Module 4 Flashcards
What is the structure of group insurance?
Insurer: company
Policyholder: employer or organization that sponsors the contract. Submits payments.
Member- person under contract.
What are the fundamental principles of group insurance?
Person must be actively at work when they become eligible.
Choices and amounts of coverage must be restricted.
If plan is contributory then must be payroll deducted.
Employer must pay for a portion of the group premium.
Must be a minimum number of employees.
Eligible employees must belong if they don’t have alternate coverage.
Methods of Calculating Group premium rates
Manual: rates are set using a standard manual based on experience of company/industry.
Experience: rates are set based on groups prior claims
Blended: a combo of both.
insurer needs a certain amount of years before experience rating is used.
What are the funding mechanisms for Group claims and expenses?
Non-refund Account: no refunds to employees
Refund Accounting: the employer shares in the results of the plan. Minimum 150 person.
ASO: Admin only: a self-funded plan by the employer. Only acts as admin.
What determines costs of group policies?
Class of employees, not age or sex. Convertible for 31 days after termination of employment.
Holding over minimum group insurance is subject to new medical underwriting yes or no?
Yes. Over a certain maximum, need medical underwriting.
What is the tax treatment for group policies?
Employees: not tax deductible, benefits tax free.
Employers: premiums paid are tax deductible. Premiums paid by employer are a taxable benefit to the employee.
What are the exclusions for group life?
None. No suicide clause on case, no contractual exclusions, no exceptions.
How does AD&D work under Group plans?
No medical underwriting. Optional benefits, holds exceptions: suicide, self inflicted, acts of war, armed forces pilot, death due to work.
How does group disability insurance usually differ?
After 2 years own definition switches to Any. Short-term disability last up to 13-52 weeks. Switches to long term - more stringent.
What are the common elimination periods for STD and LTD in group policies?
1st day for hospital or accident, 7 days for sickness : STD
120 days: LTD
How does recurrent disability work?
Must suffer a period of total disability. Returns to work, suffers recurrence of disability. STD - 14 days, LTD - 6 months. No new elimination. Continues previous claim.
What are direct and indirect offsets of benefits?
Direct: Benefit paid directly to insurer. Subrogation - like an award from car accident.
Indirect: Benefit paid to client, reported and offset against benefits paid. Coordination of benefits.
Group plans can offset CPP primary and secondary benefits.
What are the various LTD indirect offsets?
Benefits paid under an association or other group.
Any income from other job other than vacation or severance pay.
Disability benefits from auto insurance.
Any retirement benefits related to any employment.
EI insurance pays to workers that experience what?
Illness, Accident, Injury, Quarantine, Child Adoption, Pregnancy.
