A&S - SEEWHY VIDEOS Flashcards
Insurance needs pyramid
TOP(least important) TO BOTTOM (most important):
- LTC
- CI
- DI
- LI
DISABILITY: capitalization of income def + formula
def: how much capital req to replace income indefinitely
required annual income / expected investment return
DISABILITY: job classifications risk class
top(best)…. bottom (worst/hiest risk)?:
4A (BEST): DOCTORS, LAWYERS, DENTISTS, SENIOR EXECUTIVES
3A
2A
A
B (WORST): MANUAL LABOURERS IN HIGH RISK JOBS, I.E CONSTRUCTION WORKERS
DISABILITY:Definition of disability (3) for individual policies
- Any occupation: worst form of coverage
- regular occ
- own occ (best)
note: definitions can be mixed, i.e own occ for 1 year, then any occ
DISABILITY: Any occupation definition of disability
disabled if unable to perform their OWN OCC or ANY OTHER OCC suited by education/experience
- ## offered to WORST risk class (B)– i.e construction
DISABILITY: Regular occupation definition of disability
- similar to own occ
- disabled if unable to do ur regular occ
- can CHOOSE (not forced) to work if diff occ w reduced/eliminated bens.
DISABILITY: Own occupation definition of disability
- similar to regular occ
- disabled if unable to do ur regular occ
- can CHOOSE (not forced) to work in diff occ, BENEFITS WILL CONTINUE
- Offered to BEST risk class (4A) – i.e doctors, lawyers
DISABILITY Occupational clause
- if insured switches to riskier job: will adjust premium accordingly (more expensive)
- if switches to less risky job: request downward adjustment (cheaper)
DISABILITY Elimination period (waiting period before benefits)
- time period insured must be disabled before receiving benefits
- shorter period= higher premium
DISABILITY Benefits Period
- max time insured will receive benefits while disabled
DISABILITY: Renewability options- 3 types
- Non canelable– best
- guaranteed renewable
- cancelable —- worst
Non cancelable (Non- Can)
- Insurer MUST RENEW policy to specific age as long as premium being paid
- cannot change premium, amend benefits, or cancel policy
- offered to BEST risk— 4A (doctors, lawyers)
Guaranteed Renewable
- insurer CAN ALTER premium if doing so for entire class of policies
Cancelable
- inurer can cancel or adjust premiums at any time
- wort policy, so offered to worst risk— class B (i.e construction workers)
insurable income (for disability coverage)
- salary from work
- biz income
- Part time work income
UNinsurable income
- pension income
- investment income!!!!! (but can reduce amt of coverage)
- trust fund income
Waiver of premium
- standard in disability policies
- when disabled, insured pays premium for 1st 90 days, afterwards premium waived (and refund premiums colleted)
waivede till:
insured no longer disabled
certain age
certain number of years
recurrent disability clause
- if insured OFF disability, returns to work and suffers same/related disability withing a time frame (i.e 6 months) ===== continuation of benefits (deduct time already used on previous claim)
- elimination period waived 2nd time and benefits restart right away
presumptive disability clause
if:
- perm blind
- perm hearing
- loss of 2 limbs incl use of limbs
Assumes disbaled w/o proof
no elimination period
benefits start ASAP
no proof that stopped work
Common Exclusions for disability coverage
- war/terrorism
- self inflicited wounds/ suicide attempt
- participating in illegal activities
- normal pregnancy/delivery
insurer could also add specific exclusions relevant to insureds health conditions or high risk sports
Policy rider
an add on options added when policy purchased or adterwards
Future Purchase Option (FPO)
- Isured can add coverage in stated amounts on stated dates W/O MEDICAL underwriting but subject to FINANCIAL underwriting (need to proove income) + this increases premium
Cost of Living Adjustment (COLA)
- ADED TO DISABILITY POLICY
- BENEFITS INCREASE YEARLY TO COMBAT INFLATION
- 2 CALCULATION METHODS: SIMPLE METHOD OR COMPOUND METHOD
COLA calculation : simple method
- benefit oncreases by SAME % annually
COLA calculation: Compound Method
- coverage increased by rate of inflation as measured by consumer price index (CPI) up to a max amount
- unused increase (less than max) can be carry fwd to future years
Accidental death + Dismemberment (AD+D)
- BENEFIT PAID IF DIES AS RESULT OF ACCIDENT (CAR ACCIDENT, FIRE, ETC) OR IF INSURED DISMEMBERED
- NO MEDICAL UNDERWRITING, BC ITS AN ACCIDENT, NOT HEALTH
- claim does not impact benefits to be received
AD+ D exclusions
- self inflicted injuries
- suicide (or attemtped suicide)
- Participation in dangerous sports
- Flying plane (except passengers/ commercial airline)
DISABILITY rider: partial and residual benefots
residual benefits: Income related
Partial benefits: job function related
DISABILITY residual benefits definition
- paid if: after being totally disabled, no work at all, insured can return to work at reduced capacity, making less then they were before
DISABILITY residual benefits calculation 4 steps
- Income lost
- % of income lost
- 80/20 rule
- end benefit X % inc lost (if 80/20 rule doesnt apply)
DISABILITY: residual benefits calculation (how to)
- Income lost: original monthly income - current monthly income= lost $
- % of income lost: lost $ / original monthly income= % lost
- 80/20 rule:
lost more than 80%= full benefits
lost less than 80% ==NO benefits - full benefit X % inc lost = % of benefit he will receive
DISABILITY partial Benefits
- does not require total disability
- pyas partial benefit ( i.e 50% of full benefit)
DISABILITY Rider: Return of Premium (ROP)
- POLICY HOLDER receives part of premium back (tax free , W/O interest) under certain circumstances
DISABILITY RIDERS
- PARTIAL BENEFITS
- RESIDUAL BENEFITS
- RETURN OF PREMIUM (ROP)
Critical Illness (CI) Insurance overview
- a living benefit (pays before death if suffer serious illness + SURVIVE)
- pays lump sum if diagnosed w illness covered in policy + SURVIVES # of days (i.e 30)
- can do whatever want w lump sum (medical, vacation, etc…)
Critical Illness (CI) details
- stand alone product OR as a rider
- anywhere from 10k-2m
Qualification period: 1st 30 days: any additoonal illness —> not covered
waiting (survival) period: diagnosed w covered illness + SURVIVE min 30 day (or longer for certain conditions)
so 30 days qualification+ 30 days survival = 60 days
CI conditions covered
varies
Big 4:
- heart attck
- stroke
- heart bypass
- life threatening cancer
Memory aid: Hear and stroke foundation + BIG C
also:
10 conditions:
20 conditions:
Child CI policy
- benefit is less than adult
- covers same as adults, but also illnesses more associated with kids
- option to convert to adult plan
RIDERS FOR CRITICAL ILLNESS POLICY (3-R.W.2)
return of premium (similar to Disability)
waiver of premium (similar to disability)
2nd event rider
2nd event rider for CI
- only for CI
- w/o rider: after pay out = CI terminates
- W RIDER: keeps policy in force if has 2nd UNRELATED event, 2nd benefit paid (smaller)
CI exclusions
- same as disabilty insurance (add later)
+
non occ HIV/AIDS: medical practitioner that contracts HIV/AIDS on the job
Long term Care Insurance (LTC)
- covers living in nursing home (up to daily max cost)
LTC benefit triggers
Insured unable to do 2 or more activities of daily living (ADL’S
+
satisfies elimination period (0-90 days)
LTC Activities of dailhy living (ADL’s - 6)
- Transferring: moe around w/o assistance (i.e in/out of a chair)
- Maintain Continence: controlling bladder
- Toileting: get to/from + on/off toilet
- bathe/shower
- Get dressed/undressed
- Feeding self
memory aid: all the things u do to get ready for work in AM (or pm before bed)
LTC: Cognitive Impairment
- can qualify if cognitive impairment (i. e alzheimers)
LTC expenses covered
- homecare w care pro’s visitng patient
- respite care: family member providing care and needs relief temporarily
- Assisted Living: health facility, patient has own private residence
- Nursing Home/LTC facility): if patient nees 24hrs care/supervision
LTC payment models
Indemnity Model: pays LTC provider directly
Reimbursement model: insured pays, , then gets reimbursed
LTC MAX COVERAGE AMOUNTS CALCUATION
daily max X mac benefit period (in care days)
i,e
daily max $400
benefit period: 365 days
so: $400 x 365= $146,000
LTC ODDS/ENDS
EXCLUSIONS: similar to CI policies
COLA + ROP riders can be added
Extended health Plans (EHP)
- enhanced medical + hospital care on top of government care (i.e massage therapy, ambulatory care)
- dental care
- vision care
- accidental death + dismemberment (ad&d)
EHP Deductibles
deductibles could be:
- per claim
- single
- family
EHP per claim deductible
- i.e insured pays $15 DISPENSING FEE FOR EACH PRESCRIPTION
EHP Single Deductible
- i.e dental plan: insured pays $100, all other cover up till annual max
so, insured pays deductible the 1st time, then doesnt have to pay again for the year
EHP family deductibles
- family deductble === TOTAL family deductible
i.e: policy has $100 single deductible / $300 FAMILY deductible, so if each family member had $500 claim for the year :
person 1: 500 claim - 100 deductible
person 2: 500 claims - 100 deductible
person 3: 500 claim - 100 deductible
»» $300 family deductible MET«<
person 4: 500 claim- 0 deductible —> no more deductible BC family deductible MET
EHP co insurance
co insurance: % of claim ins co will pay subject to policy limits
EHP Policy w co-ins + Deductible
example:
- coverage up to $1500
- 80% co ins
- $100 deductible
1st claim: $800
step 1:
insurance co reimbursement:
» always deduct the deductible 1st«
800 claim - $100 DEDUCTIBLE= 700
step 2:
co ins: $700 x co ins 80%= $560 reimbursed
Group Plan specifics
???
Group plans: DIff types of groups
- employers
- trade associations
- creditrs (i.e mortgage life ins)
Group plans: Group Make up
insurers asses overall risk of GROUP by analyzing:
- Avg age
- olde group = higher premium
- Gneder: women pay less for life ins but more for disability
- nature of biz: i.e contructions workers pay more
- comaprable businesses : looks at claims from other similar groups and uses data to assess this one
- turnover rate: past claims statistics
Group Plans pricing: Initial and renewal premiums for group plans (3)
3 main methods:
- Manual Method
- experience Method
- Blended Method
Group Plans (pricing): Manual method (pooled pricing)
- Prmeium for 1 group based on claims experience from another (similar) group
Group Plans (pricing) : CLAIMS EXPERIENCE METHOD
- usues groups claims experience from prior years to set renewal premiums
- rarely used
Group plans (Pricing): Blended Method
- combination of manual and claims experience method
- How much of each is blended depends on on the reliability of the claims statistics (i.e a small group stats not as reliable)
Group Plans: Refund accounting (for the group)
if claims lower than expected == refunds part of premium to employer
claims higher == factored in to next renewal date
Group Plans: Non Refund Accounting (For the Group)
if claims are lower, NO REFUND , ins co keeps all
claims higher == factored in to next renewal date
Group Plans: Contributory plans (for the individual)
member (employee) must contribute to the premium
Group Plans: Non contributory plans (For the individual)
member (employee) does NOT have to contribute to the premium (employee pays all)
all qualified employees REQUIRED to join
Group Plans: Administrative Services Only (ASO)
- lowers costs for VERY large companies (self insure)
- company pays ins claims for employee deaths/ claims themselves
- insurance co provides admin services only—>
Group Plans: Typical forms of coverage (DEEL)
- Disability Insurance
- Extended health care Benefits
- Employee Assistance programs (EAP)
- Life Insurance
Group Plans: Employee Assistance Programs (EAP)
- when employees have personal probelms impacting work
i. e depression, alcoholism, etc….
offers professional counselling
Group Plans: Pre existing conditions
contract will have clause such as :
Coordination Of Benefits
- when have more than 1 ins co that can pay, clause determines which pays 1st and who pays 2nd
- 1st paying ins co pays whatever insured entitled to
- 2nd pays lesser of:
