Agency, financial powers of attorney and living wills
Key Takeaways
An insurance licence does not give unlimited authority to bind an insurer. Determine the principal and authorized act in each transaction.
A financial attorney’s powers depend on the document and provincial law. Beneficiary changes can be restricted even where premium payments are authorized.
Living wills concern care wishes rather than general financial authority. A property power ordinarily ends at death, when estate authority must be established.
Authority to act for another person
Agency is a legal relationship in which one person, the agent, acts on behalf of another, the principal, within an authorized role. It can arise through express instructions or through circumstances recognized by law. The word “agent” in an insurance licence does not itself describe every legal agency relationship the intermediary has.
An insurance intermediary may be authorized by an insurer to solicit applications, collect specified payments or deliver policies. A client can also appoint someone to perform a particular task. Identify whose agent the person is for the act in question. Authority to collect an application is not automatically authority to approve underwriting or guarantee a claim.
Actual authority can be express or implied within an authorized role. Apparent authority concerns representations attributable to the principal that lead a third party reasonably to believe the person has authority. An agent cannot create apparent authority solely by announcing unlimited powers. The principal's conduct and the third party's reliance matter.
What a financial power of attorney does
A power of attorney appoints a person to act for the donor or adult within specified authority. The appointed attorney need not be a lawyer. Property authority can cover financial decisions such as paying premiums, managing investments or surrendering a contract, subject to the document and legislation.
A continuing or enduring power of attorney can remain effective during incapacity if it satisfies the jurisdiction's requirements. Some instruments take effect immediately; others have triggering conditions. The title of the form is not enough. Confirm its effective status, any restrictions, whether attorneys must act jointly and whether the requested transaction is authorized.
Ontario distinguishes a power of attorney for property from a power of attorney for personal care. Its power-of-attorney guidance explains those different purposes. A personal-care appointment is not a general authority to withdraw money from an insurance investment.
Beneficiary changes need particular care
Financial authority does not necessarily include authority to make a will or freely change an insurance beneficiary. Such changes can alter who benefits at death and create a conflict between the adult's interests and the attorney's personal interests. Provincial statutes contain specific restrictions and exceptions.
For example, BC Power of Attorney Act section 20 restricts beneficiary changes while allowing particular prescribed transactions, including certain replacements carrying forward an existing designation. That is why a blanket statement that an attorney can always change beneficiaries is wrong, but so is a blanket national statement that no beneficiary-related transaction can ever be permitted.
The insurer's legal review should establish whether the proposed action fits an exception and whether the existing rights are preserved. A form signed by an attorney does not itself prove substantive authority. Do not use a transfer as a disguised way to redirect proceeds to the attorney.
Duties and conflicts of the representative
An attorney managing property must meet the applicable fiduciary and statutory duties, including acting within authority and for the adult's interests. Keeping accounts and avoiding unauthorized personal benefit are important practical controls. The document and legislation can restrict gifts, loans and compensation.
Suppose an attorney proposes surrendering the adult's life policy and investing the proceeds in the attorney's own business. This presents a serious conflict and possible unauthorized benefit. The agent should pause, seek compliance and legal review and preserve a record of the proposed instructions. A general property clause is not a waiver of duties.
An insurance adviser who is also appointed as a client's attorney faces a separate professional conflict. Provincial conduct rules and insurer procedures can restrict that relationship. Disclosure alone may not adequately protect the client. Obtain the relevant regulator's expectations and consider independent advice rather than assume a uniform family-member exception applies throughout Canada.
Personal care and advance wishes
A living will or advance directive generally expresses wishes about health or personal-care decisions. Its terminology and legal effect vary by jurisdiction. It is not a substitute for a financial power of attorney, an insurance beneficiary designation or a will disposing of estate property.
A client might express a preference concerning treatment if seriously ill. That instruction does not ordinarily empower a relative to surrender the client's annuity or alter the insurance contract. A long-term-care claim may require medical and functional evidence while a representative's financial authority is verified separately.
Do not infer financial incapacity merely because a client has prepared advance wishes. Planning for possible future incapacity can be a responsible step by a fully capable adult. Explain documents by their functions without treating them as evidence that the client cannot presently decide.
Death ends the ordinary property mandate
A property power of attorney ordinarily ends at the adult's death. Authority over estate property then comes from the estate-administration framework. The same person may become executor, but that is a different legal role requiring the relevant evidence.
For example, an attorney who paid premiums during the adult's illness cannot continue giving new ownership instructions after death simply by showing the old power. The insurer must establish the insured event, beneficiary entitlement or ownership succession and the representative's post-death authority.
Checking an instruction
Use a deliberate sequence:
- Identify the owner and proposed signer.
- Obtain the complete authority instrument and any necessary evidence that it is effective.
- Check restrictions, joint-signature requirements and conflicting beneficiary or assignee rights.
- Refer unusual gifts, beneficiary changes or personal-benefit transactions for legal review.
- Keep a record of what was reviewed and the insurer's decision.
If an authorized attorney asks to pay an overdue premium, that action may preserve the adult's protection. If the same attorney asks to redirect the death benefit to themselves, the legal analysis changes substantially. The signature is the same; the nature and consequences of the instruction determine whether authority is sufficient.
An attorney paid premiums during an adult’s illness and seeks new policy instructions after the adult dies. What changes?
The property power ordinarily ends, so post-death authority must be established separately.
The property power becomes permanent authority over every estate asset.
The attorney automatically becomes the policy beneficiary.
The insurer must accept any instruction bearing the old signature.
A client has signed a living will. What does that establish by itself?
It gives any relative authority to surrender all policies.
It expresses personal-care or treatment wishes according to applicable law, rather than general authority over insurance investments.
It replaces every beneficiary designation.
It proves the client currently lacks financial capacity.
Sections you finish are checked off in the contents.