19.2.1. New Life Policies—right to cancel

Subject to COB 19.2.3 and 19.2.4, a Retail Client has a right to cancel a new Life Policy effected by an Insurer. Guidance An Insurer may voluntarily provide additional cancellation rights, or rights exercisable during a longer period than allowed under COB 19.2, but, if it does so, these should be on terms similar to those in COB 19.2.

19.2.2. Variations of Life Policies—right to cancel

(1) Subject to COB 19.2.3 and 19.2.4, a Retail Client has a right to cancel an existing Life

Policy effected by an Insurer if the policy is varied and the variation has the effect of:

1. (a) increasing regular premiums or payments, or a single premium or payment, by more than 25% on the original premium or payment (or the previous highest agreed premium or payment); or
2. (b) introducing fresh policy terms; or
3. (c) imposing on the Client additional or increased obligations under the policy; or
4. (d) reducing, or otherwise materially altering, the Client’s benefits under the policy.

(2) This rule does not apply to the variation of a Life Policy if:

1. (a) the variation is the result of a pre-selected option; or
2. (b) the variation arises out of the settlement of a claim for damages or compensation connected with a previous contract.

19.2.3. Life policies—when cancellation right can be exercised

(1) A Retail Client may exercise a cancellation right in relation to a Life Policy effected by an Insurer with the Client only during the cancellation period for the investment.

(2) For a new Life Policy, the cancellation period:

1. (a) starts on the day the Insurer, or relevant Insurance Intermediary, gives the Retail Client a policy document containing all the terms of the policy under COB 5.6.9

(Life policies—provision of policy document); and

1. (b) ends at the end of 30 days after that day.

(3) For an existing Life Policy that is varied, the cancellation period:

1. (a) starts on the later of the following:
2. (i) the day the Insurer, or relevant Insurance Intermediary, tells the Retail Client that the variation has taken effect;

(ii) the day the Insurer, or relevant Insurance Intermediary, gives the Retail Client a written copy of the variation;

(iii) the day the Insurer, or relevant Insurance Intermediary, gives the Retail Client the Product Disclosure Document or disclosure documentation required by COB 5.6.2 (Product disclosure document—provision requirement) for the variation; and

1. (b) ends at the end of the 30 days after that day.

19.2.4. Life policies—exercising cancellation right

(1) This rule applies if a Retail Client has a right under COB 19.2.1 (New Life Policies—right to cancel) or COB 19.2.2 (Variations of Life Policies—right to cancel) to cancel a Life Policy effected by an Insurer with the Client.

(2) The Retail Client may exercise the cancellation right by giving notice of the exercise of the right to the Insurer in a durable medium.

(3) Without limiting subrule (2), if the Retail Client exercises the right in accordance with information given to the Client by the Insurer, the Client is taken to have complied with the subrule.

(4) The notice need not use any particular form of words and it is sufficient if the intention to exercise the right is reasonably clear from the notice or the notice and the surrounding circumstances.

(5) The notice need not give reasons for the exercise of the right.

(6) If the Retail Client exercises the cancellation right by sending notice to the Insurer at the address given to the Client by the firm for the exercise of the right and the notice is in a durable form accessible to the firm, the notice is taken to have been given to the firm when it is sent to the firm at that address.

19.2.5. Life policies—consequences of cancellation

(1) This rule applies if a Retail Client exercises a right under COB 19.2.1 or COB 19.2.2 to cancel a Life Policy effected by an Insurer with the Client.

(2) The Life Policy is terminated.

(3) For a new Life Policy, the Insurer must pay the Retail Client an amount equal to the total of the amounts paid by the Client in relation to the Life Policy.

(4) The amount must be paid to the Retail Client without delay and no later than 30 days after the day the cancellation right is exercised.

(5) For a new Life Policy, the Retail Client must, if required by the Insurer, pay the firm an amount of no more than the total of:

1. (a) amounts received, and the value of property or services received, by the Client in relation to the Life Policy; and
2. (b) losses incurred by the firm because of market movements in relation to relevant contracts if the losses are incurred on or before the day the cancellation right is exercised.

(6) Subrule (5) only applies if the Insurer can demonstrate that the Retail Client was given, under COB 5.6.2 (Product disclosure document—provision requirement), details of the amount that the Client may be required to pay if the Client cancelled the contract.

(7) However, subrule (5) (b) does not apply in relation to a contract established on a regular or recurring premium or payment basis.

(8) An amount payable by the Retail Client under subrule (5) must be paid to the Insurer without delay and no later than 21 days after the day the Client receives written notice from the firm requiring payment of the amount.

(9) For an existing Life Policy, the Insurer must pay the Retail Client an amount equal to the cash surrender value (if any) of the policy.

(10) The amount must be paid to the Retail Client without delay and no later than 30 days after the day the cancellation right is exercised.

(11) Any amounts payable under this rule are simple contract debts and, for a new Life Policy, the amounts payable may be set off against each other.