Montreal Canadiens’ star defenceman Andrei Markov has sued his insurer and life insurance agent in an effort to annul his insurance policy and reclaim approximately $1.2 million he paid in premiums on the policy.
Markov’s trustees allege that the player’s life insurance agent, Erik Niskanen, did not supply the player’s insurer, Great West Life, with correct information about the player in support of a universal life insurance policy that the agent used to fund Markov’s retirement compensation plan. The policy was issued by Great West Life, which is named as a defendant in the suit along with Niskanen.
The allegations contained in the trustee’s lawsuit have not been proven in court. The Quebec Superior Court outlined the allegations in a recent preliminary ruling about whether the case could be heard in Quebec. (The court ruled it could be heard in Quebec, which is Markov’s principal place of residence.)
Markov spends his off-season time in Russia for up to six months per year, according to evidence before the Quebec Superior Court. “Markov has little knowledge of the financial instruments available in Canada for high-net-worth individuals,” the court decision states. “He relies on his agent and other advisors to manage his finances.”
Niskanen approached the player’s agent and trustee at the time, Rand Simon, in 2007 to propose a sophisticated tax arrangement for securing Markov’s financial future upon retirement, according to the court. Under the proposal, a universal life insurance policy would be used to fund a ‘Retirement Compensation Agreement.’
Markov signed the application for the policy as the insured party on Aug. 22, 2007. Great West Life did not accept the initial application signed by Markov and made a counter-offer on Oct. 25, 2007. The amended application added a premium of $2.50 for every $1,000 worth of life insurance issued.
Markov signed Great West Life’s amended application in Montreal without Niskanen being present to explain the changes.
The Quebec court decision says Markov followed up with Niskanen about the policy over the next two years. In 2010, William Johnston was appointed trustee of the trust into which Markov deposits his salary paid to him by the Canadiens.
Johnston realized the universal life insurance policy had adverse effects on the trust, based on financial projections that were based on incorrect assumptions. For example, Johnston said Markov was incorrectly identified as a ‘non-smoker.’ Also, Johnston alleged that Niskanen provided Great West Life information that Markov lived in Ontario, when in fact the player lived in Montreal.
“Johnston alleges that Niskanen advised Markov that upon his death his spouse and children would receive a significant death benefit,” the court decision says. “He [Johnston] affirms that this representation was false, as the death benefit decreases over time and that there is not any death benefit after year 35 of the policy.”
Johnston is asking the court to annul the policy issued by Great West Life and to return the $1.23 million in premiums paid on the policy. “He alleges that the trustee’s consent was vitiated by error induced by Niskanen with respect to the nature of the contract and its essential elements,” the court decision said.
