LLQP Accident & Sickness cheat sheet

Accident and sickness insurance is a class of insurance covering loss from accidental bodily injury or sickness; benefits are most often paid as indemnity or fixed amounts, not as reimbursement of all medical costs.

Federal regulation in Canada governs insurers' solvency and market conduct through OSFI, while provincial and territorial superintendents license insurers and agents and regulate contract terms and fair treatment.

Insurance is a contract of utmost good faith (uberrimae fidei): both parties must disclose material facts; an insured's failure to disclose or a misrepresentation can entitle the insurer to void the contract.

Insurable interest must exist at the time the contract is formed; a person may insure their own life or health, and a person may insure another where a close family or financial relationship exists.

Indemnity principle: health and disability benefits generally restore the insured to no better than their pre-loss financial position, which is why benefit limits and coordination with other coverage exist.

Claims are decided on the balance of probabilities; the insured bears the burden of proving a covered loss occurred, while the insurer must prove an exclusion applies.

A policy is voidable for fraudulent misrepresentation or non-disclosure; innocent or negligent misrepresentation may allow the insurer to rescind or adjust within a stated contestability period (commonly two years).

Agents must be licensed in the province where the client resides, hold errors and omissions coverage where required, and complete continuing education to maintain the licence.

Individual disability income policies define total disability by occupation: own-occupation for an initial period, then any-occupation thereafter, or any-occupation from the outset.

Benefit periods range from 1-2 years up to age 65; longer benefit periods and shorter elimination periods both raise premium.

A waiting (elimination) period is the time from disability onset before benefits begin; typical options are 30, 60, 90, 120, or 180 days.

Residual or partial disability benefits pay a proportionate amount when the insured can work but suffers an income loss, often without requiring total disability first.

Critical illness insurance pays a lump sum on first diagnosis of a covered condition after a survival period (commonly 30 days); it is not disability income and does not replace lost earnings.

Accident-only (accidental death and dismemberment) products pay specified amounts for accidental death, loss of limb, or loss of sight, and exclude sickness entirely.

Individual health plans may include extended health, dental, prescription drug, and paramedical coverage, with deductibles, coinsurance, and annual maximums.

Guaranteed renewable policies cannot be cancelled by the insurer and premiums cannot be raised for an individual, though they may be raised for a whole class.

A group contract is between the insurer and the plan sponsor (usually an employer); individual members receive certificates, not the master policy.

Eligibility is set by a waiting or probationary period, after which employees may enrol; late entrants may face evidence of insurability or reduced benefits.

Group underwriting is experience-rated: premiums depend on the group's claims history, industry, size, and demographics rather than individual health.

Coordination of benefits (COB) prevents over-insurance: when two plans cover the same person, the primary plan pays first and the secondary plan pays the balance up to its limit.

For dependent children, the parent whose birthday falls earlier in the calendar year is primary under the birthday rule; the other parent's plan is secondary.

Conversion rights let a departing member convert group coverage to an individual policy without evidence of insurability, usually within 31 days of termination.

Continuation (such as extended health benefits after job loss) preserves coverage for a limited period; the member typically pays the full premium.

Group benefits commonly include life, disability, extended health, and dental; disability benefits are usually a percentage of earnings, often 60-70%, and are taxable if employer-paid.

Benefit amount is typically 60-70% of gross income, capped by the insurer; the goal is to replace a portion of after-tax income without creating a disincentive to work.

The elimination period is a time deductible; a longer elimination period lowers premium but requires the insured to self-fund the initial weeks of disability.

Own-occupation definition pays if the insured cannot perform the material duties of their own occupation; any-occupation pays only if unable to perform any occupation for which they are reasonably suited.

A recurrent disability clause treats a relapse from the same or related cause within a stated period (often 6 months) as a continuation of the prior claim, avoiding a new elimination period.

Waiver of premium keeps coverage in force without premium payment while the insured is disabled, typically after the elimination period.

A cost-of-living adjustment (COLA) rider increases benefits over time to offset inflation; it adds to premium but protects long-term claimants.

Non-cancellable policies guarantee the insurer cannot cancel or raise premiums and cannot change policy terms; guaranteed renewable policies guarantee renewal but allow class-wide rate changes.

Occupational hazards and avocations are underwritten; disability caused by a pre-existing condition may be excluded or limited by a pre-existing condition clause.

Critical illness insurance pays a tax-free lump sum on first diagnosis of a covered condition, provided the insured survives the survival period (commonly 30 days).

Core covered conditions usually include cancer, heart attack, stroke, and coronary artery bypass surgery; expanded plans add conditions such as kidney failure, major organ transplant, and multiple sclerosis.

A survival period requires the insured to be alive a set number of days after diagnosis; if death occurs within that period, no benefit is paid.

Early or partial payment provisions pay a percentage (often 25%) for less severe conditions such as early-stage cancer or angioplasty, reducing the remaining benefit.

A return-of-premium option refunds premiums paid on death or surrender if no claim is made; it substantially increases premium.

Critical illness coverage is typically level premium to a stated age or for life, and may be cancelled by the insured without penalty.

Exclusions commonly include conditions present before coverage began, self-inflicted injury, and claims arising within the waiting period.

Critical illness benefits are paid directly to the insured and are not taxable; proceeds can be used for any purpose, including income replacement or treatment costs.

Long-term care insurance pays a daily or monthly benefit when the insured cannot perform a set number of activities of daily living (ADLs) or has a cognitive impairment.

Common ADLs are bathing, dressing, eating, toileting, transferring, and continence; policies often require inability to perform two of six, or cognitive impairment.

A waiting (elimination) period of 30-90 days and a benefit period (for example 2-5 years or lifetime) determine the cost and duration of coverage.

Benefits may be paid on an indemnity basis (fixed daily amount) or reimbursement basis (actual expenses up to a limit).

Extended health plans cover prescription drugs, paramedical practitioners, vision, and medical equipment, subject to deductibles, coinsurance, and annual maximums.

Dental plans distinguish basic, major restorative, and orthodontic services, each with separate maximums and coinsurance levels.

Home care and respite benefits may be included so care can be delivered at home rather than in an institution.

Government health plans cover medically necessary hospital and physician services; private coverage supplements services outside those plans, such as drugs and dental care.

The entire contract provision states that the policy and the application (and any attached riders) constitute the whole agreement; no outside documents bind the insurer.

The incontestability provision bars the insurer from denying a claim for misrepresentation after the policy has been in force for two years, except for fraud or non-payment of premium.

The grace period (commonly 30 or 31 days) allows premium payment after the due date while coverage continues; if the insured dies or claims during the grace period, the unpaid premium is deducted.

The reinstatement provision allows revival of a lapsed policy on evidence of insurability and payment of overdue premiums; a new contestability period may apply.

A change of occupation provision allows the insurer to adjust benefits if the insured moves to a more hazardous occupation, usually paying the benefit the premium would have purchased.

The time limit on certain defences clause bars the insurer from denying a claim after a set period (often two or three years) for misstatements in the application, except fraud.

The notice and proof of claim provisions require the insured to give written notice within a stated period (often 20-30 days) and proof of loss within a stated period (often 90 days).

The physical examination and autopsy provision permits the insurer, at its own expense, to require an examination of the insured or an autopsy where not forbidden by law.

Underwriting classifies risk using age, sex, health history, occupation, avocations, and family history; outcomes are standard, substandard (rated or excluded), or declined.

A pre-existing condition clause limits or excludes coverage for conditions that manifested symptoms or received treatment within a look-back period before the policy took effect.

Premium factors include age at issue, benefit amount, benefit period, elimination period, occupation class, and riders selected.

Level premium means the premium stays constant for the policy term; the insurer assumes the risk of rising claims costs over time.

Claims adjudication verifies coverage, eligibility, the cause of disability, and compliance with the elimination period, then calculates the benefit based on the definition of disability.

The insurer may require independent medical examinations, attending physician statements, or functional capacity evaluations to confirm a claim.

A claim may be denied for non-disclosure, an excluded cause, failure to meet the definition of disability, or failure to provide proof within the required time.

Coordination of benefits and offsets (such as CPP disability or workers' compensation) reduce the insurer's payable benefit so total income does not exceed the policy's intended replacement level.

Suitability requires matching the product to the client's needs, income, obligations, and existing coverage; recommending coverage the client cannot afford or does not need breaches the duty.

Full and fair disclosure requires the agent to explain exclusions, limitations, waiting periods, and premium obligations before the client signs the application.

Replacement rules require disclosure when new coverage replaces existing coverage, so the client understands any loss of benefits, contestability, or waiting periods.

Confidentiality: personal health and financial information must be collected, used, and disclosed only as permitted by privacy law, with the client's knowledge and consent.

Conflicts of interest, including compensation tied to a sale, must be disclosed; the client's interest takes priority over the agent's commission.

Anti-money-laundering and know-your-client obligations require verifying identity and reporting suspicious transactions.

The insurer's duty of good faith includes timely, fair claims handling; unfair claim practices such as unreasonable delay or bad-faith denial are prohibited.

A client may cancel a new policy within a free-look period (often 10 days) for a full refund, and must be told of this right.