Red flags specific to life insurance or annuity providers

In addition to other red flags, we have identified the following specific red flags relevant to our business and industry:

• Client wants to use cash for a large transaction.
• Client proposes to purchase an insurance product using a cheque drawn on an account other than his or her personal account.
• Client requests an insurance product that has no discernible purpose and is reluctant to divulge the reason for the investment.
• Client who has other small policies or transactions based on a regular payment structure makes a sudden request to purchase a substantial policy with a lump sum payment.
• Client conducts a transaction that results in a conspicuous increase in investment contributions.
• Scale of investment in insurance products is inconsistent with the client’s economic profile.
• Unanticipated and inconsistent modification of client’s contractual conditions, including significant or regular premium top-ups.
• Unforeseen deposit of funds or abrupt withdrawal of funds.
• Involvement of one or more third parties in paying the premiums or in any other matters involving the policy.
• Overpayment of a policy premium with a subsequent request to refund the surplus to a third party.
• Funds used to pay policy premiums or deposits originate from different sources.
• Use of life insurance product in a way that resembles use of a bank account, namely making additional premium payments and frequent partial redemptions.
• Client cancels investment or insurance soon after purchase.
• Early redemption takes place in the absence of a reasonable explanation or in a significantly uneconomic manner.
• Client shows more interest in the cancellation or surrender of an insurance contract than in the long-term results of investments or the costs associated with termination of the contract.
• Client makes payments with small denomination notes, uncommonly wrapped, with postal money orders or with similar means of payment.
• Changing the duration of the life insurance contract from the original purpose and intended use.
• The first (or single) premium is paid from a bank account outside the country.
• Client accepts very unfavourable conditions unrelated to his or her health or age.
• Transaction involves use and payment of a performance bond resulting in a cross-border payment.
• The same beneficiary for multiple policies.
• Relationship between the policy holder and the beneficiary is not clearly established.