales representative gave you that tends to
support the claim of misrepresentation, but does not clearly and unambiguously
confirm it
- a sales representative form completed by the sales representative, confirming
that they made the misrepresentation. The sales representative must have attested
to the truth of the contents of the form before someone authorized to administer
oaths
- a written statement from anyone, other than the sales representative, who
witnessed the presentation the sales representative made to you at the time you
bought your policy. This statement must independently confirm the misrepresentation.
The person making the statement must have attested to the truth of the statement
before someone authorized to administer oaths
- prepayment of all the policy premiums required up to the premium offset date
you were advised of when your policy was issued. These premiums must have been
paid no later than six months after your policy was issued
- a material change made by the sales representative to the original standard
illustration used by Canada Life. The sales representative must have made this
change no later than six months after your policy was issued.
Minus factors
Evidence that tends to contradict that a misrepresentation was made as described
in the section Why would you participate in the independent review process? is
called a minus factor. A minus factor must meet one of the following conditions:
- any written document you received that tends to contradict the claim of misrepresentation,
but does not clearly and unambiguously contradict it
- a sales representative form completed by the sales representative, denying
that they made the misrepresentation. The sales representative must have attested
to the truth of the contents of the form before someone authorized to administer
oaths
- a written statement from anyone, other than the sales representative, who
witnessed the presentation the sales representative made to you at the time you
bought your policy. This statement must deny the misrepresentation. The person
making the statement must have attested to the truth of the statement before
someone authorized to administer oaths
- the fact that, before you bought your policy, you received advice regarding
the cost and value of your policy from an accounting, tax, legal, financial,
insurance, actuarial or estate planning advisor not associated with Canada Life
- the fact that you received more than one original standard illustration used
by Canada Life and the only difference between them was the dividend level used.
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