Insurance And Financial Planning

The FNA involves analyzing the client’s financial needs from information gathered in the information collection (to fully understand them, and in particular their existing insurance contracts, their personal and financial situation, and their objectives. If the insurance product in mind for the client includes an investment component, the FNA must also include their investor profile.)

The needs analysis is fundamental because it allows the advisor to determine the difference between the client’s current situation and what they are planning, as well as the best ways to bridge this gap. The advisor therefore evaluates whether the client and their family are sufficiently covered given the client’s current financial resources.

The information collected and used for this analysis must be recorded in a dated document (written or electronic) to be provided to the client if they purchase the product, and a copy of which must be added to their file.

For the advisor, the FNA results in…

  • an in-depth understanding of their client’s needs
  • an improvement to the quality of their services because it can be an opportunity to identify needs that the client has not thought of

After this analysis, the advisor is able to make appropriate recommendations to their client, enabling them to obtain products that suit their situation.

In the event of a disagreement, if the FNA is properly documented, it will also allow the advisor to demonstrate that they acted as an informed professional.

The objective of the FNA is to develop a financial strategy and to offer the client suitable products that will decrease the gap between their current situation and what they want.

The financial security advisor must carry out a written financial needs analysis for the client…

  • Before completing an insurance application
  • Before purchasing an insurance of persons product that includes an investment component, such as a segregated fund or a universal life insurance policy
  • Before replacing an insurance contract

Before starting an FNA, we recommend completing several formalities.

Educating the client on what an FNA is

This involves explaining to the client that the FNA is required and that the advisor must make sure the product offered corresponds to their needs. The FNA is an excellent opportunity to educate the client about their role as a professional. Often, a short explanation is enough for the client to understand what it is all about. The advisor can use the example of a doctor who makes a diagnosis before prescribing a treatment or remedy to their patient.


Obtaining the client’s agreement

The advisor must ensure that the client agrees:

  • to dedicate the time required to collecting necessary information for the FNA
  • to provide information on their personal and financial situation and their existing contracts, and any other information pertinent to this exercise (the advisor can emphasize the confidential nature of the information the client will provide and the full discretion required by the profession)

The FNA is not just based on a form that is filled out. It is a process. There is, therefore, no form required by law. This process may take different forms, but the advisor is required to complete a needs analysis and record it in writing.

Though each situation is different, it may happen that the analysis is more focused on some situations than on others, based on the client’s needs.

Analyzing the information in light of the client’s situation

The information and documents gathered on the client’s situation during the collection are essential for the advisor to proceed with the client’s financial needs analysis. These documents include, in particular, a copy of policies or contracts in effect for the client or the insured person, or any paper containing relevant information; they help explain their features and provide the name of the insurers that issued them.

Existing Contracts

The tool Examining existing contracts (includes several pertinent features to consider during the analysis of these contracts.

The advisor must examine the existing contracts…

  • to determine if they correspond to the client’s needs and their financial capacity
  • because the needs may be covered by an existing contract
  • because the current contract may include a significant tax advantage
  • because a chance to the existing insurance or an additional insurance may be sufficient to meet the client’s needs

The advisor must obtain a copy of the existing individual contracts and group insurance booklets, as applicable, and any paper containing relevant information. Without such documentation, the advisor will not be able to analyze the client’s needs or make recommendations, because they have a high risk of not making the correct diagnosis.

If the client doesn’t have a copy of their existing contracts, they can always contact the insurance company to get one before their meeting with the advisor.

Or, the client can authorize their advisor to make this request for them. If they agree, the advisor must obtain written and signed authorization from them, because it involves confidential information.


When evaluating a retired client’s financial needs, the advisor must pay special attention to certain variables outside of the client’s situation that may impact their recommendations, such as:

  • An increase in the average prices of goods and services (inflation)
  • Health care costs
  • Cost of medications
  • Government retirement plans
  • Tax rules and their changes
  • Fluctuations in the stock market
  • Economic cycles

Determining the needs upon death, for a disability or critical illness

The Death, Disability and Critical illness sections of the tool Know your client () include several examples of questions that can help a advisor wanting to specify the scope of a client’s needs.


A death can have consequences not only on the standard of living of the deceased person’s family, but also on a business’ operations. The life insurance needs analysis aims to establish whether the client’s patrimony of the succession will allow their family to maintain the same standard of living or allow their company to continue operating in the event of their premature death. If this is not the case, the analysis may lead the advisor to recommend that their client transfer the financial consequences of their death to an insurer by purchasing life insurance.

Certain clients’ life insurance needs decrease as their assets increase, whether they are sufficient for their estate needs and for tax and expenses at the time of death, or when their commitments decrease.

A decrease in life insurance needs does not necessarily mean that they cease to exist. A person may still want to keep their insurance, for example, for the following reasons:

their current spouse is not the beneficiary of the retirement plan benefits
they have a specific estate objective that is not covered, or wishes to make gifts or individual donations outside of their estate
they want to share their assets between the survivors of one or more other unions

Permanent or temporary needs

Depending on the client’s objectives and financial capacity, the advisor may know whether their needs are permanent, temporary, or both.

Recommending a permanent insurance product for a temporary need may deprive the client of financial resources that they could dedicate to their other financial, insurance, or savings needs, given the higher premium.

It’s all a question of priority based on the client’s needs and their ability to pay. Convertible and renewable temporary insurance may also be an option, depending on the circumstances.

Using software

Software for calculating life insurance needs is often provided by an insurer or available online. The responsibility of the advisor working on it is not limited to just ensuring the accuracy of data entered. They must also confirm that the software is based on adequate and realistic hypotheses.

Most software uses a rate of 70% of gross annual income before retirement to calculate the income necessary to maintain a standard of living at retirement. This is a practical approach, but it does not take into account the fact that needs can vary with time, economic circumstances, and each client’s personal situation. A retiree may plan several trips at the beginning of their retirement, and then plan for a more sedentary and modest lifestyle as they get older. They may also have increasing health care needs. The advisor must therefore educate their client about these realities and take them into account when evaluating their financial needs.

Software can be a good guide, but it must not be used automatically, bypassing the client’s unique characteristics such as taxes, income splitting, and public annuities for which they are eligible.


Disability benefits are used to replace the income of a person in the event of disability, usually until retirement. It is generally accepted that the more financially independent the client, the less they need this type of insurance.

Disability insurance compensates the loss of ability to earn income. It allows the client and their family to maintain their standard of living and to continue to save for retirement and other financial goals. It is essential, therefore, that the advisor take all the time they need to evaluate their client’s disability insurance needs.                       
Further, the client’s income is not the only thing that should be weighed in this evaluation. Just as much focus should be placed on their budget. In other words, the advisor will evaluate the amount that would be necessary for them to meet their needs if they were disabled.

When a client does not have group insurance or has incomplete group insurance, it may be necessary for them to purchase disability insurance before purchasing critical illness insurance, based on their needs and priorities.

Critical Illness

Critical illness insurance involves payment of a single lump sum benefit to cover expenses related to a critical illness as defined in the contract.

As the cost of this insurance increases considerably with age, it is advantageous for the client to purchase it while they are young.

When evaluating the need for critical illness insurance, the advisor should not include expenses that will be covered by disability insurance held by the client, to avoid making them pay double for the same need.

However, they must still consider the client’s budgetary constraints, their income, and their cash to cover unexpected expenses, and find the right balance between purchasing critical illness insurance and other needs specified in the FNA.

Specific need

A client requests a specific product… The advisor cannot just carry out the request, even if the client seems to know what they want. Other more appropriate solutions can be proposed to them after a thorough analysis. The advisor must therefore conduct a full analysis, even in this situation.

The advisor must record the information collected for the needs analysis and/or the investor profile in a dated document. This document does not necessarily serve as the needs analysis, but if the analysis includes information gathered in the information collection, it could be submitted as such.

When the client purchases the recommended product, the advisor must provide them with a copy of this document by the time the policy is delivered, at the latest.

To simplify the delivery, the advisor may use e-mail, fax, registered mail, or any other delivery method that provides proof that the document was actually delivered. Ideally, the advisor should make sure they obtain this proof, for example a confirmation of receipt, so they can prove that the document was received.

The client may refer to this document to better understand the factors that resulted in the advisor’s recommendations and make a connection between the reasons that led them to purchase an insurance policy.

If the client does not purchase the product, the advisor must still keep a copy of this document that contains all the information collected for conducting their analysis in the client’s file.

Follow-up begins when the product is delivered to the client. The advisor can explain that they should keep them informed of any changes to their financial or family situation. A financial product that no longer meets the client’s needs may harbour bad surprises, during a claim for example. The section Updating the client’s file in Know your client (gives more details on this topic).

It’s important to know that the advisor cannot be exempt from their obligation to conduct the FNA, even with written permission from their client.The CSF disciplinary committee has mentioned on several occasions that the obligations in this matter are imperative and that the advisor must follow them. The committee has added that it is not the client’s responsibility to dictate a advisor’s code of conduct, and a client cannot release an advisor from their obligation to conduct an FNA, even if the advisor has known or worked for this client for many years.

This analysis should therefore allow the advisor to establish “a diagnosis” and make appropriate recommendations () to their client to close the gap between their situation and their desired situation.

When the advisor evaluates their client’s insurance needs, they must first present them with all the available options for providing the most extensive coverage possible, based on their objectives, their priorities, their financial resources, and their current contracts, in order to help them understand these needs. It is then the client’s responsibility to decide whether or not they want to purchase the recommended products, based on their ability to pay. If the coverage determined as necessary following the FNA and the coverage purchased by the client are not the same, the advisor must explain this difference in the client’s file.

Given the time required to evaluate all of a client’s insurance needs, the advisor may proceed in steps, over several meetings, prioritizing the client’s needs based on their objectives, which were defined with the advisor’s help.

At the end of these procedures, the client will feel they are properly covered and reassured knowing that no matter what happens, they will have a plan to limit the financial and emotional consequences of unforeseen events.

An advisor keeps all the previous versions of the needs analysis and the investor profile in the client’s file can demonstrate that at a given time, the client’s products suited them. They therefore always remain able to justify their recommendations.