Content Options

COBS 16.6 Communications to clients - life insurance, long term care insurance and income withdrawals 2

Disclosure for life insurance contracts: information to be provided during the term of the contract

COBS 16.6.1RRP
3
  1. (1)

    This section applies to a long-term insurer, unless, at the time of application, the client, other than an EEA ECA recipient, was habitually resident:3

    1. (a)

      in an EEA State other than the United Kingdom; or

    2. (b)

      outside the EEA and he was not present in the United Kingdom.

  2. (2)

    In addition, COBS 16.6.8 R applies to an operator of a personal pension scheme or stakeholder pension scheme in relation to a retail client who elects to make income withdrawals.

    3
COBS 16.6.2RRP
4
  1. (1)

    The policyholder must be informed if during the term of a life policy entered into on or after 1 July 1994 there is any change in the following information:4

    1. (a)

      the policy conditions;4

    2. (b)

      the name of the insurer, its legal form or the address of its head office and, where appropriate, of the agency or branch which concluded the contract; and4

    3. (c)

      the information in (8) to (13) of COBS 13 Annex 1 (The Solvency II Directive information) in the event of a change in the policy conditions or amendment of the law applicable to the contract.4

  2. (2)

    A notification in (1) must be made: 4

    1. (a)

      in a clear and accurate manner and in writing; and4

    2. (b)

      in an official language of the State of commitment or in another language if the policyholder so requests and the law of the State of commitment so permits or the policyholder is free to choose the law applicable.4

[Note: article 185(5) and (6) of the Solvency II Directive4]

4
COBS 16.6.3RRP

If a life policy entered into on or after 1 July 1994 provides for the payment of bonuses and the amounts of bonuses are unspecified, the long-term insurer must, in every calendar year except the first, either:

  1. (1)

    notify the policyholder in writing of the amount of any bonus which has become payable under the contract, and which has not previously been notified under this rule; or

  2. (2)

    give the policyholder in writing sufficient information to enable him to determine the amount of any such bonus.

[Note: in respect of (1), article 185(5) of the Solvency II Directive]4

COBS 16.6.3ARRP

4If a firm provides figures, on or after 1 January 2016, about the potential future development of bonuses under a with-profits policy it must inform the policyholder annually in writing of any differences between the actual bonuses payable to date and the figures previously provided.

[Note: article 185(5) of the Solvency II Directive]

COBS 16.6.4RRP
  1. (1)

    When a firm provides information in accordance with this section, it must provide the information in a durable medium, unless (2) applies.

  2. (2)

    If the contract is being made by telephone, the firm may give the information orally to the customer. If the customer enters into the contract, a written version of the required information must be sent to the customer within five business days of the contract being entered into.

COBS 16.6.5RRP

Where a life policy is effected jointly, the information required by this section may be sent to the first named client.

COBS 16.6.6RRP

A firm must make an adequate record of information provided to a customer under this section and retain that record for a minimum period after the information is provided of five years.

Long term care insurance

COBS 16.6.7RRP

1At each anniversary of the date on which a long-term care insurance contract which is based on single premium investment bonds was entered into, the insurer must:

  1. (1)

    provide the retail client with a table based on the format of COBS 13 Annex 3 2.2R containing at least the current fund value and projected future policy values (as in column "What you might get back");

  2. (2)

    where it is the case, inform the retail client of the possibility that future policy values may be insufficient to fulfil the original purpose of the contract; and

  3. (3)

    inform the retail client how to obtain advice on investments in respect of long-term care insurance contracts, and that it is in his best interest to do so.

Income withdrawals

COBS 16.6.8RRP

1At intervals no longer than 12 months from the date of an election by a retail client to make income withdrawals or one-off, ad-hoc or regular uncrystallised funds pension lump sum payments5, the relevant operator of a personal pension scheme or stakeholder pension scheme 3must:

3
  1. (1)

    provide the retail client with such information as is necessary for3 the retail client to review the election, including where relevant the information required by COBS 13 Annex 2 2.9R3; and

    3
  2. (2)

    inform the retail client how to obtain advice on investments in respect of his income withdrawals, and that it would be in his best interests to do so.

COBS 16.6.9GRP

5The information provided to the retail client in COBS 16.6.8R(1) is likely to be sufficient for the client to review the election if it contains at least one of the following:

  1. (1)

    the information required by COBS 13 Annex 2 2.9R (Additional requirements: drawdown pensions and regular uncrystallised funds pension lump sum payments); or

  2. (2)

    the effect of any significant one-off withdrawals or payments since the previous information was provided; or

  3. (3)

    (where regular income is being taken) information about the sustainability of the client’s income over time, which may refer to:

    1. (a)

      the proportion of the fund remaining since outset; or

    2. (b)

      an indication of when the fund may cease to exist; or

    3. (c)

      the rate of withdrawals or payments relative to a sustainable rate.