Group Disability

Question 1

What is needed for a group insurance to be in force?

Answer 1

A group of insured persons must be established along with the conditions that qualify the group

Question 2

How does the insurance company prove enrollment?

Answer 2

The insurance certificate is issued to the insured person.  in Quebec the employer must provide a copy of the policy and an information booklet.

Question 3

How do you enrol in a group insurance plan without evidence of insurability?

Answer 3

When was due so within 30 days of becoming eligible for the plan.

Question 4

Who manages the group insurance contract?

Answer 4

Contract management is facilitated by the fact that the employer holds much relevant information on its employees and his best position to manage the contract.

Question 5

How much disability is accepted in a group disability insurance plan? What are the conditions?

Answer 5

Total disability. Be insured person must not receive work income, except for rehabilitation programs recognized by the insurer, and must receive care from a healthcare professional on a regular basis.

Question 6

How does short term group disability insurance coverage defer from other group insurance?

Answer 6

Lesser benefits and a shorter elimination period.

Question 7

What are the usual benefits for short-term group disability insurance coverage?

Answer 7

Benefits are normally 2/3 of remuneration with a set maximum amount. Benefits are paid weekly and the benefit. Is usually 15 to 26 weeks (half a year).

Question 8

How often are benefits paid? How long is short term group disability insurance benefit period usually?

Answer 8

Benefits are paid weekly. The benefit period is usually 15 to 26 weeks.

Question 9

What is the elimination period?

Answer 9

 it’s the waiting period before the first benefit is paid

Question 10

Hope long is the elimination period for short term group disability insurance?

Answer 10

Typically 0 to 90 days

Question 11

Do exclusions and restrictions apply to short term or long-term coverage?

Answer 11

Both

Question 12

The following exclusions and restrictions, apply to both short-term and long-term coverage:

Answer 12

• Injury and illness resulting from an assault or criminal act
• Leave taken to receive aesthetic care
• Suicide
• Self inflicted injury
• Accidental injury or illness occurring during a temporary layoff, lockout or strike if the members coverage has not been maintained during the layoff, lockout or strike
• Injury or illness due to participation in a riot, war ,civil unrest or uprising
• If a plan, member is under treatment for drug dependence or alcoholism, the insured may agree to provide coverage

Question 13

What is the effect of pre-existing illness when it comes to disability insurance?

Answer 13

The insurer may decide to exclude pre-existing illnesses from disability insurance. If the group to be insured does not already have such coverage at the time of the agreement.

This exclusion cannot be made when changing insurers upon the expiry of a contract (as members of the former plan have acquired privileges )

Question 14

How are group plans taxed?

Answer 14

An employer who sets up a group insurance plan rather than individual policies for employees will have tax benefits

• the premiums are deductible for the business
• the premiums are not a taxable benefit for the employee
• the benefits are taxable for the employee

Question 15

What happens at taxation if the premiums are paid by the employee?

Answer 15

In the case of consolidated disability insurance contract, where the employee pays the premiums, the benefits paid in the event of disability are not taxable.

If the employer pays a portion of the premiums, the employee will be taxed on the portion of the benefits that exceeded the portion paid by the employee.

Question 16

In a group disability insurance plan, where the employer and employee pay premiums, who gets taxed and how much?

Answer 16

The premiums paid by the employer are deductible for the business (but not for employee)

The employee ye will be taxed on the portion of the benefits that exceeded the portion paid by the employee.

Question 17

What is business disability insurance?

Answer 17

This is when the employer considers protecting their business in the event of a disability. The disability may be of an employee or a business owner.

Question 18

What are three types of business disability insurance?

Answer 18

• Key person coverage
• Disability buyout coverage
• Overhead expense coverage

Question 19

What is key person coverage?

Answer 19

Key person coverage protects businesses from financial losses that may result from the disability of key persons in an organization.

Question 20

Does key person coverage have an elimination period? If so, how long is it normally?

Answer 20

Yes, there is normally a 30 day elimination. Before the first benefit is paid.

Question 21

How long are benefits received in the case of a key person coverage?

Answer 21

After the 30 day elimination period, the benefits normally receive for 12 months.

Question 22

What is disability buyout coverage?

Answer 22

It protects businesses from the long-term disability of a partner or owner. It allows the disabled partners shares to be brought out over a long period. The buyout is accomplished through periodic payments or a lump sum payment.

The disability buyout coverage is guaranteed and cannot be canceled. The contract can be renewed until the 65th birthday of each insured.

Question 23

What is overhead expense coverage?

Answer 23

It is a business disability insurance that allows for the reimbursement up to a certain limit of the expenses incurred by business to continue providing services, if the owner becomes disabled

Question 24

Which business disability insurance cannot be used to protect the owner, a.k.a. if the owner becomes disabled?

Answer 24

The key person coverage cannot be used to cover the owner. The owner cannot be the key person. There are other coverages for the owner or owners.

Question 25

Which business disability insurance is good to protect one partner in a business over the other person’s disability?

Answer 25

The disability buyout coverage

It protects businesses from the long-term disability of a partner. It all allows the disabled partners shares to be bought out over a long period.

The buyout is accomplished through periodic payments, or a lump sum payment

The disability buyout coverage is guaranteed and cannot be cancelled

The contract can be renewed until the 65th birthday of each insured

Question 26

Which business disability insurance is guaranteed and cannot be canceled?

Answer 26

Disability buyout coverage.

The contract can be renewed until the 65th birthday of each insured.

Question 27

What kind of expenses are covered in overhead expense coverage?

Answer 27

Overhead expenses, obviously.

There is usually a maximum amount

Examples of expenses :
- Wages of employees who performed different duties than the insured
- Rent
- General insurance costs
- Professional or union dues
- Telephone service
- Mailing costs
- Laundry
- Electricity and heating
- Water
- Mortgage payments
- Equipment rentals
- Legal and accounting fees

Question 28

Which of the following expenses are not covered in overhead expense insurance coverage?

A. wages of employees who perform different duties than the insured
B. Wages of key persons
C. Electricity and heating
D. Travel expenses
E. Vehicle operating costs
F. Telephone service
G. Disability buyout coverage
H. Income of the insured person, or persons who perform the same work as the insured person

Answer 28

D, e, g, h

The expenses that are not covered, include :
- Travel and entertainment expenses
- Cost of purchasing goods for resale
- Income of the insured person, or a person who performs the same work as the insured person
- Equipment and vehicle operating costs
- Expenses incurred to generate business income, while the insured is disabled
- Expenses incurred by the insured person after the disability has ended

Question 29

Who is insured for overhead expense coverage?

Answer 29

This insurance covers expenses incurred by a business to continue providing services if the owner becomes disabled

This coverage is intended in particular for small businesses with a soul owner or key person

To be eligible , this person must work full-time for the business

But wages earned by the insured are not covered, only key person wages

Question 30

Which types of business disability insurance covers the disability of a key person?

Answer 30

Either key person coverage, as long as that key person is not the owner.

Or overhead expense coverage, as long as the person works full-time for the business, this one will cover overhead expenses during disability

Question 31

Which business disability insurance is the best for a small business with a sole owner or key person?

Answer 31

Overhead expense coverage. As long as that covered person works full-time for the business.