chap 7 Income protection plan

Question 1

3 government plans that offer income protection

Answer 1

1) Worker Compensation
2) Employment insurance
3) CPP disability benefit

Question 2

6 social insurances

Answer 2

1) worker compensation
2) EI
3) CPP disability benefit
4) CPP
5) Retirement benefit
6) Death benefit

Question 3

6 Characteristics of social insurance

Answer 3

1) compulsory
2) benefit provided relates to income
3) The benefits are prescribed by law
4) benefits are not means tested
5) are contributory
6) benefits are paid out of contributions, not tax

Question 4

Workers’ compensation

Answer 4

Canada’s first social program, originated in ontario in 1915. Workers can be compensated for injuries if they give up the right to sue

Question 5

4 underlying principles of worker compensation

Answer 5

1) Employers bare the direct cost of compensation in return for protection against lawsuit
2) workers give up the right to sue
3) negligence and fault are only considered when determining premiums
4) administered by a neutral agency

Question 6

Worker compensation determination of premiums

Answer 6

Based on earnings before deductions. Workers are divided in divisions according to their occupation and then subdivided in Major Groups and then further subdivided

Question 7

Worker compensation/maximum assessable earnings

Answer 7

the maximum amount of earnings for each employee covered by Worker Comp. In most provinces it is also the maximum earning covered

Question 8

Taxation on Worker compensation

Answer 8

it is added to taxable income, so affects the ability of a spouse to deduct the impaired spouse as dependent and the amount of child tax credit. There is then an offsetting deduction making Worker Comp non taxable

Question 9

worker compensation : non economic loss

Answer 9

when a worker is permanently injured and can not return to work, most jurisdictions provide a benefit that recognize there is a loss beyond wage loss. Benefits are also adjusted for age and inflation

Question 10

Worker compensation: survivor benefit

Answer 10

when a worker dies as a result of a work related injury, surviving spouse and other dependents receive a lump sum payment plus a monthly benefit

Question 11

3 objectives of Employment Insurance

Answer 11

1) Provide income during short time involuntary unemployment
2) Help unemployed workers find jobs

Question 12

Premiums for Employment Insurance

Answer 12

1.73% on all eligible earnings (not investment income) up to 731$. Employee premiums are eligible for non refundable tax credit and employers pay 1.4 times more than employee which are tax deductible

Question 13

Uninsurable employment income

Answer 13

Includes self employed income, lump sum, scholarship, research grant, payment under wage loss replacement plan, casual employment

Question 14

EI: 5 categories of benefit

Answer 14

1) Regular benefit
2) Maternity, parental and sickness benefit
3) Compassionate care benefit
4) Fishing benefit
5) work sharing benefit

Question 15

EI Regular Benefit

Answer 15

pay from 14 to 45 weeks if:

• the employee lost his job through no fault of his own
• has been without work for at least 7 days
• has worked the required number of hours in the previous 52 weeks

Question 16

Qualifying period for EI

Answer 16

it is the shorter of: 52 weeks OR period since the start of the last claim

Question 17

Amount of EI benefits

Answer 17

1) look at total earnings on the last 26 weeks of work
2) find the unemployment rate in the region and the min divisor that apply for that region
3) Determine the average weekly insured earnings by dividing last 26 week earnings with the greater of: # of weeks worked OR min divisor
4) multiply the result by 55% to get the weekly benefit to a max of 447$

Question 18

maternity benefit

Answer 18

for birth of surrogate mother to a maximum of 15 weeks

Question 19

Parental benefit

Answer 19

for birth or adoptive parents to a maximum total of 35 weeks

Question 20

sickness benefit

Answer 20

for sickness, injury or quarantine to a maximum of 15 weeks

Question 21

eligibility for parental, maternity and sickness benefit

Answer 21

regular weekly earnings has decreased by more than 40% AND the employee has accumulated 600 insured hours in the last 52 weeks

Question 22

Compassionate care benefit

Answer 22

paid up to 6 weeks to a person who has to be absent from work to provide care or support to a gravely ill family member at risk of dying

Question 23

Work sharing benefits

Answer 23

available for employees who accept a temporary reductions in workload if there is a temporary reduction of orders. can last from 6 to 52 weeks. employees must meet normal requirement for regular EI benefit

Question 24

Private disability plan

Answer 24

the amount of coverage is based on income at the time policy is taken and can be up to 80% for taxable benefit

Question 25

5 parts of a private disability insurance

Answer 25

1) Definitions
2) Benefits
3) Contract provisions
4) Exclusions
5) Riders

Question 26

eligibility requirements for group disability insurance

Answer 26

1) Only full time direct employees can participate
2) there is a probationary period before a new employee can join
3) after the probationary period, employees have to sigh up during the eligibility period
4) employee has to be actively at work when the insurance becomes effective
5) in a small group, all employees must participate

Question 27

characteristics of short term disability plan

Answer 27

1) Pay benefits for 13 to 52 weeks
2) short or no elimination period
3) may provide coverage if the accident happends off the job
4) provides own occupation coverage
5) benefits are a % of earnings
6) few exclusions

Question 28

Dual definition of disability used on long term group disability plans

Answer 28

between 0 and 2y: disabled if you cannot work at your own occupation
after 2 years: disabled if you cannot work at any occupation

Question 29

Taxation of disability income

Answer 29

if an indiv pays for individual or group insurance, income is not taxable when received. If the employer pays the premium then income is taxable when received