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Money Advisor Wealth Management

Money Advisor Wealth Management

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Group Benefits

Critical Illness vs. Long Term Disability

 While most of us recognize the benefits of Life Insurance, the truth is that insurance against an accident or disease is arguably even more important. Statistically, a typical 30 year old has 4 times greater chance of becoming disabled or critically ill than he does of dying before age 65. A full one in six Canadians will be disabled for 3 months or more before the age of 50.

It makes sense then that insurers should underscore the importance of Disability and Critical Insurance to their brokers. LTD benefits are a monthly percentage of a person’s income, and have a waiting period from the onset of disability before regular payments can be made. Critical Illness, on the other hand, also has a waiting period, usually shorter, but is not based on a percentage of the holders’ income, but the full amount of the policy. It is therefore a good alternative due to the confines of Long Term Disability. There are also many reasons why LTD may not be an option for some, such as ineligibility due to family history, occupation, industry or having no earned income.

This is where Critical Illness comes in as a bridge between Life and LTD. It is paid out as a one-time tax free lump sum payment to the insured within 30, 90 or 180 days of diagnosis of illness. There are no strings attached. The funds can be used for everything from paying off a mortgage, paying ongoing medical expenses not covered by the provincial/territorial plans, or even a vacation!

In general, Critical Illness should be considered a compliment rather than a substitute for Disability Insurance. However, because CI is easier and less expensive to obtain (for single coverage) it is recommended for those who may not qualify for LTD due to the reasons discussed above. Additionally, since disability benefits may be affected by the holders other sources of income or full recovery from the debilitating illness, CI is a good option for those who are looking for a predictable payout in case of illness or disability. LTD also requires ongoing proof of loss of income, while CI does not. On the flip side, however, CI coverage is limited to the illnesses or disabilities included in the plan. Comprehensive plans cover up to 25 illnesses, and most basic CI plans have about 5 illnesses.

8 important lessons for employees about benefits plans


BY Bill Zolis, The Callery Group | September 16, 2013

The signs of a new school year are all around us. Neighbourhood streets are once again lined with yellow buses, store shelves are packed with school supplies, and backpacks are being filled with homework assignments. (Don’t let your kids convince you otherwise.)

They can all serve as gentle reminders to schedule an annual employee training session about your client’s company benefits plan.

There is always important information to cover during these regular meetings with a benefits consultant. After all, a benefits package or the process used to file related claims can evolve over time, and there is a value in reminding employees about the steps they can take to sustain plans for years to come.

Consider these tips and topics that employers often ask me to share during annual 45-minute presentations:

  1. Eligibility 101 – Every individual benefits plan will identify when new employees begin to enjoy coverage, and this usually occurs after a probationary period comes to an end. But it is not the only way timelines can play a role in benefits. An employee’s spouse may not be covered until the couple has shared a permanent residence and a common mailing address. Meanwhile, unmarried children may see benefits come to an end once they turn 22, while full-time students in the family will see the support stop once they turn 25. Of course, the exception to the rule will include disabled children who are still considered dependents.
  2. Time management – Limits on payable benefits can be based on annual terms or calendar years, and plan holders need to understand the difference if they want to avoid denied claims or unexpected invoices. For example, a dental plan may limit expenses in a calendar year while a vision plan bases its cap on a moving 24-month window. Employees also have no more than 30 days to report “life events” such as the need to cover a spouse who lost their job and the benefits that came with it. Any delays can require plan holders to submit new medical evidence, potentially increasing premiums or affecting available coverage.
  3. The math of aging – Some benefits such as Long-Term Disability coverage are eliminated altogether after employees reach a traditional retirement age of 65. This might be a shock to older employees who have decided to delay retirement and stay on the job.
  4. Introduction to taxation – The only certain things in life are death and taxes, but employees may be interested to know that paid benefits for death, dismemberment and critical illness are tax-free income. The same is true for dependent life insurance, which can be a valuable resource to help survivors pay for funeral expenses. It is an important fact to include in any family’s financial planning exercise.
  5. Advanced sustainability – Every employee will appreciate the support of a benefits plan, but they also have a role to play in the plan’s ongoing sustainability. Those who commit to using a pre-approved pharmacy, discourage non-essential dental procedures, or ask their physicians about generic prescription drugs and other affordable alternatives will reduce the strain on this valuable resource.
  6. Introduction to personal finances – An increasing number of benefits plans rely on employees to pay a portion of drug costs, but there are steps plan holders can take to reduce the amount drawn from their own pockets. In addition to embracing generic medication, which can be 45% cheaper than a brand name alternative, employees can also choose to fill just a 10-day supply of a new drug to ensure that it works before buying (and discarding) a full prescription.
  7. Business economics – Many employees are shocked to learn just how much employers invest into benefits plans. This understanding can be a powerful retention tool, helping to build morale and making valued employees think twice before exploring other job offers.
  8. Homework – Any error in the forms used to submit expenses can lead to delayed or denied claims. The timing of the paperwork can be equally important. Those who are thinking about dental expenses valued above a certain threshold, for example, may need to submit a pre-determination form to have the expense pre-approved. Any emerging medical conditions also need to be compared to the restrictions on available travel insurance.

This article first appeared on the Callery Group blog.

What Gen Y wants from a benefits plan

BY Sun Life Financial | March 28, 2013

Generation Y are the fastest growing segment of the employee population. They are a smart, hard-working group that is eager to succeed and have a lot to contribute. But the most compelling reason to factor Generation Y into your clients’ benefits strategy is the growing influence that they will have in the work place in the coming years, thanks to simple demographic forces.

While Generation Y only makes up a quarter of the workforce today, that will swell to about 40% by 20201. And with the overall workforce shrinking as baby boomers retire—expect the fight for talent to intensify over the next decade.

Read: Trends in health benefits plans for retirees

Group benefits are a critical tool for attracting and retaining talent employers who ignore the needs of Generation Y will find themselves at a significant competitive disadvantage. That’s why Sun Life Financial, in partnership with Ipsos Reid, conducted in-depth research to understand what Generation Y employees were looking for in a group benefits plan. The research indicated that this generation has significant needs and preferences that are not being address by traditional benefits plans.

Read: Advisor Q&A: How do you handle and aging group?

Four key areas for change stood out in the research:

1. More flexibility and control

They expect benefit solutions that reflect their diversity and acknowledge their individualism. They are frustrated by the status quo of “one size fits all”.

Almost three quarters (70%) said they would prefer a flexible benefits plan to a traditional plan. After all, it provides them with the ability to pick and choose benefits that meet their specific needs2.

Employers may want to also consider “add-on” solutions such as Health Savings Accounts (HSAs) and Personal Savings Account (PSAs), where they allot funds to employees to spend on health related expenses at their own discretion.

2. Greater convenience on claims

Manual claims—filling out paper claims forms and putting them in the mail—is seen as an “absurd inconvenience”. This group views online claiming with instant results as the minimum standard. Unsurprisingly, they are very enthusiastic about mobile applications that allow them to submit claims and manage their benefits on the go via their mobile devices.

3. Clear, plain language communication

They want simple, concise, plain language communication that is free of “industry-speak” and they want the option to receive it on their terms—meaning digitally—by text, email, social media and video.

4. More wellness, health and lifestyle benefit options

According to the 2012 Sun Life Canadian Health IndexTM (a national survey of Canadians’ health related attitudes and self-reported behaviours), this group reported the highest level of uncomfortable stress in their lives.

In fact, 90% of Canadians age 18-24 say they have excessive or unaffordable levels of stress at this time and 80% of Canadians aged 25-44 say the same. This compares to 51% for Canadians age 65 and over3.

While Generation Y employees understand the value of core benefits such as medical, dental, vision and prescription drugs, the research found that they have a strong affinity to employers who offer other programs aimed at promoting healthy lifestyles. This includes wellness-related benefits such as subsidized gym memberships, worksite fitness facilities, healthy food programs and reimbursement toward the cost of education or self-development.

Mind the gap

Failing to account for the more progressive needs of Generation Y could lead to a significant “gap” in the perceived value of a sponsor’s plan over time. And this could put organizations at a competitive disadvantage. Advisors who bring solutions now to address these needs will provide significant value to their clients by positioning them to attract and retain Generation Y and harness this generation’s great potential.

Read: 5 benefits plan tips for small groups

1 Derived from Statistics Canada 2011 Labour Force Survey; The Public Service Commission of Canada, “Emerging Trends Affecting the Public Service Commission of Canada and the Public Service Employment Act”, 2009

 2 2012 Sun Life Financial Survey of Canadians with group benefits coverage

 3 2012 Sun Life Canadian Health IndexTM, a national survey of Canadians’ health related attitudes and self-reported behaviours.

This article is sourced from

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