Module 3 Flashcards
Why do people get Accident and Sickness Insurance?
Morbidity Risk: The risk of financial loss due to illness. 3 times for like to become disabled than death.
Covers cost of pharmacy, covers significant unforeseen medical expenses.
Accident and Sickness Insurance provides what sort of tax treatment?
Covering up to 70% of before tax earning. Benefit is variable, elimination period is variable.
What are the different sources of disability insurance?
Personal Health
Critical Illness - Provides lump sum payment under critical illness.
Long Term - Pays for home care or nursing area.
WCB: Benefits were tax free, pays up to 90% of pre-disability income if occurs at work. 4 hour elimination.
EI: Benefits are taxable, 2 week elimination period, 15 weeks of benefits, up to 55%.
Individual: Usually long term benefits, 3-4 month elimination, to 65.
What are the qualifications for CPP disability insurance?
Benefits are Taxable with 4 month elimination period. Difficult qualify for. Disability must be SEVERE and PROLONGED.
What are the different types of Group benefits?
Benefits: May be taxable or tax free depending on contract terms Short term benefits 1 or 2 week elimination period Up to 1 year of benefits Long term benefits 3 or 4 month elimination period Could be coverage to 65
What is the order of benefit payouts?
WCB, CPP, Group, EI, Personal (no subrogation).
What are different occupational classes and different definitions of disabilities?
5A - Professionals, Doctor, lawyers, etc. (own)
4A- Executives over 100k (own)
3A- Supervisors under 100k (regular)
2A Skilled trades (regular/any)
1A - Dirty and Dangerous occupations. (any)
What is the different definition of disability?
Own: Can’t do the important duties of own occupation. If working different, still get full benefits.
Regular: Same, but dollar for dollar reduction in benefits from new occupation.
Any: Can’t do any work based on education or skills. If working different then benefits stop.
What is a presumptive disability?
Insurer will presume that the insured is permanently disabled if two of the follow happen: voice, hearing, sight, use of two limbs. Full benefits, no offsets.
What are three levels of Guarantees?
Non-cancellable, guaranteed renewable (5A, 4A) Insurer cannot make changes. Guaranteed Renewable (3A, 2As) annually insurer can raise premiums, lower benefits for the entire class. Cancellable (2A, 1A) Insurer can make any adjustments or cancel the entire class.
What is the definition of total disability and partial?
For Own and Reg policies: If the client cannot do the major activities of the job. Benefits depends on Elimination period. For Partial, cannot do one of the major activities. If can perform all activities but for less time, not paid.
Any: Same except if they can find other work it is not paid. For Partial, any work for any time, not paid.
What is the definition of residual disability?
If client returns to activities but for less time then eligible for residual. More than 20%, less than 80%. new inc/old income%*Benefit.
What are the contractual exception for disability insurance?
Self inflicted injuries, Transplant surgery as the donor, Cosmetic surgery, Attempted suicide, Pregnancy (but complications are), Disability from committing a crime, War.
What are exclusions and ratings for Disability insurance?
Rating: Charging extra for extra risk based on health, activities.
Exclusion: not covering a particular activity due to added risk. If something is excluded, no rating.
Full Exclusions: Sports or dangerous activities.
What are some of the rider for disability insurance?
AD&D
Future income benefit - if eligible, client can buy more insurance even if in bad health.
24 hour sickness and injury - required for self employment or not covered by WCB.
COLA - Indexed to inflation
