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BAP UNDERWRITING GUIDELINES UNDERWRITING

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					                            BAP – UNDERWRITING GUIDELINES

The Benefit Avantage Program allows for more flexbility when quoting. Like everything else, there are
certain guidelines that are are required to follow and anything except the guidelines must be approved by
Group Underwriting.


                      UNDERWRITING GUIDELINES – 2 – 10 LIVES


   General Guidelines (Benefit Advantage Program)

 1.    Maximum percentage of Employees who:
         a) are hired in the last 12 months (PROVIDE REASON)                      40%
         b) are on commission                                                     40%
         c) earn less than $10,000.000 annually                                   40%
 2.    Earnings for commissioned Employees will be the average earnings over a three year period paid
       by the Employer, exclusive of bonuses or overtime earnings. If employed less than three years,
       earnings will be averaged over the available length of service with the Employer.
 3.    Businesses should have been operating for a minimum of two years.
 4.    Disabled employees must be listed.
 5.    ALWAYS obtain a copy of the collective agreement for union plans.
 6.    When quoting a non-government group with government funding, the group must meet the
       following requirements:
          1) Maximum funding of 50% from ALL government sources, and
          2) In operation for a minimum of two years, and
          3) Must have previously been insured by another carrier, and
          4) The stability of the group is a major factor.
 7.    An Employee must work a minimum of 25 hours per week to be eligible for coverage.
       Participation Requirements
       Non-conbtributory and contributory plans must have 100% participation. Participation
       requirements apply to the group at inception, and any new employees after that date are required
       to join the plan as a condition of employment.
 8.    Elected officials must be approved by underwriting.




                                                  -1-
                           BAP – UNDERWRITING GUIDELINES

9.    2 - 10 EMPLOYEES client must not have a Co-operators Group Policy currently in force.
      Groups who are multi-line or have a commercial policy are eligible for a 2% discount in
      premium rates. Should they become a commerical or multi-line client after purchasing the group
      product the rates will be reduced by 2% effective the first of the following month. The agent
      will be responsible to notify Group Lockhart of their change with confirmation of the other
      policy number in writing.

10.   This program must exclude existing Co-ops and Credit Union business, Home Hardward or any
      other existing Group Business with The Co-operators.

11.   Health evidence is a requirement on all benefits. The applicant is to complete a “short medical
      evidence form”. Group Lockhart will provide clear case underwriting on all groups. Any
      evidence form indicating “yes” answer will be sent to The Co-operators to underwrite (for
      details see attached clear case underwriting).

12.   Home based incorporated businesses are eligible for coverage. The Long Term Disability
      benefit is limited to “2 year benefit”.

      Note: It is possible that home based business is not incorporated nor do they have a commercial
      policy. In this case the following conditions must be met:

      * The individual must be of skilled or professional trade.

      * The requirement of permanent employment must be met. The employment must be of
        permanent nature. The person must not be doing an odd job, while he/she is tryiong to find
        their real job. Must have at least 2 years of history or stable contract work.

      * The requirement of regular salary must be met. When disabled, we must be definite if there is
        a loss of income and what amonts of benefit must be paid. To determine insurable income, it
        must be clear that the individual is drawing regular salary from his business. Some
        individuals draw dividends. Dividends are not insurable income, as individual can still draw
        dividiends while disabled.

        Monthly income for these type of people can fluctuate significantly as it will depend on
        whether they have a contract or not. Insurable income should be determined by obtaining
        average of 2 years of income tax notice of assessment.

      * The individual must be reporting income to Revenue Canada.

      * Contract or employment must not be of seasonal nature.

13.   A vision care option of $200 is available upon request, however, premium rates will be increased
      accordingly. Once this option is chosen the lessor amount is not available in the future.
      (minimum of 4 lives).




                                                 -2-
                           BAP – UNDERWRITING GUIDELINES

 14.   Please indicate by individual if they are covered under WCB on the request to quote and on the
       application form.




Farm Corporations
          Must be an incorporated farm operation.

          Operation 12 month a year.

          No seasonal employees. Only full time year round employees are eligible.

          Must have 100% participation of eligible employees. (Employees with spouses that have
          EHC and/or dental coverage may opt out.)

          There must be at least five insured’s for each coverage.

          If the case has greater than 10 lives SR4’s should contact their Group Rep’s office for an
          EMPAC quote.

          All preceding guidelines also apply.



  Final decision on a Farm Coporation will be on a case by case basis.




                                                  -3-
                             BAP – UNDERWRITING GUIDELINES



                         PLAN DESIGN OPTIONS - 2 TO 10 LIVES


Health evidence is required on all amounts of insurance.

  LIFE and ACCIDENTAL DEATH, DISEASE AND DISMEMBERMENT

  Option 1             Flat $25,000
  Option 2             1 x annual salary to a maximum of $300,000
  Option 3             2 x annual salary to a maximum of $300,000

  All Options          Reduce by 50% at age 65, maximum $20,000
                       Terminates earlier of retirement or employee's age 70


  DEPENDENT LIFE - coverage from birth - includes Pre-natal Benefit

  Option 1             Spouse        $10,000         Option 2          Spouse       $5,000
                       Child         $5,000                            Child        $2,500

  All Options          No spousal conversion
                       Terminates earlier of retirement or employee's age 70


  LONG TERM DISABILITY

                          Option 1                        Option 2                  Option 3
  Elimination Period        119 days      30 days           119 days      30 days     119 days      30 days
  Benefit Period          2 years                         To age 65                 5 years
  Def. of Disability      2 year own occ.                 2 year own occ.           2 year own occ.
  Integration             Primary                         Primary                   Primary
  Maximum                 $3,500                          $3,500                    $3,500
  % of Salary             66.67%                          66.67%                    66.67%
  Termination             Age 65                          Age 65                    Age 65




                                                    -4-
                         BAP – UNDERWRITING GUIDELINES

EXTENDED HEALTH CARE


                          Option 1            Option 2**            Option 3             Option 4**
Co-insurance
     Drugs/Other          100%/100%           80%/80%               100%/100%            80%/80%
Deductible *
     Single/Family        $0/$0               $0/$0                 $25/$50              $25/$50


*   Semi-private and Convalescent Hospital, Vision Care and Out-of-Country are not subject to co-
    insurance or deductibles.

** If no coverage currently exists, group is limited to Option 2 or 4 for the first 12    months

DRUG CARD - Available under options 1 and 2 only
    Option 1               $0.00 co-pay (Plan Z)

    Option 2               20% co-pay (Plan Z)

All Options

Hospital                           Semi-private
Vision Care                        $100/24 months
Survivor                           2 years
ParaMed                            $500/yr
Convalescent Hospital              Daily limit $20 for a maximum period of 90 days.
Nursing Care                       $5,000/year
Hearing Aids                       $400/60 months
Drugs                              Prescription
Maximum
   In Canada                       Unlimited/year
   Outside Canada                  $1,000,000/lifetime
Out of Province                    Emergency travel coverage up to 90 days
Termination                        Earlier of retirement or employee's age 70




                                                -5-
                         BAP – UNDERWRITING GUIDELINES

DENTAL


                         Option 1            Option 2**            Option 3           Option 4**
Co-insurance
     Level 1 and 2       100%/100%           80%/80%              100%/100%           80%/80%
Deductible *
     Level 1 and 2
     Single/Family       $0/$0               $0/$0                $25/$50             $25/$50

All Options

Maximum                   Combined maximum of $1,000 per person
Fee Guide                 Current
Survivor                  2 year
Termination               Earlier of retirement or employee's age 70

*   Semi-private and Convalescent Hospital, Vision Care and Out-of-Country are not
    subject to co-insurance or deductibles.

** If no coverage currently exists group is limited to Option 2 or 4 for the first 12 months



COVERAGE PREREQUISITE

2 - 10 lives
A group must purchase Life, Accidental Death & Dismemberment, Dependent Life and Long Term
Disability before purchasing Extended Health Care and/or Dental.




                                               -6-
                             BAP – UNDERWRITING GUIDELINES


                          UNDERWRITING GUIDELINES - ONE LIFE

NOTE: All the rates will be 15% higher with the exceptioin of LTD which will be 25% higher than the
base rates for the BAP program for 2 - 10 lives.



      General Guidelines (Benefit Advantage Program)

 1.     Earnings for commissioned Employees will be the average earnings over a three year period paid
        by the Employer, exclusive of bonuses or overtime earnings. If employed less than three years,
        earnings will be averaged over the available length of service with the Employer.

 2.     Businesses should have been operating for a minimum of two years.

 3.     Disabled employees must be listed.

 4.     ALWAYS obtain a copy of the collective agreement for union plans.

 5.     When quoting a non-government group with government funding, the group must meet the
        following requirements:
          1) Maximum funding of 50% from ALL government sources, and
          2) In operation for a minimum of two years, and
          3) Must have previously been insured by another carrier, and
          4) The stability of the group is a major factor.

 6.     An Employee must work a minimum of 25 hours per week to be eligible for coverage.

        Participation Requirements

        Non-conbtributory and contributory plans must have 100% participation. Participation
        requirements apply to the group at inception, and any new employees after that date are required
        to join the plan as a condition of employment.

 7.     Elected officials must be approved by underwriting.




                                                   -7-
                           BAP – UNDERWRITING GUIDELINES

8.   Client must not have a Co-operators’ group policy currently in effect. A client who is a multi-line
     or has a commercial policy are eligible for a 2% discount in premium rates. Should they become
     a commerical or multi-line client after purchasing the group product the rates will be reduced by
     2% effective the first of the following month. The agent will be responsible to notify Group
     Lockhart of this change with confirmation of the other policy number in writing.

9.   This program must exclude existing Co-ops and Credit Union business, Home Hardward or any
     other existing Group Business with The Co-operators.

10. Health evidence is a requirement on all benefits. The applicant is to complete a “short medical
    evidence form”. Group Lockhart will provide clear case underwriting on all groups. Any
    evidence form indicating “yes” answer will be sent to The Co-operators to underwrite (for details
    see attached clear case underwriting).

11. Home based incorporated businesses are eligible for coverage. The Long Term Disability benefit
    is limited to “2 year benefit”.

     Note: It is possible that home based business is not incorporated nor do they have a commercial
     policy. In this case the following conditions must be met:

     * The individual must be of skilled or professional trade.

     * The requirement of permanent employment must be met. The employment must be of
       permanent nature. The person must not be doing an odd job, while he/she is tryiong to find
       their real job. Must have at least 2 years of history or stable contract work.

     * The requirement of regular salary must be met. When disabled, we must be definite if there is
       a loss of income and what amonts of benefit must be paid. To determine insurable income, it
       must be clear that the individual is drawing regular salary from his business. Some individuals
       draw dividends. Dividends are not insurable income, as individual can still draw dividends
       while disabled. In cases of income splitting the spouse’s salary will not be covered unless they
       are a full time employe actively at work.

       Monthly income for these type of people can fluctuate significantly as it will depend on
       whether they have a contract or not. Insurable income should be determined by obtaining
       average of 2 years of income tax notice of assessment.

     * The individual must be reporting income to Revenue Canada.

     * Contract or employment must not be of seasonal nature.

     * Please indicate by individual if they are covered under WCB on the request to quote and on the
       application form.




                                                 -8-
                             BAP – UNDERWRITING GUIDELINES


                            PLAN DESIGN OPTIONS - ONE LIFE


Health evidence is required on all amounts of insurance.

  LIFE and ACCIDENTAL DEATH, DISEASE AND DISMEMBERMENT

  Option 1             Flat $25,000
  Option 2             Flat $50,000

  All Options          Reduce by 50% at age 65, maximum $20,000
                       Terminates earlier of retirement or employee's age 70


  DEPENDENT LIFE - from birth

  Option 1             Spouse         $10,000          Option 2          Spouse        $5,000
                       Child          $5,000                             Child         $2,500

  All Options          No spousal conversion
                       Terminates earlier of retirement or employee's age 70


  LONG TERM DISABILITY

                          Option 1                          Option 2                  Option 3
  Elimination Period        119 days        30 days           119 days      30 days     119 days       30 days
  Benefit Period          2 years benefit period            To age 65                 5 years benefit period
  Def. of Disability      2 year own occ.                   2 year own occ.           2 year own occ.
  Integration             Primary                           Primary                   Primary
  Maximum                 $2,000                            $2,000                    $2,000
  % of Salary             66.67%                            66.67%                    66.67%
  Termination             Age 65                            Age 65                    Age 65




                                                      -9-
                         BAP – UNDERWRITING GUIDELINES

EXTENDED HEALTH CARE


                         Option 1             Option 2**           Option 3           Option 4**
Co-insurance
     Drugs/Other         100%/100%            80%/80%              100%/100%          80%/80%
Deductible *
     Single/Family       $0/$0                $0/$0                $25/$50            $25/$50


*   Semi-private and Convalescent Hospital, Vision Care and Out-of-Country are not subject to co-
    insurance or deductibles.

** If no coverage currently exists, group is limited to Option 2 or 4 for the first 12 months

DRUG CARD OPTION NOT AVAILABLE.

All Options

Hospital                          Semi-private
Vision Care                       $100/24 months
Survivor                          2 years
ParaMed                           $500/yr
Convalescent Hospital             Daily limit $20 for a maximum period of 90 days.
Nursing Care                      $5,000/year
Hearing Aids                      $400/60 months
Drugs                             Prescription
Maximum
   In Canada                      Unlimited/year
   Outside Canada                 $1,000,000/lifetime
Out of Province                   Emergency travel coverage up to 90 days
Termination                       Earlier of retirement or employee's age 70




                                               - 10 -
                         BAP – UNDERWRITING GUIDELINES

DENTAL


                         Option 1            Option 2**            Option 3           Option 4**
Co-insurance
     Level 1 and 2       100%/100%           80%/80%              100%/100%           80%/80%
Deductible *
     Level 1 and 2
     Single/Family       $0/$0               $0/$0                $25/$50             $25/$50

All Options

Maximum                   Combined maximum of $1,000 per person
                          First 12 months of coverage are limited to $500 per person
Fee Guide                 Current
Survivor                  2 year
Termination               Earlier of retirement or employee's age 70

*   Semi-private and Convalescent Hospital, Vision Care and Out-of-Country are not
    subject to co-insurance or deductibles.

** If no coverage currently exists group is limited to Option 2 or 4 for the first 12 months



COVERAGE PREREQUISITE

A group must purchase Life, Accidental Death & Dismemberment, Dependent Life and Long Term
Disability before purchasing Extended Health Care and/or Dental.




                                               - 11 -
                         BAP – UNDERWRITING GUIDELINES

     ANSWERS TO FREQUENTLY ASKED QUESTIONS



Q:     How does the writing Agent get paid?

A:     Co-operators Life will be responsible for distributing the Agent commissions.
       Commissions of 7% of premium will be credited as follows:

           The annual premium will be estimated by multiplying the monthly premium by
           11. This amount, along with the AP credits will be credited up front
           immediately to the Agent. (i.e. 7% of 11 months premium) Any commission
           outstanding at the end of the 11th month will be adjusted according to the
           actual premium received for that year.

           The second year commission will be calculated based on the latest monthly
           premium received. This monthly premium will be multiplied by the number of
           months remaining in the calendar year (i.e. to December 31st), less one month.
           This amount will be credited up front. Any commission outstanding at the end
           of the calendar year will be adjusted according to the actual premium received
           for that period.

           The third year commission and each year thereafter will be for the period
           January 1 to December 31 and will be calculated based on the latest monthly
           premium received. The annual premium will be estimated by multiplying the
           latest monthly premium by 11. This amount will be credited up front. Any
           commission outstanding at the end of the year will be adjusted according to the
           actual premium received for that year.

       This is a rather complicated answer to a simple question but allows an annualized
       commission to be paid up front on new cases and a move to our common renewal
       date of January 1 for the Benefit Advantage Block of business. Consequently, it
       will generate large advances on your renewal portfolio of Benefit Advantage clients
       in January each year.


Q:     What are the minimum benefit options?

A:     The core package of mandatory benefits is Life, AD&D and Long Term Disability.
       Dependent Life is not mandatory as a group may require all single coverages.
       Health and Dental benefits are optional. Groups may add either Health or Dental or
       both.




                                           - 12 -
                       BAP – UNDERWRITING GUIDELINES

Q:   If one person is declined for coverage does the 100% participation rule still
     apply?

A:   If the group had 4 people, for example, we could place coverage on the other three
     employees provided there is no existing group coverage. If all four were insured
     with an existing plan, The Co-operators would decline the whole case if one person
     were uninsurable. Employees must not lose coverage when changing group
     insurers.


Q:   What if the case is not a commercial client of The Co-operators?

A:   Eligibility for the Benefit Advantage Program is restricted to commercial clients or
     multi-line clients of The Co-operators. We can proceed with issuing group
     coverage if a commercial quote has been provided and we have a letter from the
     client stating that commercial business will be placed with The Co-operators at the
     upcoming renewal date.


Q:   Can employees elect different coverage options within the same group?

A:   Different benefit schedules can be established for each eligible class of employees
     such as management, salaried and hourly employees. 100% of each eligible class
     must participate in the selected benefits for that class unless they are waiving
     Health and Dental benefits due to spousal coverage through another employer. It is
     possible to insure two owners as management and not have employee classes
     eligible. All employees in a class must take the core benefits.


Q:   Whom should premium payment be made to?

A:   Cheques should be made payable to Group Lockhart.


Q:   What rates are to be used if there are employees in more than one province?

A:   The rates for each employee should reflect the province in which they reside.




                                          - 13 -

				
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