Group Income Protection Group Income Protection

Transcription

1 Group Income Protection Group Income Protection Policy Conditions

2 The nature of the Policy The Policy provides insurance to cover income benefits payable for a member who is unable to work due to incapacity. It provides evidence of a legal contract between you and us and takes effect from the commencement date. The Policy document includes: The Policy Conditions, which set out the standard terms of the contract, and include the signed Policy statement; and The Policy Particulars which set out the specific details of the cover we have agreed with you. The terms of the Policy are dependent upon the information you provide. If this is mis-stated, or if any material facts have changed since you provided the information, we may amend or discontinue the Policy. If you do not comply with all of the Policy terms and conditions, we will not pay claims. We may also cease cover under the Policy and will not be bound to accept any further premiums. In this event premiums under the Policy will be deemed to have discontinued, and cover under the Policy will cease. Third party rights This Policy can be amended varied or cancelled without the consent of any third party who might benefit from its terms or have enforceable rights hereunder. Any person or company who is not a party to this Policy does not and shall not have or acquire any right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this Policy. But after a claim has been made for a member, that member can pursue that claim as if they were the Policyholder. The member can also, for any complaint or dispute in connection with that claim, pursue their complaint or grievance through our normal complaints procedures. If they remain dissatisfied, they can then refer the matter to the Financial Ombudsman Service before seeking a remedy at law.

3 Policy statement This Policy is issued by Canada Life Limited (we) in response to a written proposal and declaration from the Policyholder named in the enclosed Policy Particulars (you). In addition to this Policy statement, the Policy comprises: the Policy Conditions provided with this Policy statement; and the Policy Particulars provided with this Policy statement. This Policy statement witnesses that: 1 We issue this Policy to you subject to the terms set out in this statement, the Policy Particulars, the Policy Conditions, and in any amendments or replacements we issue. These jointly form the Policy. 2 We will pay you the benefits set out in this Policy, if you have paid all the premiums we have asked for, in accordance with the Policy terms and provided that all other requirements of the Policy have been met. 3 The Policy and any benefits payable under the Policy are not assignable. We shall not be affected by any notice of any assignment, trust, charge or lien or by any other dealing of the Policy or the benefits. 4 Where we use words in the singular, the same applies to the plural (and vice versa), unless it is clear that this is not the case. 5 This Policy is subject only to English law. If there is any dispute between the parties about anything to do with the Policy, the UK Courts are the only courts which may make a judgment about the dispute. 6 This Policy will not have or accrue any surrender value. Please read this Policy carefully, and then keep it in a place of safety for future reference. Signed for and on behalf of Canada Life Limited: Ian McMullan Managing Director, Group Insurance

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5 What the Policy explains The Policy gives you clear details of: who you must include, from when and for what benefits, what is not covered, what premiums are payable by you and when, how and when the basis of the Policy can be changed, when and how you can make a claim. How does the Policy work? If you: provide us with all the details we ask for, when we ask for them; and pay all of the premiums when they are due, we will: cover the members for their insured benefits; and if their claim is admitted, pay you a member s insured benefits after the end of the deferred period if their incapacity continues. If you do not comply with all of the Policy terms and conditions, we will not pay claims. We may also cease cover under the Policy and will not be bound to accept any further premiums. In this event premiums under the Policy will be deemed to have discontinued, and cover under the Policy will cease.

6 Contents Terms and expressions we use 8 Your commitment 15 Risk factors 16 Section 1 Who is covered? 17 Normal entrants What happens if a member s benefit exceeds the free cover limit? Will benefits need to be underwritten annually? What happens if a member is absent from work due to ill health or disablement on the commencement date? Can cover be provided for discretionary and late entrants? Will any cover be provided before a medical underwriting decision has been made? What underwriting decisions can be made? What cover is provided during absence from work? Section 2 What is covered? 20 Discretionary benefits Section 3 Optional additional cover 21 Section 4 What is not covered? 22 Section 5 When does cover cease? 22 Section 6 Are there any benefit limits or restrictions? 23

7 Section 7 How do we calculate your premiums? 24 What information do we need to calculate your premiums? When are premiums payable? How you can pay your premiums What will happen if you do not pay your premiums? Section 8 Alterations to the Policy 29 What you must tell us When you can make an alteration When will the alteration be effective? When can we alter the premium rates, Policy terms and Policy fee? How you can cancel or cease the Policy Section 9 Making a claim 31 When you should tell us about possible claims What happens if a member has had repeated absences as a result of the same incapacity? What will happen next? How is a claim assessed? Who pays for the medical evidence? How will the benefit be paid? Does any other income affect the member s benefit from this insurance? Can the member s benefit increase in payment? Can a reduced benefit be paid? Can rehabilitation help? For how long will the benefit be paid? Can benefit payments restart if a member s incapacity recurs? Can another claim be made for a member for a further incapacity? What happens if a member suffering incapacity leaves the service of an employer during a claim period? What happens if an incapacitated member s contract of employment is transferred to a different employer under a TUPE arrangement? What happens to claims if the Policy is discontinued? Section 10 Further information 41 The Company Queries and complaints Compensation

8 Terms and expressions we use In this Policy when we refer to we, us or our we mean Canada Life Limited. When we refer to you or your, we mean the existing or prospective Policyholder. Some terms have specific meanings. These are listed below in alphabetical order, together with their meanings. Actively at work means that a person: is present at their place of work; and has not received medical advice to refrain from work; and is mentally and physically capable of performing fully the normal regular duties associated with the job they are engaged to do; and is working their normal contracted number of hours, either at their normal place of business or at a place that the business requires. Annual revision date : the date in each calendar year when the premiums are calculated. The date is shown in your Policy Particulars. Cease age : the age agreed between us as being the age at which cover and benefit payments for a member cease, as set out in your Policy Particulars. The maximum age must not exceed a member s 70th birthday, or in the case of a partnership partner, the date on which the member reaches age 65 or state pensionable age if higher. Commencement date : the date that the Policy starts, as set out in your Policy Particulars. Deferred period : the period of time which starts after the commencement date you have agreed with us and throughout which a member suffers an incapacity and is unable to work due to that incapacity. The period starts on the first day that the member is unable to work due to that incapacity. If the member is on statutory leave the deferred period will start from the date of incapacity, and benefit payments will start from either the end of the deferred period or the agreed return to work date, whichever is later. If the member has been granted a leave of absence the period starts on the first day on which the agreed leave of absence ends. We do not pay any benefit during the deferred period. The deferred period is stated in your Policy Particulars. 8

9 Terms and expressions we use Note: Subject to our agreement, you may aggregate separate periods of incapacity suffered by a member to decide when the deferred period is complete, if: the periods are from the same cause; and the total period of time since the beginning of the period of incapacity is not more than twice the deferred period. We will not aggregate separate periods of incapacity which occur prior to the commencement date. You cannot change the deferred period for a member who is already suffering incapacity. Discretionary benefit : a benefit you want us to provide for a member that is larger or smaller than the normal scheme benefit for which the member would be eligible. Discretionary entrant : someone: who is not an eligible person but who you wish to include in the Policy. who is an eligible person but who you want covered from a different date to their normal inclusion date. Eligible person : someone who meets the eligibility requirements for inclusion in the Policy. Employer : this term refers to any company, partnership or organisation that we have agreed to include in the Policy. ESA : the Employment and Support Allowance (ESA) is a State benefit paid to those who are unable to work due to illness or incapacity. The ESA, work related activity component, support component and assessment phase are described in Chapter 5, Part 1 of the Welfare Reform Act Evidence of insurability : any documentary or medical evidence that we may reasonably require to include someone for benefits in the Policy. Free cover limit : the total amount of a normal entrant s benefit that we will cover on standard terms without the need for evidence of insurability. This will be shown in your statement of account. 9

10 Terms and expressions we use Gainful occupation : any activity that the member undertakes that has the potential to provide the member with some form of tangible gain, directly or indirectly, either immediately or in the future. This gain could include (but is not limited to) salary, fees, benefits in kind and profit or earnings from self-employment. HMRC : HM Revenue & Customs. Incapacity : illness or injury meeting either the standard, suited or standard switching to suited definitions of incapacity as agreed between you and us. These definitions are: The Standard definition. We will treat a member as suffering incapacity, if, throughout the deferred period and beyond, the member s illness or injury prevents them from, and makes them incapable of, performing the material and substantial duties of their normal occupation. The member must not be engaging in any other gainful occupation, whether as an employee or otherwise. The Suited Occupation definition. We will treat a member as suffering incapacity, if, throughout the deferred period and beyond, the member s illness or injury prevents them from, and makes them incapable of: performing the material and substantial duties of their normal occupation; and any other occupation for which they are reasonably suited due to their education, training or experience. The member must not be engaging in any other gainful occupation, whether as an employee or otherwise. The Standard switching to Suited Occupation definition. We will treat a member as suffering incapacity, if, throughout the deferred period and beyond, the member s illness or injury prevents them from, and makes them incapable of, performing the material and substantial duties of their normal occupation. The member must not be engaging in any other gainful occupation, whether as an employee or otherwise. Once 24 monthly benefit instalments have been paid in respect of the member under the Policy (whether consecutive or not), this definition changes. Thereafter, we will only continue to treat a member as suffering incapacity if their illness or injury also prevents them from, and makes them incapable of, performing any other occupation for which they are reasonably suited because of their education, training or experience. As before, the member must not be engaging in any other gainful occupation, whether as an employee or otherwise. 10

11 Terms and expressions we use Notes: We will apply the Suited Occupation definition of incapacity where a member has to hold a licence or certificate that is dependant on them being certified as medically, physically or mentally fit to be able to perform their normal occupation. Examples of these occupations include LGV drivers, PSV drivers and Aircraft Pilots. We will also apply the Suited Occupation definition for some special occupations. Examples of these special occupations include, but are not limited to, Merchant Navy personnel, aircrew and dealers. (For this purpose a dealer is someone who places orders to buy or sell securities, options or futures, or instruments creating or acknowledging indebtedness or contracts of difference). Your Policy Particulars will state whether this definition applies. As the Policy is based on the information you give us, you must clearly specify the members occupations. You cannot change the definition of incapacity that applies to a member s benefits if their deferred period has already started. In certain instances though, we can pay a reduced amount of benefit when a member suffers partial incapacity. This is directly related to the reduction in salary that the member suffers as a result of working fewer hours or undertaking less onerous duties, and is known as proportionate benefit. We will not pay proportionate benefit (see section 9) if the Suited Occupation definition applies, or continue to pay any proportionate benefit previously being paid under the Standard definition, when a switch to Suited Occupation occurs see previous page. Insured benefit : the total benefit or benefits for which the member has been included in the Policy. Limited period : a period of time consisting of two, three or five years during which benefit is paid, which starts the day after the end of the deferred period, and which is shown in your Policy Particulars. LTIB : Long Term Incapacity Benefit (LTIB) is a state benefit paid to those who have been unable to work due to illness or incapacity for more than 52 weeks and who applied to receive incapacity benefits before 27 October

12 Terms and expressions we use Material and substantial duties : the duties that a member is normally required to do to perform their normal occupation and which cannot reasonably be omitted or modified by you or the member. The duties refer to the tasks the member is required to perform, and whether those tasks could be carried out for you or any other employer. In addition a journey to and from the member's normal residence to the normal place of business is not regarded as part of the normal occupation. Member : an eligible person included in the Policy. Membership declaration : the form which is used to provide us with details of the cover required for specific members, and which an employer completes when a scheme is set up. Normal entrant : an eligible employee who you include in the Policy: on the first day that they meet the normal entry conditions; and for the normal scheme benefit. Normal inclusion date : the first day that an eligible person qualifies for inclusion in the Policy. The day is explained in your Policy Particulars. Normal occupation : the occupation for which the member was employed or engaged to do immediately before their incapacity started. Other benefits : any payments that a member receives due to their incapacity from any of the following: a group or individual insurance policy giving rise to income benefits as a result of illness, injury or disablement, a mortgage protection policy, a loan or credit protection arrangement (including credit and store cards); or an insurance premium waiver. 12

13 Terms and expressions we use Other income : any payments that a member receives from: any employer (whether included in the Policy or not) in salary or other payments (but not any payments for statutory minimum holidays accrued during a period of incapacity), self-employment; or a pension or annuity (but not a pension or annuity in payment before and continuing after the member s deferred period starts). Partial incapacity : illness or injury where a member is considered able to undertake some work related activities. Partnership partner : an equity partner of a partnership or a member listed in the incorporation document of a Limited Liability Partnership. Pension scheme contributions : the contributions that you have agreed with us in respect of a member s membership of an employer s pension arrangements. The basis is shown in your Policy Particulars. Periodic review date : the date when your premium rates, Policy Conditions and Policy fee are reviewed. The date is shown in your Policy Particulars. Policy : the legal contract between you and us, which takes effect from the commencement date. It comprises: the Policy Conditions, which set out the standard terms of the contract, and include the signed Policy statement, and the Policy Particulars which set out the specific details of the cover we have agreed with you. Policy fee : an annual charge per Policy towards our costs. Policy year : any 12 month period from an annual revision date during which the Policy is in full force. 13

14 Terms and expressions we use Rehabilitation programme : a rehabilitation and reintegration programme we recommend for a member and agree with that member s General Practitioner, attending physician, consultant or other suitably qualified person treating the member s illness or injury. Relevant date : the commencement date or other such date specified by us. Relevant UK individual : has the meaning given to that expression in the Glossary to the HMRC Registered Pension Schemes Manual. RPI : the Retail Prices Index, published by the Office for National Statistics. Scheduled territories : the United Kingdom and all other European Union (EU) countries, Andorra, Australia, Canada, the Channel Islands, Gibraltar, Hong Kong, Iceland, the Isle of Man, Liechtenstein, Monaco, New Zealand, Norway, San Marino, Switzerland, USA and the Vatican City. Scheme benefit : the benefit or benefits set out in your Policy Particulars. Scheme salary : the basis of scheme salary you have agreed with us and set out in your Policy Particulars. State pensionable age (SPA) : the earliest age at which the member can start to receive the UK state pension, as defined in paragraph 1, schedule 4 of the Pensions Act State Scheme deduction : the ESA and LTIB are both referred to as State Scheme deduction within your Policy Particulars. Statutory leave : any statutory leave taken from active employment because of maternity, adoption or paternity. Supplementary benefit : National Insurance contributions and/or pension contributions and which are described in your Policy Particulars, as such. Underwriting : the process whereby evidence of insurability is obtained and assessed. 14

15 Policy guide Your commitment You must: give us accurate and complete information and data at all times and tell us immediately whenever this changes, pay us all of the premiums we ask for, when they are due, in UK currency, abide by the terms and conditions of the Policy, advise us immediately, of any members who change their work location, submit any claims in line with the process described in section 9 of this document, facilitate and support a rehabilitation programme for a member, comply with the Equality Act 2010 and consider, and where appropriate make, reasonable workplace adjustments in order to comply with that Act, pass on the appropriate benefits paid under the Policy to the member; and tell us when a member returns to work. tell us when a member suffers incapacity in accordance with section 9. Both a claim form and personal statement relating to a claim for benefit, or additional amounts of benefit, must be received by us no later than six months after the end of the deferred period. We will not pay any benefit, or any additional amounts of benefit, if we receive either a completed claim form or a completed personal statement after this period. You must also tell us immediately, whenever: there is any change to the companies or groups of people included in the scheme. you wish to change the benefit basis or include any optional additional cover. a member s aggregate benefit exceeds the free cover limit. you want to include someone who is a discretionary entrant or for a discretionary benefit. you want to cancel cover completely. 15

16 Risk factors It is important that you fulfil your commitments under the policy. A breach of certain commitments within the Policy will result in us rejecting your claims, stopping benefit payments for claims that we have previously accepted, or withdrawing cover. We will only continue your cover if you keep your premium payments up to date and give us the information and data we need. Any delay in paying your premiums or giving us the information or data we need, may result in unexpected premium arrears or someone not being fully covered. We will not pay any benefit or any additional amounts of benefit if we receive either a completed claim form or a completed personal statement, in respect of the benefit being claimed, later than six months after the end of the deferred period. If a member receives other income or other benefits during incapacity, the member s benefits payable under the Policy may be reduced. Exclusions may apply for certain activities. Please see section 4 for details. We may refuse to pay or continue to pay all or part of the benefit payable if an employer fails to comply with the Equality Act 2010, where appropriate. Please see section 9 for details. We may alter the premium rates, Policy Conditions and Policy fee at the periodic review date or at any other time if a change that affects any of them, occurs. Please see section 8 for details. There may be changes to the legislation, regulation, the state pensionable age, HMRC practice or tax rules affecting this Policy, the Policy benefits, premiums or ancillary services. In the event of a claim, where the cease age is linked to state pensionable age, the member s state pensionable age will be the one that applies at the beginning of the deferred period and will not change if state pensionable age subsequently changes. 16

17 Section 1 Who is covered? Normal entrants We will include a normal entrant as a member: on the commencement date, if they joined the scheme on or before that date; or from their normal inclusion date, if they join the scheme after the commencement date. What happens if a member s benefit exceeds the free cover limit? You must tell us if the amount of a member s total scheme benefits (including any supplementary benefits) exceed the free cover limit. For example: If a member s scheme salary is 130,000 per annum and the basis of scheme benefit is a basic income benefit of 75% of scheme salary plus a supplementary benefit of 15% of scheme salary for pension scheme contributions, then: The basic income benefit is 75% of 130,000 = 97,500 per annum. The supplementary benefit is 15% of 130,000 = 19,500 per annum. The member s total scheme benefit is 97, ,500 = 117,000 per annum. If the free cover limit is 100,000 the free cover is exceeded by 17,000. Cover for the excess benefit will be subject to evidence of insurability and to acceptance by us. Will benefits need to be underwritten annually? Once underwritten, acceptance terms will be issued specifying when further evidence of insurability will be required. What happens if a member is absent from work due to ill health or disablement on the commencement date? We will not include any person in the Policy who is absent from work due to ill health or disablement on their last contractual working day before the Policy starts, until they have returned to work and are actively at work. If a person is already a claimant under a previous group scheme with another insurer, and is receiving income protection benefit payments immediately prior to the commencement date of this Policy, we will not include them in the Policy until those payments have stopped and they have completed our actively at work requirements. 17

18 There is an extra requirement where there are under 20 members in the Policy at the commencement date. Any member who has been absent from work on account of ill health or disablement for more than five consecutive working days during the six months before the commencement date, will not be included in the Policy until they have returned to work and have continuously been actively at work for at least two months. Note: We will require evidence of insurability (including medical underwriting requirements) for: categories of up to and including four members, benefits that are above the free cover limit, benefits that have not previously been accepted, benefits that have not been accepted by a previous insurer; or benefits that were subject to special terms or were declined by a previous insurer. Also, any member that has an increase in scheme benefit, will be subject to evidence of insurability and to acceptance by us. Can cover be provided for discretionary and late entrants? We may agree, at your specific request, to include a discretionary or late entrant in the Policy as a member. We will need evidence of insurability before we can accept cover for any benefit. We will tell you what evidence of insurability we need and the date that any cover for that member starts. Will any cover be provided before a medical underwriting decision has been made? Yes. If evidence of insurability is needed by us before we can accept a member s total benefit, or include a discretionary entrant as a member of the Policy, we will provide temporary cover for the total benefit while we complete that process. Temporary cover will apply for up to 120 days, from the date: an eligible person is first included in the Policy as a member; or when a member's benefit increase applies; or when we are notified of any discretionary entrant or discretionary benefits. Temporary cover will cease after 120 days or when we tell you what our decision is, if earlier. 18

19 However, temporary cover will not apply: if that person has previously had some or all of their benefit declined or postponed; or if medical evidence or other requirements previously requested have not been provided; or if a person suffers from an incapacity before a decision is made and their incapacity was due to a medical condition that the person has suffered from within the five years prior to the date temporary cover commenced. What underwriting decisions can be made? When we have received all the evidence of insurability that we need to decide whether we can accept a person s benefits, we will tell you what terms, if any, we can offer. We may: accept the benefits at standard terms, decline the amount of benefit that was being underwritten, postpone making a decision to a later date if the medical condition is inconclusive, charge an additional premium for the amount of benefit that has been underwritten, exclude certain conditions or activities. If we do not receive the evidence of insurability we ask for to be able to complete underwriting that person s benefit, we will restrict the benefit as follows: to their previously accepted benefit if they have been previously underwritten; or to the free cover limit if they have not been previously underwritten and they are being underwritten because their benefit exceeds the free cover limit, nil benefit if they are being underwritten as a discretionary entrant; or to that person s normal scheme benefit if they are being underwritten for a discretionary benefit. If we can accept that person s scheme benefit we will tell you when cover for that benefit starts. You must tell us in writing if those terms are not acceptable to you. We will cancel that cover from the date we receive your letter. Premiums will be charged for the period we were on risk. 19

20 What cover is provided during absence from work? If you continue to pay premiums, we will continue to provide cover, subject to section 4, for members who are granted a leave of absence from work. Cover under the Policy will continue: during any period of illness, disablement or statutory leave; or for up to one year for any other reason, provided the member has a right at the end of the agreed leave of absence to return to the occupation for which they were employed or engaged immediately before the leave of absence commenced. Unless otherwise agreed between you and us in writing, the amount of a member s scheme salary during a period of leave of absence from work will be the amount that applied in respect of the member immediately before the absence started. However, we may agree, at your request, to allow increases in benefit during a period of temporary absence. Such increases will be limited to the lesser of: the general level of increases in basic salaries or wages awarded by the member s employer; and the increases in the Average Weekly Earnings Statistic, published by the UK Office for National Statistics, during the period of absence. Section 2 What is covered? Your Policy Particulars will state the cover that is included in the Policy and the basis of its calculation. Discretionary benefits We may agree, at your specific request, to include a member for a discretionary benefit. Cover for any part of the discretionary benefit that exceeds the member s normal scheme benefit will be subject to evidence of insurability and acceptance by us. We will tell you in writing when the cover for that benefit starts. These benefits will not be shown in the Policy Particulars. 20

21 Section 3 Optional additional cover Your Policy Particulars will state whether any additional cover is included under the Policy and the basis of its calculation. Additional cover will only be provided with our prior agreement. We will tell you what method we will use to calculate the premiums for additional cover which will either be on a single premium basis or a unit rate basis. Please see Section 7 for an explanation of these terms. Pension scheme contributions Cover for contributions payable by the member and/or you to your pension scheme. We will not normally cover a member s pension contribution rate that is more than 7.5% of their salary. The maximum combined total of your and the member s pension scheme contributions that we will cover must not be more than 35% of the member s salary or, if less, 75,000. Contribution rates may not vary at the member s discretion, for example contributions to individual personal pension arrangements or additional voluntary contribution arrangements. If contribution rates vary by age, we will base the amount of income benefit on the contribution rate applicable at the beginning of the deferred period. However, if the employer s contributions to a member s pension scheme cease, this supplementary benefit will cease or will subsequently not become payable, even if previously included within the cover taken out. If a member makes pension contributions through salary sacrifice, and benefits are based on the salary before the sacrifice took place, the contributions may not be insured as an additional benefit. Employer s National Insurance contributions Cover for you to pay National Insurance contributions on the member s basic income benefit, either at the contracted-in or the contracted-out levels. However, if the employer s national contributions in respect of a member cease, this supplementary benefit will cease or will subsequently not become payable, even if previously included within the cover taken out. 21

22 Section 4 What is not covered? We will not cover any incapacity that is due directly or indirectly to a member engaging in the activities of any organisation formed for military or terrorist purposes (but not including the Armed Forces of the Crown or any organisation concerned with National Service work for the Crown). Section 5 When does cover cease? Cover will normally cease for a member when they: cease to be actively employed by the employer, leave service, retire (either early or otherwise) or die, reach their cease age, reach the end of their contract of employment, reach the end of the period allowed under the policy for an agreed leave of absence and they have not returned to active employment, have received the appropriate number of benefit payments for the limited period chosen, take up permanent residence outside the UK, the Republic of Ireland, the Channel Islands or the Isle of Man, other than during a period of incapacity; or cease to be a member, whichever occurs first. Where the cease age is linked to state pensionable age and state pensionable age changes: In the event of a claim, the member s state pensionable age will be the one that applies at the beginning of the deferred period and will not change if state pensionable age subsequently changes. In all other cases, if state pensionable age for a member changes, the cease age will be based on the member s new state pensionable age. 22

23 Section 6 Are there any benefit limits or restrictions? We will limit the scheme benefit for a member, excluding any supplementary benefits, to a maximum of 350,000 pa. We will also limit the insured benefit payable for a member, where necessary, so that the aggregate total of that benefit and any other income due to the member will not exceed: for employees included in the Policy, 75% of that member s earnings, for partnership partners, 50% of that member s earnings ; or 350,000 pa, whichever is the lower amount. We call this the maximum aggregate benefit. We will check whether this limit has been exceeded when the first benefit payment is due and when other income starts or stops. When we calculate the maximum aggregate benefit we will exclude any supplementary benefits. By earnings we mean the greater of: the member s scheme salary, for employees, the total earned income from all sources received by the member in the last 12 months. This includes any commission, bonuses, overtime, directors fees and other such income. But, where a member s basic annual rate of salary or wages from their employer at the end of that period is three-quarters or less of their total earned income, we will limit earnings to: the member s basic annual rate of salary or wages; plus the annual average of all other earnings they have received during the last three years or since joining their current employer if this is less than three years. for partnership partners, that person s annual average amount of partnership drawings in the partnership s last three accounting years. But if that person does not have partnership drawings for the whole of those three accounting years, we may agree with you an alternative method of calculating that person s earnings. 23

24 We will normally ignore other benefits (but not salary or other payments from an employer) if the benefit payment period under the policy, arrangement or waiver agreement that the income arises from, is less than two years. But these other benefits will not be ignored if: the period is limited only because the member is less than two years from their cease age; or the total of other income, other benefits and the scheme benefit would exceed the member s earnings before their incapacity starts. Section 7 How do we calculate your premiums? The basis we will use to calculate your premiums depends on how many members there are covered for benefits. We use either our single premium basis or our unit rate basis. The single premium basis is normally used where there are up to and including 19 members. The unit rate basis is normally used where there are 20 or more members. Your Policy Particulars will show which basis applies. The total premiums for all members for any Policy year will not be less than 1,000 whichever basis applies. Single premium basis These are premiums that allow for the member s age, gender, location and occupation. They also allow for insured benefits up to the free cover limit or that are subject to non standard terms. We will calculate separate premiums for each member on the commencement date and on each subsequent annual revision date. Each premium will be for that part of the member s insured benefits to which this basis applies. 24

25 We will also calculate an additional premium if someone becomes a member or has an increase in insured benefit other than on the commencement date or an annual revision date. If a member s cover ceases or decreases, or we start to pay or stop paying a benefit for a member, other than on the commencement date or an annual revision date, we will calculate a premium adjustment at the next annual revision date. Any premiums, additional premiums or premium refunds will be for the period from the relevant date until the next annual revision date. Where the period is not a complete year, the premiums will be a fraction of a whole year s premiums. The fraction will be the number of days from the relevant date to the next annual revision date divided by the number of days in the Policy year. Unit rate basis We calculate these premiums by multiplying the relevant total members scheme salaries by the unit rate that applies at that date. At the commencement date and at each subsequent annual revision date we will calculate the premiums for the period from that date to the next annual revision date. If the period from the commencement date to the next annual revision date is not one year, the premiums for that period will be a proportion of a full year s premiums. At each annual revision date we will calculate a premium adjustment to take account of benefit and membership changes since the last annual revision date (or commencement date if later). To keep things simple, we will assume that all changes occur half way through the Policy year. If there has been any change to the basis of cover, eligibility, employers or groups of people included, legislation or unit rate during that period, we will calculate adjustments for the periods before and after that change took effect. We will waive the premiums for a member s benefits for any period during which we are making benefit payments to you for that member. 25

26 What information do we need to calculate your premiums? We will tell you in advance of each annual revision date what information we require. If the single premium basis applies, we will ask you for a complete list of members at that annual revision date. The list must include for each member: Name, Date of birth, Gender, Scheme salary or benefits (if the member s benefit is a fixed benefit), Scheme benefit category, Occupation, Business location (including post code), Date of joining or leaving, if appropriate. You must clearly show members who are in a period of temporary absence from work or for whom restricted benefits apply. If the unit rate basis applies, we will normally ask you to provide at each annual revision date: the total number of members, the total scheme salaries at the annual revision date; and the total scheme salaries as at the day before. We will also ask you to provide full individual details for any members: whose total benefits exceed the free cover limit, to whom special terms apply, who are in a period of temporary absence, for whom restricted benefits apply. 26

27 We will ask you for more detailed information at the commencement date, a periodic review date or at any other time that a unit rate needs to be re-calculated. This will include at least the following: Name, Date of birth, Gender, Scheme salary or benefits (if the member s benefit is a fixed benefit), Occupation, Business location (including post code). For either basis, you must ensure that the data you give us accurately reflects any salary basis or limitations that you have agreed with us or that apply to your scheme. For example, where you operate a salary sacrifice arrangement, basic salary should (unless we have specifically agreed otherwise) be the actual basic salary after any salary sacrifice. We will charge you approximate premiums from each annual revision date. We will calculate the accurate premiums when you have provided us with complete information. This may result in more premiums being due from you, if too little premium has been charged by us, or a refund due to you, if we have charged too much. When are premiums payable? The premiums are payable by you to us in advance. Premiums are due on the commencement date and on each subsequent annual revision date. Premiums are normally payable annually, but you may choose to pay your premiums monthly by direct debit. If you choose to pay your premiums monthly by direct debit your premiums will increase by 2%. We will send you a statement of account and invoice setting out the total premiums due in respect of members at the commencement date and at each annual revision date. If the single premium basis applies the statement of account will include individual premiums for each member. If we have previously issued an invoice for approximate premiums, we will send you a further invoice for the accurate premiums when you provide us with complete accurate information. 27

28 How you can pay your premiums You may pay your premiums either: annually by cheque payable to Canada Life Limited or by electronic funds transfer; or monthly by Direct Debit. What will happen if you do not pay your premiums? You must pay your premiums within 30 days of the date they are due. If you do not pay your premiums, we may either: agree to allow you more time; or deem that premium payments have stopped and we will cease cover under the Policy. If we cease your cover, we will tell you in writing the date that cover ceases. Premiums will be due for the period of cover up to that date. If we agree to allow you more time to pay your premiums, we will tell you in writing. Our agreement may be subject to special terms and conditions including a late payment charge. You may not simply stop paying your premiums as a way of ceasing your cover and the Policy. 28

29 Section 8 Alterations to the Policy What you must tell us You must tell us immediately, if: the business location of an employer or a group of people included in the Policy changes. you wish to change the benefit basis or include any optional additional cover. there is a change in the nature of an employer s business that results in a member s job becoming more hazardous. the number of members increases to 24, where premiums are calculated using the single premium basis. the number of members reduces to 17, where premiums are calculated using the unit rate basis. either the number of members or the total scheme salaries increase or decrease by more than 25% of the total number or the total scheme salaries applicable on the last periodic review date (or on the commencement date if later). you want to include a further employer or group of people in the Policy, or remove an employer or group of people from the Policy. you ask us to change the eligibility conditions for inclusion in the Policy or, if a change occurs in the membership conditions of a scheme to which eligibility is limited. you want to cancel or cease the Policy. When you can make an alteration You can request an alteration to the Policy cover at any time. You must tell us in writing before the date you want to alter the Policy and its cover. We will tell you what evidence of insurability we will need to be able to make the change. When will the alteration be effective? We will write to tell you when we have altered the Policy and from what date the change is effective. 29

30 When can we alter the premium rates, Policy terms and Policy fee? We may alter the premium rate(s), Policy terms and Policy fee on any periodic review date. We may also alter the premium rates and Policy terms at any other time if: you ask us to change the basis for calculating the benefits provided under the Policy. you ask us to change the eligibility conditions for inclusion in the Policy or, if a change occurs in the membership conditions of a scheme to which eligibility is linked. you ask us to include an additional employer or an additional group of people in the Policy or an employer or group of people are removed from the Policy. the business location of an employer or a group of people included in the Policy changes. there is a change in the nature of an employer s business that results in a member s job becoming more hazardous. the cease age is amended. the number of members increases to 24, where premiums are calculated using the single premium basis. the number of members reduces to 17, where premiums are calculated using the unit rate basis. either the number of members or the total scheme salaries increase or decrease by more than 25% of the total number or the total scheme salaries applicable on the last periodic review date (or on the commencement date if later). the basis of calculation, payment or taxation of the State benefits changes. the basis of calculation of the employer s rate of National Insurance contributions changes or that rate increases by more than 3 per 100 of earnings, if covered as a supplementary benefit. any new legislation (or change in legislation), a change in state pensionable age or change of HMRC practice after the commencement date affects the legislation, regulation or the tax treatment of your premiums and/or the scheme benefits for you, your members or us. How you can cancel or cease the Policy You must tell us in writing before the date you want to cancel or cease the Policy and its cover. The Policy will continue until we receive your written instructions and premiums will continue to be due up to the date we confirm cover under the Policy ceases. 30

31 Section 9 Making a claim When you should tell us about possible claims If it appears that the member s illness or injury will extend beyond the deferred period and you want to make a claim, you must submit: a fully completed original, current claim form, signed by an official of the policyholder, and a fully completed original, current personal statement, signed by the member, and a copy of the member s job description, including details of the duties undertaken, when a member has been suffering incapacity for: four weeks, if the deferred period is 13 weeks; or 10 weeks, for any longer deferred period. We do not need to see a copy of the member s medical certificates, as we do not accept these as proof of incapacity. We will not pay any benefit, or any additional amounts of benefit, if we receive either a completed claim form or a completed personal statement later than six months after the end of the deferred period. You should send completed forms and documentation to: IP Claims Management Services Canada Life Limited Group Insurance 3 Rivergate Temple Quay Bristol BS1 6ER Fax: ipclaims@canadalife.co.uk Claim forms are available to download from our website or by contacting us at the above address. Leaflets providing further information are also available. 31

32 What happens if a member has had repeated absences as a result of the same incapacity? If a member is absent from work for short periods of time, with the same incapacity, these may be added together to calculate the deferred period. These absences must occur within a period that is no more than twice the length of the deferred period. For example: if your deferred period is 26 weeks and there have been several periods of absence which total 26 weeks, within a maximum of 52 weeks, these may be added together to produce the deferred period. What will happen next? When we have received all of the initial forms and information, we aim to tell you within five working days: what further information we need to assess the your claim, or whether we can consider your claim. If we cannot consider your claim we will tell you why not. If we can consider your claim, we will ask the member s General Practitioner and/or consultant(s) for details of medical history and the treatment being given for the incapacity. We may also: contact the member by telephone to obtain a fuller picture of their circumstances. ask a specialist to conduct an independent medical examination. ask a rehabilitation consultant to contact you or the member (see below). arrange for other investigations to be done. Our rehabilitation consultants are experienced nurses who deal with all aspects of Income Protection. They will usually contact the member to arrange a visit and will carry proof of identity. Whilst visits are arranged to help us assess your claim, the rehabilitation consultant is also trained to help you and the member by answering questions about Income Protection, State Benefits and Rehabilitation. 32

33 How is a claim assessed? We will make an objective assessment of the nature of a member s incapacity including the severity of any medical condition, how long it has existed and what affect it has on the member. We will then seek to determine whether or not they would be able to undertake the tasks involved to satisfy the definition of incapacity, taking into account any adaptations which would assist them to work. We will need evidence that the member is continuing to receive medical advice when appropriate and that treatment options have been investigated and explained to them. We will also consider any medical reports or additional information that you or the member give us. We reserve the right to use any appropriate means to investigate your claim. We will arrange periodic medical reviews to confirm that the member s illness or injury continues to meet the definition of incapacity you have agreed with us. You must provide us with any documents and information we need to process your claim. A breach of certain commitments within the Policy will result in us rejecting your claim. Who pays for the medical evidence? Canada Life will pay for any medical evidence obtained in the UK that we ask for. However, if the member does not attend a medical examination at an agreed date and time, you may incur a cancellation fee. How will the benefit be paid? The benefits payable under the Policy will be paid by us, to you in UK currency. Any benefit will normally be paid by monthly instalments in arrears, benefit payments starting one month after the end of a member s deferred period. We will not pay any benefit during or for the deferred period. 33