Accident & Sickness Insurance Fundamentals and Regulation
Core concepts
Accident and sickness (A&S) insurance pays benefits triggered by an accident or illness rather than by death. Candidates must distinguish indemnity coverage (reimburses actual loss up to the limit) from valued/benefit coverage (pays a fixed sum regardless of actual loss), and know the standard benefit triggers: accident, sickness, disability, and medical expense.
Regulation matters. In Canada, A&S insurers must be licensed in each province where they do business, and the policy is governed by provincial insurance statutes plus the federal framework for federally regulated insurers. Know the roles of the Superintendent of Insurance / provincial regulator, licensing of agents, and the requirement for fair treatment of consumers. Key statutory concepts include the incontestability period (generally two years for misrepresentation), the grace period for late premiums, and the right to a copy of the application.
Traps in questions
- Confusing A&S with life insurance: A&S pays for living events, not death.
- Assuming federal law alone governs - provincial contract rules often control.
- Mixing up the insurer's licensing with the agent's licensing.
- Forgetting that group and individual products may face different statutory rules.
Rule of thumb
If a question asks "who regulates this contract?" the answer is usually the province where the contract is issued or the insured resides, subject to federal solvency oversight. Always check whether the question is about product design (insurer) or conduct/sales (agent licensing).
Worked example
An insured dies of a heart attack 18 months after policy issue, having misstated a prior cardiac condition. Because the misrepresentation occurred within the two-year incontestability period, the insurer may rescind and deny the claim. After two years, absent fraud, the policy is generally incontestable.