INSURANCE

Question 1

What are banks prohibited from doing under the Bank Act regarding insurance?

Answer 1

Banks cannot sell insurance policies through their branch networks or use customer information for segmented marketing of insurance products.

Question 2

What limitations affect banks’ ability to sell insurance?

Answer 2

Limiting elements arise from the Bank Act and jurisdictional controls at both federal and provincial levels.

Question 3

Who has overall control of banks in Canada?

Answer 3

Overall control of banks rests with the federal government, but provinces have control over certain financial institutions, including insurance companies.

Question 4

What do provincial laws govern regarding insurance?

Answer 4

Provincial laws govern the licensing of agents and brokers and qualifications to sell insurance products.

Question 5

What is a unique law in Ontario regarding insurance sales?

Answer 5

Ontario has laws that prohibit employees of deposit-taking institutions from being licensed to sell life insurance.

Question 6

What are Crown Insurance Companies?

Answer 6

Some provinces, like Quebec, Manitoba, and BC, sell compulsory vehicle insurance through Crown Insurance Corporations.

Question 7

What proposal has the Canadian Bankers Association made regarding regulation?

Answer 7

They propose that financial institutions be regulated by only one level of government based on their operational province.

Question 8

Why are banks interested in the insurance business?

Answer 8

Banks believe they can provide greater access to insurance products at lower costs, expand in a maturing market, increase financial capacity, and service customer needs during retirement.

Question 9

What is insurance?

Answer 9

Insurance is a range of products that protect against the effects of risk, which is the chance of experiencing a loss.

Question 10

How does insurance work?

Answer 10

Individuals pay premiums to an insurance company, and in the event of a loss, they file a claim for payment.

Question 11

What is the principal reason for buying insurance?

Answer 11

Consumers want to protect themselves and their dependents against various forms of risk that can lead to financial loss.

Question 12

What are the four broad categories of insurance products?

Answer 12

1. Life, disability, and extended health care 2. General 3. Credit 4. Professional liability

Question 13

What does life insurance provide?

Answer 13

Life insurance provides payment upon the death of the insured, protects survivors from financial burden, and comes in term, permanent, and group coverage.

Question 14

What is term life insurance?

Answer 14

Term life insurance provides coverage for a specified period, pays a death benefit only if the insured dies during that term, and does not build cash value.

Question 15

What distinguishes permanent life insurance?

Answer 15

Permanent life insurance remains in force for the insured’s lifetime, includes a cash value component, and has variations like whole, universal, and variable life.

Question 16

What is group life insurance?

Answer 16

Group life insurance is offered to employees under a master policy, with coverage based on employment status and often included in benefit packages.

Question 17

What does disability insurance cover?

Answer 17

Disability insurance replaces income if a person cannot work due to injury or illness and covers expenses not included in provincial health plans.

Question 18

What is general insurance?

Answer 18

General insurance covers various types of insurance products that do not deal with life, disability, or extended health coverage.

Question 19

What are the two broad categories of general insurance products?

Answer 19

1. Personal Lines 2. Commercial Lines

Question 20

What does home and property insurance protect against?

Answer 20

Home and property insurance protects against loss to the home, its contents, and personal belongings, as well as personal injury to others.

Question 21

What does vehicle insurance cover?

Answer 21

Vehicle insurance protects against losses from collision, theft, vandalism, and liability for injuries to others.

Question 22

What happens to the premium with higher liability coverage?

Answer 22

The higher the liability coverage, the higher the premium.

Question 23

What is a common range for first-loss deductibles in vehicle policies?

Answer 23

Common deductibles range between $100 and $500.

Question 24

How does the deductible affect the cost of coverage?

Answer 24

The higher the deductible, the less the person will generally have to pay for coverage.

Question 25

What are the payment options for insurance premiums?

Answer 25

Payment options include a lump-sum payment or monthly installments via direct debit.

Question 26

What happens if payment is not received by the insurer?

Answer 26

Coverage normally ceases if payment is not received within 31 days of the due date.

Question 27

Can a prepaid premium be refunded upon cancellation?

Answer 27

Only a prepaid and unused premium may be refunded in the event of cancellation prior to the end of the policy term.

Question 28

Can customers amend their insurance coverage during the policy term?

Answer 28

Yes, customers may choose to amend the range of perils covered and deductible levels during the policy term.

Question 29

When does coverage cease if a policy is canceled?

Answer 29

Coverage normally ceases at the end of the month in which written notice of cancellation is received.

Question 30

How is access to insurance typically obtained?

Answer 30

Access is through an agent or broker.

Question 31

What is required by law for vehicle owners before a license plate is issued?

Answer 31

Persons must have minimum levels of coverage on their vehicle.

Question 32

What type of insurance do certain provinces require?

Answer 32

Some provinces require that elements of vehicle insurance be acquired from public insurance corporations.

Question 33

What is travel insurance primarily designed to cover?

Answer 33

Travel insurance provides protection for medical expenses incurred outside of Canada.

Question 34

What are some medical benefits provided under travel insurance?

Answer 34

Common medical benefits include ground and air ambulance, hospital accommodation, and prescriptions.

Question 35

What are some non-medical benefits included in travel insurance?

Answer 35

Non-medical benefits include emergency air transport back home and lost luggage.

Question 36

What are the general characteristics of travel insurance?

Answer 36

Coverage can be from one day to six months, based on age, number of people, and payment must be made prior to departure.

Question 37

What types of commercial products are available?

Answer 37

Major types include buildings and contents, vehicles, equipment, crime, marine and aircraft, boilers, surety, business interruption, and general liability.

Question 38

What does buildings and contents insurance cover?

Answer 38

It covers risks affecting the ability of the business to continue due to fire, water damage, and other perils.

Question 39

How does vehicle coverage differ for commercial products?

Answer 39

Costs are higher for business vehicles due to increased risk from being on the road more hours.

Question 40

What does crime insurance cover?

Answer 40

It covers theft due to break-ins and acts of dishonesty by employees.

Question 41

What does surety insurance protect against?

Answer 41

It ensures project completion in case of contractor failure.

Question 42

What is credit insurance designed to protect against?

Answer 42

It protects customers if they become disabled or die before repaying a loan or mortgage.

Question 43

What is malpractice insurance associated with?

Answer 43

It is associated with the medical profession and provides liability protection.

Question 44

What is professional indemnity coverage?

Answer 44

It protects professionals against mistakes or omissions that could result in personal injury or financial loss.