Accident And Sickness

Question 1

Denis is self-employed. Last year, his business generated total revenues of $250,000 and operating expenses of $120,000. Denis also received $5,000 in dividends paid by a multinational in which he has shares. He contacts you to purchase the maximum individual disability insurance coverage.
In this situation, what income amount do you use to calculate the maximum benefits Denis will be entitled to?
a)$255,000.
b)$135,000.
c)$130,000.
d)$125,000.

Answer 1

B)
Business revenue - operating expenses + investment income

Question 2

Marc-André, 37 years old, participates in his employer’s group insurance plan. The plan
provides a long-term disability insurance payable after employment insurance benefits
expire and corresponding to 50% of his monthly salary. The disability benefits are nontaxable. With an annual salary of $60,000 and sole financial support of his 3 children, MarcAndré’s estimated current financial expenses are $3,500/month. If he were to become ill, his personal savings would enable him to meet his financial requirements for 4 months.
What additional disability insurance coverage should Marc-André take out?

a) Marc-André does not need additional disability coverage.
b) Marc-André should purchase disability insurance of $500 per month with a 4- month waiting period.
c) Marc-André should purchase disability insurance of $1,000 per month with a 4- month waiting period.
d) Marc-André should purchase disability insurance of $1,500 per month with a 4- month waiting period.

Answer 2

C)

Step 1: Calculate Employer Disability Benefit
MonthlySalary×CoveragePercentage=MonthlyBenefit

Step 2: Calculate Income Shortfall
MonthlyExpenses−MonthlyBenefit=Shortfall

Step 3: Determine Additional Coverage Needed
Shortfall=AdditionalDisabilityInsuranceRequired

Step 4: Apply Waiting Period
If personal savings cover X months, the additional insurance should have a waiting period of X months.

Since his employer’s LTD provides only $2,500 per month, and he needs $3,500 per month, he should get additional $1,000 per month coverage with a 4-month waiting period.

Question 3

Jérémy founded a computer graphics business three years ago. The business quickly
achieved success thanks to Jérémy’s numerous contacts at the local Chamber of Commerce. He had to hire three paid employees at $2,000 a month each and move his
business to a prestigious office building where rent and maintenance cost $8,000 a
month. Jérémy is acutely aware that the company’s revenue is directly related to his skills and contacts; thus, if he were to suffer a disability following an illness or accident,
the business would no longer be able to pay the employees’ salary or rent.
What should Jérémy do?
a) Purchase critical illness insurance.
b) Purchase long-term care insurance.
c) Purchase business overhead expense (BOE) insurance.
d) Purchase individual disability insurance

Answer 3

C)
Jérémy should purchase accident and illness insurance
for businesses, and business overhead expense insurance would allow him to keep the business afloat for several months, until the owner or employee recovers.

Question 4

Darius works for himself as an independent contractor, cutting lawns and maintaining
gardens. To protect his income against losses due to illness or injury, Darius took out an
individual disability income replacement policy. The policy has a $2,500 monthly benefit,
a 90-day waiting period, a 24-month benefit period and a recurring disability clause with
a 6-month recurrence period. A year after taking out the policy, Darius was injured when
his riding tractor overturned. He was off work for eight months with ruptured tendons in
his left leg and then returned to work. Four months later he re-injured the same leg due
to returning to work too soon and was off work for another eight months.
How much income replacement benefit would Darius have received for his disabilities?
a) $12,500.
b) $25,000.
c) $32,500.
d) $40,000

Answer 4

C)

Darius had an 8-month disability but didn’t receive benefits for the first 3 months due to the 90-day waiting period, so he received 5 months of benefits.

Later, he became disabled again from the same cause within 6 months of returning to work, so no new waiting period applied. He received 8 more months of benefits.

Total benefits received:
5+8=13months

Total payout:
13×2,500=32,500

Question 5

René is a machinist and runs his own business, which employs two specialized employees. Following an illness last year, René was off work for eight months during which time he received disability benefits from his insurer. Although René recently returned to work, he is still unable to perform some of his duties. As such, he receives reduced benefits from his insurer as well as a reduced salary.
Which rider had René added to his accident and sickness insurance policy?
a) Residual disability benefits.
b) Partial disability benefits.
c) Return of premium (ROP).
d) Future purchase option (FPO).

Answer 5

A)

René had added a residual disability rider, which allows
him to receive reduced benefits from his insurer and a reduced salary.The residual disability benefits are paid to René following his total
disability and return to work part-time.

Question 6

Claude is an optometrist and has purchased individual disability insurance, providing
$3,000 a month coverage, with a 90-day waiting period, benefits payable up to age 65, a cost of living adjustment rider and a guaranteed insurability option. A car racing enthusiast, Claude takes part once or twice a year in car races on a professional circuit. The insurer issued the policy as a standard financial and medical risk, as was applied
for, but modified the policy because of Claude’s car racing activities.
What change did the insurer make in the policy?
a) A benefit limitation.
b) An exclusion.
c) A premium rating.
d) A deductible.

Answer 6

B)
The insurer modified the policy because Claude takes
part in car races on a professional circuit. This is an excluded risk.
Answer c: False. Since the policy was issued as a standard financial and medical risk, no premium rating was imposed.

Question 7

Donald and Hilary are equal co-shareholders in a private corporation that runs their
dental practice. They have a buy/sell agreement that, among other provisions, establishes the terms for a buyout should one of them become ill or injured and unable to work in the practice for a prolonged period (six months or longer), providing for an immediate buyout at the fair market value of the disabled shareholder’s interest. They
wish to fund this element of the agreement with corporate-owned disability insurance.
Which of the following provisions of disability insurance policies would match up with the terms of the buy/sell agreement?
a) A 180-day waiting period on each of the lives insured.
b) Annual benefit payments of 1/10th of the purchase price for 10 years.
c) An any occupation definition of disability on each of the lives insured.
d) A payor waiver of premium rider on each of the disability policies.

Answer 7

A)

The 180-day waiting period matches up with the 6-month
triggering period of disability in the agreement. A longer waiting period would leave the agreement temporarily unfunded at the end of six months, when the buyout would be triggered. A shorter waiting period would trigger a payout
unnecessarily early and be too costly

Question 8

Artemus took an application for disability insurance from Daedelas on July 12, 2015,
along with a cheque for $145.00 – one month’s premium under the policy. The policy was approved and issued in early August and sent to Artemus for delivery. The policy was not delivered to Daedelas until the following November, due to the fact that both the agent and the applicant were on holiday at various times over the summer and early fall and then the delivery appointment simply slipped Artemus’s mind until early November. Daedelas had continued to pay the monthly premium throughout all this time via automatic bank debit. When Daedelas finally received the policy, he decided that he no
longer wanted it and immediately asked that it be returned to the insurance company for cancellation.
What are the implications of the situation for both the applicant and the insurance
company?
a) Daedelas had no coverage until such time as the policy was delivered but was entitled to a full refund of premiums once it was cancelled.
b) Daedelas was covered from early August until the policy was cancelled in November but was entitled to receive all of his paid premiums back when the
policy was cancelled.
c) The insurance company cancelled the policy as instructed and kept all of
Daedelas’s premiums. They would have had to pay benefits had a claim been filed in the interim.
d) Daedelas was covered from early August until the policy was cancelled in November and so was not entitled to receive all of his paid premiums back.

Answer 8

A)

The policy must be delivered to Daedelas in order to be
legally effective. Daedelas was therefore not covered before the policy was delivered. Moreover, Daedelas is entitled to receive all of his paid premiums back if he returns the policy to the insurance company for cancellation within 10 days of receipt.

Question 9

Félix is general manager of a legal firm, which offers a group insurance plan to its employees. In addition to life insurance, the group plan offers short- and long-term disability benefits as well as health and dental benefits. You meet with Félix to renew the group insurance plan. During this meeting, Félix notes
that results regarding the plan’s claims experience show a high number of claims for
short-term disability insurance coverage. Félix recognizes that the stress to perform within very tight deadlines explains a large part of the employee claims history. Félix asks if you can propose a modification to the plan to improve results.
What would you propose to him?
a) Reduce the short-term disability insurance waiting period.
b) Add an Employee Assistance Plan.
c) Add an insurance guarantee against critical illness.
d) Reduce the long-term disability insurance benefit amount.

Answer 9

B)
Adding an Employee Assistance Plan, including psychological counselling, would allow employees to develop coping strategies to deal with stress at work and thereby decrease short-term disability claims.

Question 10

Sébastien is a group insurance representative. He proposes a group plan to the car
dealership president who sold him his latest vehicle. The president shows interest, but
fears potential conflicts between him and his 10 employees in the event they were to file
claims. What do you tell the president to reassure him about the claims issue?
a) The insurer will help the president resolve conflicts.
b) The insurer handles the entire claims administration process.
c) Sébastien handles the entire claims administration process.
d) Sébastien is responsible for managing conflicts between the president and his
employees.

Answer 10

B)

It is the responsibility of the group insurer to administer
claims from first notification to final payment (if any). The insurer therefore
handles the entire claims administration process.

Question 11

Own Occupation: Pays if you can’t perform —— job.

Answer 11

YOUR

Question 12

Any Occupation: Pays only if you can’t perform —- job suited to your ——

Answer 12

Perform ANY…. Experience/education

Question 13

Elimination Period:

Answer 13

Waiting period before benefits start.

Question 14

Benefit Period:

Answer 14

Duration for which benefits are paid.

Question 15

Critical Illness Insurance: Lump sum payment if diagnosed with…

Answer 15

a covered illness (e.g., cancer, stroke, heart attack).

Question 16

Survival Period: Time the insured must survive after…

Answer 16

diagnosis to receive benefits.

Question 17

Long-Term Care Insurance (LTCI): Pays for assistance with daily living (ADLs) like…

Answer 17

bathing, dressing, eating.

Question 18

Qualifying Triggers for LTCI:

Inability to perform…

Answer 18

2+ ADLs or severe cognitive impairment.

Question 19

Accidental Death & Dismemberment (AD&D): Pays a lump sum for accidental…

Answer 19

death or loss of limbs/sight/hearing.

Question 20

(AD+D)
Principal Sum:
Full payout for…

Answer 20

Death.

Question 21

(AD+D)
Capital Sum:

Answer 21

Partial payout for dismemberment.

Question 22

Waiver of Premium: Waives premium payments if…

Answer 22

insured becomes disabled.

Question 23

Guaranteed Insurability Rider: Allows the insured to buy more coverage…

Answer 23

without medical proof.

Question 24

Return of Premium: Refunds part of the premiums if…

Answer 24

no claims are made.

Best For:
✔️ People who want coverage but also want their money back if they don’t need it.

Question 25

Coordination of Benefits: Ensures benefits from multiple plans…

Answer 25

don’t exceed 100% of the loss.

Question 26

Claims Process: Proof of loss,….

Answer 26

claim forms, insurer's decision.

Question 27

Partial Disability: If you can work part-time but not full-time, they may still pay you.

Answer 27

Disability Insurance

Question 28

Covered Illnesses: Usually includes cancer, heart attack, stroke, kidney failure, major organ transplant, and paralysis (each policy lists the covered conditions).

Answer 28

CI

Question 29

CPP Disability: If you paid into the Canada Pension Plan, this gives you a monthly income if you…

Answer 29

become severely disabled.

Question 30

EI Sickness Benefits: Short term… (up to… weeks) if you're temporarily unable to work.

Answer 30

Short-term (up to 15 weeks) income

Question 31

Workers’ Compensation: Pays if you get injured…

Answer 31

at work (doesn’t cover non-work injuries).

Question 32

In Disability Insurance, the amount you get paid when you can’t work is usually a percentage of your income. The formula is: Benefit Amount =

Answer 32

Monthly Income x Benefit Percentage

Question 33

If there's an elimination period (waiting period), you need to subtract the number of days of the waiting period from the benefit calculation. The benefit won’t be paid during this period. So, if you're on a 90-day elimination period, no benefits are paid for the first 90 days. Example: If you have a monthly benefit of $2,000, but the elimination period is 90 days, and you miss 30 days of work in that period, you’d calculate it like this: Benefit after Elimination=2,000−( 90/30×2,000)=2,000−667=1,333

Answer 33

Benefit after Elimination Period = Monthly Benefit – Unpaid Days (elimination)

Question 34

For Long-Term Care Insurance, you’ll typically receive a daily benefit to help pay for care. The formula is: Example: If your daily benefit is $200, and the policy pays for 80% of your costs, the benefit would be: Daily Benefit=200×0.80=160 (for care per day)

Answer 34

Daily Benefit = Coverage Amount x Percentage of Coverage for Care Needed

Question 35

The payout for AD&D insurance is usually a percentage of the full amount based on the severity of the injury. You may see formulas like: Example: If the Principal Sum is $100,000 and you lose one hand (which might be worth 50% of the Principal Sum), the payout would be: Payout=100,000×0.50=50,000

Answer 35

Payout for Loss of Body Part = Principal Sum x Percentage for that Part

Question 36

For riders, you may need to calculate how the base premium changes based on adding a rider, which is just an extra cost:

Answer 36

New Premium = Base Premium + Rider Cost

Question 37

Survival Periods: For Critical Illness or Long-Term Care, these are usually expressed as…

Answer 37

30 days or 60 days.

Question 38

Sonjay has applied for long term disability. He has an income of $110,000 per year and also has an investment that generates $11,000 per year. Given this scenario what is the insurance company likely to offer as a disability benefit should Sonjay become disabled? Select one: a.$5,133 b.$8,250 c.$5,500 d.$9,167

Answer 38

A) Most long-term disability (LTD) policies replace a percentage of earned income, typically 60% of the insured person's gross annual income. However, many policies subtract investment income or other passive income sources when calculating the final benefit.

Question 39

Mr. Anderson was a successful opera singer employed by the national philharmonic until two and a half years ago. Unfortunately, he suffered a throat injury while boating that resulted in permanent damage to his vocal chords. This ended his career as a singer, but not his love of music. Several months after learning that his injury was permanent, Mr. Anderson was offered a position as a music teacher. If he accepts this position, which of the following would be true? Select one: a.His LTD policy would stop paying him once he accepts the teaching position as he is no longer considered disabled b.His LTD policy would continue to pay him his monthly DI benefit even though he was being paid as a teacher c.His LTD policy would pay him for another year and then it would stop d.His LTD policy would pay him for any difference between it and his new income

Answer 39

B) The “own occupation” definition of disability is the most liberal in that it is the easiest under which to qualify as being “disabled.” With this definition the insured is considered to be totally disabled if he cannot perform all of the primary duties of his regular occupation, even part of the time. There is no requirement that he return to work, either in his previous role or some other suitable role, until and unless he can perform all the primary duties of his regular occupation. While he meets the definition of disabled under “own occupation,” benefits will be paid, even if the insured works in a different occupation.

Question 40

Angela and Marco are siblings who work for a limousine company. Both are employed as drivers. Last year, while driving to work together they were involved in a serious automobile accident. Angela suffered permanent nerve and muscle damage to her right arm and is no longer able to drive. Fortunately, she was able to secure an administrative position in the limousine company’s head office, albeit at a lower salary. Marco was more severely injured in the accident, suffering permanent, debilitating spinal damage. Due to reduced mobility and chronic pain Marco is unable to work in any capacity and unlikely to recover. Given this scenario which of the following statements is most correct? Select one: a.Neither Angela nor Mareco will qualify for CPP disability benefits b.Only Marco will qualify for CPP disability benefits c.Only Angela will qualify for CPP disability benefits d.Both Angela and Marco will qualify for CPP disability benefits

Answer 40

B) As per section 6.5.2.1 Employment Insurance, Example, “Because she is still able to work, Angela would not qualify for CPP disability benefits.” “Due to reduced mobility and chronic pain Marco is unable to work in any capacity and unlikely to recover. Marco would qualify for CPP disability benefits.”

Question 41

Sabrina is a successful mortgage agent who earns on average $93,500 of pre-tax income annually. Her portion of family expenses such as mortgage payments, household expenses, food, etc. amounts to $3,000 a month. Because she would not be able to continue as a mortgage agent if she was to become disabled, she wishes to purchase disability insurance. Given this scenario which of the following statements is most accurate? Select one: a.Based on the expense approach her life insurance agent recommends $4,500 per month of coverage b.Based on the expense approach her life insurance agent recommends $4,000 per month of coverage c.Based on the income approach her life insurance agent recommends $3,000 per month of coverage d.Based on the income approach her life insurance agent recommends $4,675 per month of coverage

Answer 41

D) $4675 Salary x 60% Divide by 12 for monthly

Question 42

Alice is an avid skier. She plans to ski throughout the world when she retires. Although she is healthy, she is concerned about how she will be able to live out her retirement dream if she suffers from a heart attack or stroke, as both of these health issues run in her family. She doesn't want these types of health problems to prevent her from enjoying an active lifestyle in retirement. Given this scenario which of the following statements is most correct? Select one: a.Alice should obtain a whole life insurance policy with a csv to cover costs associated with being active after suffering from these types of events b.Alice should obtain a long-term disability policy to cover costs associated with being active after suffering from these types of events c.Alice should save his money so that he has funds to cover costs associated with being active after suffering from these types of events d.Alice should get critical illness and long-term care insurance to cover costs associated with being active after suffering from these types of events

Answer 42

D) If a client plans to travel a lot in retirement, they may need critical illness and long-term care (LTC) insurance. A serious health event like a heart attack or stroke could limit their mobility or require special medical equipment, such as a wheelchair or adaptive vehicle controls. These needs are important for anyone, but they can be even more costly for those with an active lifestyle.

Question 43

Jacqueline has a long term disability policy to age 65, with a six-month recurring disability rider. She was diagnosed with cancer, for which she has been treated. During her treatment, which lasted six months, she was unable to work. She was back to work for one month when she broke her leg. Due to the nature of her employment she is unable to work. Given this scenario which of the following options is most important to her? Select one: a.The cost of living allowance b.The waiting period c.A presumptive disability clause d.A recurring disability benefit

Answer 43

B) In this case the client is going back on disability and would not want to go through another prolonged waiting period.

Question 44

Given the following list which combination of the following exclusions are typical in a disability policy? 1. Acts of war 2. Attempted suicide 3. Complications due to pregnancy 4. Self-inflicted injuries Select one: a.1, 2, 3, and 4 b.1, 2, and 3 c.1, 2, and 4 d.1 and 3

Answer 44

C) Common exclusions include disabilities arising from the following situations: .War, whether declared or not .Terrorist acts .Self-inflicted wounds .Attempted suicide .Participating in illegal activities .Normal pregnancy and delivery .Complications due to pregnancy are covered by disability policies whereas normal pregnancy is generally excluded.

Question 45

John is a member of a group dental plan that has a coinsurance factor of 80%, with an annual deductible of $100, a $1,200 annual reimbursement cap and a coinsurance factor of 80%. Three months ago John had his semi-annual maintenance check-up which cost him $230, and one month ago his wife had cosmetic work done which cost $1,300. Given this scenario how much will his dental plan reimburse John for his claim? Select one: a.$104 b.$1,000 c.$1,124 d.$130

Answer 45

The correct answer is "$104" Rationale 4.2.2.2 Deductibles and co-insurance The question is asking for the reimbursement for John, not his wife. Amount = Claim – deductible x coinsurance factor Amount = (230 – 100)x.80 Amount = 130 x .8 Amount = 104

Question 46

Print Four Inc. has a key person disability insurance policy on one of its key employees. The policy will pay a benefit of $7,000 per month after a two-month waiting period in the event of the disability of this key employee. Given this scenario which of the following is true about the deductibility of the premium and the taxation of the benefits paid by this policy? Select one: a.The premiums are not tax deductible to the company and the benefits are received tax-free by the company. b.The premiums are tax deductible for the company. c.The benefit received from the policy will be treated as taxable income for the company d.The premiums paid by the company will be treated as a taxable benefit to its key employee.

Answer 46

A) Key person disability insurance policies are owned by the business. The premiums are not tax deductible to the business, but the benefits are received tax-free by the business.

Question 47

Jack tripped and fell, breaking his leg. He was totally disabled for the three months while his broken leg healed. Jack received disability benefits from his individual disability policy for two months after the one-month waiting period had passed. In addition he had creditor disability insurance on his credit card but the insurer refused to cover his monthly credit card payments. What definition of total disability must have governed the insurance on his credit card? Select one: a.Any occupation b.Regular occupation c.Own occupation d.Total disability (according to CPP)

Answer 47

D) The Canada Pension Plan (CPP) defines total disability as being unable to work in any job that fits the person’s education or experience. It also means the person will never recover, won’t be able to work again, and will likely die from the condition. This strict definition is rare in regular disability insurance but is more common in creditor insurance.

Question 48

Which of the following list of riders is NOT available in a BOE insurance policy? Select one: a.Waiver of Premium b.Recurring Disability c.Residual Disability Benefit d.Cost of Living Adjustment

Answer 48

Cost of living adjustment is NOT offered, as per section 5.3.1.5 Benefits, which states that BOE benefits are on a reimbursement basis. There can be no cost of living adjustment on reimbursements.

Question 49

Your client, Bertha, has an individual disability plan to age 65, with a recurring disability benefit and a 3-month waiting period. She suffered a heart attack on her 50th birthday and was off work for 6 months as a result. During that time she attended rehabilitation for 3 months every week and as a result, was able to return to work. Unfortunately, she returned to work too early. She began to experience chest pain on her first day back at work and as a result, her doctor told her to stay off of work and attend rehabilitation for the next 4 months. Given this scenario, Bertha's policy would have paid her a total of: Select one: a.6 months b.8 months c.7 months d.9 months

Answer 49

C) 6 months off – 3 month waiting period + additional 4 months’ of rehab = 7 months A recurring disability benefit feature means there is no additional waiting period, as per section 2.2.2.7 Benefits of recurring disability

Question 50

What impact will the number of members in a group insurance plan typically have on the underwriting process? Select one: a.Premiums are not affected by the number of members b.Premiums will usually be higher in a group with many members c.Premiums will usually be lower in a group with many members d.Premiums will only be affected by 1,000 members or more

Answer 50

C) The size of a group affects how an insurance company sets premiums. In small groups (25 or fewer members), it's harder to predict future claims because there isn’t enough data to match actuarial norms. This often leads to higher premiums. To manage this, insurers may pool small groups together to spread risk. In large groups (thousands of members), risk is spread more evenly, making claims more predictable and allowing for more accurate and stable premiums.

Question 51

Abigail owns a nightclub and has a BOE contract with a monthly maximum benefit of $6,000. While Abigail's business has typical monthly overhead expenses, there are several expenses that are not spread evenly over the course of the year. Her life insurance agent arranged a BOE policy that takes this into account. Abigail's claim to her insurance company after suffering an injury has been approved. In the first month of benefits eligibility, the business has qualifying expenses of $6,900. Given this scenario which of the following statements is most correct? Select one: a.Abigail will be able to recover $900 in the first month, reducing the following month to $5,100 b.Abigail will carry forward $900 to be applied to the following months’ expenses c.Abigail will not be able to recover $900 of her expenses in the first month as the limit is $6,000 d.Abigail will carry forward $900 to be applied only to her next month’s expenses

Answer 51

B) A flexible Business Overhead Expense (BOE) insurance contract allows unused benefits to carry over. If expenses exceed the monthly limit, the extra amount can be claimed in future months when expenses are lower than the benefit limit. This is in recognition of the fact that many business expenses are not spread evenly over the course of the year. Some, like business premises rent, Internet charges, vehicle leases and other expenses may be equal each month and predictable in advance. Other expenses, like heating, lawyer’s and accounting fees, and fuel costs, may be seasonal or only sporadic throughout the year. In recognition of this, it makes sense to have a reimbursement schedule that can handle monthly disparities.

Question 52

Aisha owns a company that employs 30 people. She wants to introduce a group plan for her employees to reward them for their loyalty and retain them going forward. As this is a new cost to her company she wants the least expensive premium. Out of the following list, which funding formula will you recommend that Aisha use? Select one: a.Retention accounting b.Administrative services only c.Non-refund accounting d.Refund accounting

Answer 52

C) Non-Refund Accounting (Fully Insured Plan) - The insurer sets the premium and covers all claims. - If claims exceed the premium, the insurer bears the loss. - If claims are lower than expected, the insurer keeps the extra money. Refund Accounting (Retention Accounting) - A participating insurance plan where the sponsor may get a partial refund if claims are lower than expected. - If claims are higher, the insurer covers the loss. - These plans cost more than non-refund accounting because they share some savings with the sponsor. Administrative Services Only (ASO) Contract - A self-insured plan where the sponsor (usually a large company) pays for claims instead of the insurer. - The insurer only handles administration (e.g., processing claims and record-keeping). - Recommended for large companies with enough cash flow to cover claims.

Question 53

Given the following list which option is NOT affected by an applicant’s occupation? Select one: a.Determining the disability benefit b.The type of policy available c.Whether the applicant is insurable d.Riders and benefits available

Answer 53

A) When underwriting disability insurance, an applicant’s occupation affects: - Eligibility (whether they can get coverage) - Policy type (which plans they qualify for) - Available riders/benefits - Premium cost (riskier jobs have higher costs) Some jobs are more prone to injuries or stress, leading to a higher chance of claims. To manage risk, insurers group jobs into occupational classes: 4A, 3A, 2A (Low-Risk Jobs) 4A: Professionals (Doctors, Lawyers, Dentists, Senior Executives) 3A: Office/Admin Workers (Clerical Staff, Low-Hazard Jobs) 2A: Supervisors in safe environments, Salespeople The lower the risk, the better the coverage and lower the premium

Question 54

Given the following list, which method is NOT used by insurers use to address a substandard risk? Select one: a.Exclusions b.Increase in waiting period c.Discount on a premium d.Premium ratings

Answer 54

C) A discount on a premium is offered only for an applicant who is healthier than the average person. For substandard risks, they offer premium ratings and exclusions or increase in waiting periods.

Question 55

ACME Clothing has a group accident and sickness insurance plan that is up for renewal. ACME's insurance company is offering to renew the plan with higher premiums based on the losses that it suffered in the *last term*, as there were higher claims than the insurance company anticipated in the original policy. Given this information what type of funding formula is the insurance company using? Select one: a.Administrative services only b.Non-refund accounting c.Contributory accounting d.Refund accounting

Answer 55

D) Refund Accounting (Retention Accounting) for Group Insurance is a type of participating insurance for the employer (plan sponsor). Premiums are set based on past claims history. If claims are lower than expected, the employer gets a partial refund on premiums. If claims are higher than expected, the insurer can adjust premiums at contract renewal to recover losses. This system helps employers benefit from good claims experience while insurers manage risk over time.

Question 56

Q: What does Disability Insurance (DI) cover?

Answer 56

A: Replaces lost income if you're unable to work due to injury or illness.

Question 57

Q: What are the two types of Disability Insurance (DI)?

Answer 57

A: Short-term DI (weeks/months) and Long-term DI (years/lifetime).

Question 58

Q: What does Critical Illness Insurance (CI) provide?

Answer 58

A: A lump sum payout if diagnosed with a covered serious illness (e.g., cancer, heart attack, stroke).

Question 59

Q: What does Long-Term Care Insurance (LTC) cover?

Answer 59

A: Helps pay for nursing home or home care if you can't perform daily activities (e.g., bathing, dressing).

Question 60

Q: What does Group Health & Dental Insurance cover?

Answer 60

A: Medical and dental expenses not covered by government health plans, usually offered by employers.

Question 61

Q: What does Travel Insurance cover?

Answer 61

A: Emergency medical expenses while traveling outside your province or country.

Question 62

Q: What does Business Overhead Expense (BOE) Insurance cover?

Answer 62

A: Pays for business expenses (e.g., rent, utilities, salaries) if a business owner becomes disabled.

Question 63

Q: What is the Elimination Period in Disability Insurance?

Answer 63

A: The waiting time before benefits start (e.g., 30, 60, 90 days).

Question 64

Who needs it? Workers who rely on their income. When to recommend? If they’re the sole breadwinner or self-employed.

Answer 64

Disability Insurance Key features: Short-term DI: Covers weeks/months (e.g., broken leg). Long-term DI: Covers years/lifetime (e.g., paralysis). Elimination Period: Waiting time before payments start (30, 60, 90 days). Residual Benefit: Pays partial benefits if they can work part-time.

Question 65

Who needs it? Anyone worried about expensive medical bills if diagnosed with a serious illness. When to recommend? If they have a family history of illness or no emergency savings.

Answer 65

Critical Illness Covers major illnesses: Cancer, heart attack, stroke, etc. Benefit: One-time tax-free lump sum (can be used for anything).

Question 66

Who needs it? Older adults or people worried about becoming dependent. When to recommend? If they want to protect their assets from nursing home costs.

Answer 66

Covers: Care at home or in a facility.

Question 67

Simple vs. Compound COLA: Simple: Benefits increase by the same amount each year. Compound: Benefits increase with interest (grows faster).

Answer 67

Cost of living adjustment

Question 68

Disability pays ~60% of income, coinsurance is usually 80%

Question 69

As an individual ages, the prevalence of disability: Select one: a.Stabilizes b.Decreases steadily c.Fluctuates d.Increases steadily

Answer 69

D) Increases steadily

Question 70

This type of DI insurance policy guarantees to issue some form of coverage, but not necessarily exactly the coverage applied for: Select one: a.Guaranteed-to-renew b.Guaranteed standard risk c.Guaranteed-to-issue d.Cancellable policy

Answer 70

c. Guaranteed-to-issue Why? A guaranteed-to-issue (GI) disability insurance policy means that the insurer promises to issue a policy, but it may not be the exact coverage the applicant originally applied for. Key Features of GI Policies: ✔️ No medical exam required – Easier to qualify. ✔️ Coverage is guaranteed, but the insurer can modify terms (e.g., lower benefits, exclusions, or higher premiums). ✔️ Typically offered to employees in group plans or individuals in certain professions.

Question 71

This type of DI insurance policy involves individually issued policies that are an *alternative* to traditional long-term disability (LTD) group insurance coverage and are available to groups in the low-risk occupational classes of executives and professionals: lawyers, doctors, accountants, etc.: Select one: a.Guaranteed renewable policy b.Cancellable policy c.Non-cancellable policy d.Guaranteed issue policy

Answer 71

d. Guaranteed issue policy Why? A guaranteed issue (GI) disability insurance policy: ✔️ Is available to specific groups (like executives, lawyers, doctors, accountants). ✔️ Offers an alternative to traditional LTD group plans. ✔️ Requires no medical underwriting, making it easier to qualify. ✔️ Ensures coverage, but the insurer may adjust benefits or exclusions. d. Guaranteed issue policy

Question 72

Individuals that suffer such catastrophic health events as a life-threatening cancer, heart attack or stroke may incur expenses or changes in their lifestyle that are not covered by conventional disability insurance. What is a restriction that will limit how the CI benefit can be used? Select one: a.Conventional medical expenses not covered by provincial health plans b.Paying off debt, such as mortgages or credit card balances, to ease the financial stress arising from a prolonged recovery period, increased medical expenses and/or a reduced future earning capacity c.There are no particular restrictions on how the benefit can be used d.Alternative treatments to those covered by provincial medical plans

Answer 72

C) The correct answer is: There are no particular restrictions on how the benefit can be used

Question 73

This form of business ownership or business structure does not offer their shares for purchase to the general public: Select one: a.Sole proprietorship b.Corporation c.Partnership d.Privately held

Answer 73

D) Privately held

Question 74

In the case of non-standard risks the company would normally still like to accept the risk, provided they can limit the extent of the risk to acceptable levels. Which of the following is NOT one of the four ways the insurer will modify the policy? Select one: a.Rating the premium b.Imposing exclusions c.Imposing limitations d.Imposing a minimum benefit

Answer 74

D) For non-standard risks (higher-risk applicants), insurers want to limit their exposure while still offering coverage. They do this in four main ways—but NOT by imposing a minimum benefit. What the insurer CAN do: ✅ Rating the premium – Charging higher premiums for higher risks. ✅ Imposing exclusions – Not covering certain conditions (e.g., pre-existing illnesses). ✅ Imposing limitations – Reducing benefits (e.g., shorter benefit periods, lower coverage). What the insurer does NOT do: ❌ Imposing a minimum benefit – Insurers don’t force a set minimum payout, as that wouldn’t help them manage risk.

Question 75

Because the entire insurance underwriting and issue process begins, and sometimes ends, with the application, it is critical that the agent involved in taking the application gathers information that is as complete and as accurate as possible. The agent intervenes in all the following aspects of the application, except: Select one: a.Agents comments b.Financial questions c.Medical questions d.Inspection report

Answer 75

B) financial questions are usually handled by the underwriter, not the agent. While the agent collects some financial details, they don’t make decisions about financial eligibility.

Question 76

When examining a proposed new group plan from the perspective of “Dental benefits”, all of the following factors are applicable, except: Select one: a.Benefits period b.Co-insurance factors c.Deductibles d.Maximum annual/lifetime benefits

Answer 76

A) When looking at a new group dental plan, the main factors typically considered are: ✅ Co-insurance factors – This refers to how much the insured pays out-of-pocket (usually a percentage) for dental services. ✅ Deductibles – The amount the insured must pay before the insurance starts covering dental expenses. ✅ Maximum annual/lifetime benefits – The highest amount the insurance will pay out for dental services over a year or the insured's lifetime. However, the "benefits period" isn't as relevant for dental plans compared to other types of insurance. Dental plans usually operate on an annual basis, with benefits renewing each year.

Question 77

Which of the following is NOT of particular interest for determining the overall cost of coverage given the tax implications of group A&S plans? Select one: a.Employer contribution to disability payments b.Group premium tax c.Employee payment of long-term disability premium d.Registration of short-term disability plan with Employment and Social Development Canada (ESDC)

Answer 77

A) When determining the overall cost of coverage for group Accident and Sickness (A&S) plans, the following are typically of interest due to tax implications: ✅ Group premium tax – The tax applied to the premium paid for the group plan. ✅ Employee payment of long-term disability premium – If the employee pays part of the premium, the tax treatment may differ compared to employer-paid premiums. ✅ Registration of short-term disability plan with Employment and Social Development Canada (ESDC) – This ensures that the plan meets the necessary legal requirements, which can impact the tax status. However, the employer's contribution to disability payments is not directly related to the cost of coverage. The employer's contribution doesn't have a specific tax implication that directly affects the cost of the insurance premium itself.