11 - How Do I Get My Money?

Question 1

What 4 things does a claims examiner confirm before the benefit is paid?

Answer 1

1. Insurance contract was in force at time of claim
2. If a life policy, that the deceased was the life insured
3. Loss covered by the contract
4. Claimant is same as named in the policy

Question 2

What is the formula to calculate the net death benefit?

Answer 2

Face Amount 
\+ Extra Benefits 
- Outstanding amount of a policy loan & interest 
- Unpaid Premiums
= Net Death Benefit

Question 3

What does “Last Acquired” refer to?

Answer 3

A policy can be acquired more than once (if it lapses and is reinstated within 60-days of calendar year-end, or has been transferred by absolute assignment).

Question 4

Define “Annuitized” in reference to insurance policies.

Answer 4

It is when the benefit of a policy is converted to a life annuity.

Question 5

What is the formula to determine the adjusted cost base (ACB) of insurance?

Answer 5

Premiums
- Net Cost of Pure Insurance (NCPI)
- Dividends
= ACB

Question 6

Define “Maximum Tax Actuarial Reserve” (MTAR).

Answer 6

The allowable amount of growth in a test policy that duplicates the real policy. It is used to determine whether an insurance plan is actually an investment or not.

Question 7

What is the formula to determine the taxable gain for non-participating policies?

Answer 7

CSV - (Premiums - NCPI) = Taxable Gain

Question 8

What is the forumla to determine the taxable gain for participating policies?

Answer 8

CSV - (Premiums - NCPI - Dividends) = Taxable Gain

Question 9

What is the potential area for conflict in a claim for total disability benefit?

Answer 9

If the claim examiner finds that the definition of disability for “any occ,” “regular occ,” or “own occ” has not been met.

Question 10

What is the formula to determine the claim for a residual disability benefit?

Answer 10

(Pre-disability income - income earned)/pre-disability income = % of benefit to be received

Question 11

What is the formula to determine the claim for a partial disability benefit?

Answer 11

Total Disability Benefit x Percentage stated in Policy = Benefit to be received

Question 12

What is a “Presumptive Disability Benefit?”

Answer 12

A claim for loss of limbs, sight, hearing, or speech. Full benefits paid regardless of whether or not the person returns to work.

Question 13

What is special about a Recurring Disability Benefit?

Answer 13

If a disability recurs form the same or related cause within a period of time (usually 6 months), it is treated as a continuation of the original claim. No elimination period.

Question 14

What is an “All Sources Maximum” provision?

Answer 14

It is a provision in many group disability plans that states that an employee cannot receive total income that would act as a disencentive to return to work.

Question 15

How is the “Waiver of Premium” rider different in disability or life policies?

Answer 15

In disability policies, the underwriting process is the same (the policy owner and the insured are the same person).
In life policies, the underwriting process is different (the life insured and the policy owner may be two different people).

Question 16

How are claims for “A&S” insurance handled?

Answer 16

Provide lump-sum payments for qualified medical expenses.
30 days to notify insurer, 90 days to provide proof of claim.
No elimination period (may be a deductible and/or co-insurance).
Tax-free.

Question 17

What does “Coordination of Benefits” refer to?

Answer 17

When there are more than one insurance plan offering coverage for a disability. Coordination of Benefits ensures that a claimant does not receive double the benefit from having two insurance plans. This leads to a distinction between “Primary Carrier” and “Secondary Carrier.”

Question 18

What is the difference between a Primary Carrier and a Secondary Carrier?

Answer 18

The Primary Carrier is the main insurance plan (from place of occupation etc.). Secondary Carrier is any other insurance plan.

Question 19

What is the “CPP Offset?”

Answer 19

Many insurers reduce their disability benefits by the amount of the CPP disability benefit.

Question 20

Define “Subrogation.”

Answer 20

The legal process by which an insurance company can claim compensation from a third-party (which caused injury to the life insured).

Question 21

What are Employee Assistance Programs (EAPs)?

Answer 21

They provide professional advice to employees (many areas including stress and dependency problems).