COVERING OPERATING EXPENSES IN CASE OF DISABILITY

Transcription

1 COVERING OPERATING EXPENSES IN CASE OF DISABILITY SOLO Business Expense Desjardins Financial Security 31

2 SOLO Business Expense 2.1 Plan Description SOLO Business Expense will cover the key operating or overhead expenses of the insured's business, such as rent, utilities, taxes and payroll in the event of a disability. Following the onset of the disability, a monthly benefit payment is made after the waiting period and proof of business expenses conditions are satisfied. Solo Business Expense SOLO Business Expense is designed to protect self-employed individuals (business owners, entrepreneurs, etc) in the event that they are unable to work as a result of an accident or illness which renders them totally disabled. Furthermore, policy premiums are tax-deductible as a regular business expense. Benefit payments are considered taxable income to the business. SOLO Business Expense is renewable up to age 65. DFS cannot cancel the coverage, modify or add provisions or restrictions to the existing coverage. After age 65, the insured may decide to continue this coverage for an extended period of time with some new terms and conditions. 2.2 Eligibility Eligible occupation classes: 4A, 3A, 2A, A and B To be eligible for the SOLO Business Expense coverage, the insured must: Be between the age of 18 and 60 inclusively; Secure a job and belong to an occupation class other than "X"; Have been in business for at least 2 years with a positive annual income or satisfy employment continuation criteria; and Work at least 30 hours per week; and - work at least 40 weeks per year; or - work between 35 and 39 weeks per year (in this case, the waiting period must be at least 90 days +). If the insured: does not work at least 35 weeks per year; or has not held the same occupation for at least 2 years and does not satisfy the employment continuation criteria; or employs more than 10 employees through the company He/she is not eligible for this product, but may be eligible for the SOLO Living Expenses or SOLO Accident Disability Income protection. 2.3 Premium Structure The premium rates were calculated to remain the same for the duration of the coverage, which is up to age 65. However, DFS could increase or decrease the rates to reflect claims experience, although they cannot be modified for only one insured. A change in the rates would affect all the insured s who share similar characteristics. The insured's health conditions or ability to perform his/her occupation will not be considered in determining the new premium. SOLO Business Expense 33

3 2.4 Monthly benefit amount The monthly benefit is the amount of insurance selected by the insured to be paid in the event of a disability. The amount is based on the corresponding business expenses. The minimum and maximum amounts are described below: Monthly Benefit Occupation Class Benefit Minimum All $400 Maximum 4A $6,000 3A $4,000 2A $3,000 A $3,000 B $3,000 These maximum limits are applicable for all the insured's business expenses plan held with DFS. The percentage of business expenses covered is subject to the number of employees in the company, as described below: Number of employees % of general expenses covered 0 to 5 100% 6 85% 7 70% 8 55% 9 40% 10 25% 11 or more 0% Only service-based businesses are eligible for a number between 6 and 10 employees. Please refer to the appendix showing the industry list. If the insured owns a business with 11 employees or more, he/she is not eligible for SOLO Business Expense, because in case of disability the business could continue to operate, therefore the loss would be limited. 2.5 Definition of Total Disability During the waiting period and the 24 months that follow, the insured is considered totally disabled if, as a result of an illness or accident: He/she is unable to perform the important duties of his/her regular occupation; and He/she is not working in any gainful occupation; and He/she receives continuous medical care. After receiving benefits for 24 months, the insured will continue to receive benefits if: He/she is unable to do a replacement occupation; and He/she is not working in any gainful occupation; and He/she receives continuous medical care. DFS may waive the continuous medical care requirement if we receive acceptable written proof indicating that further medical care would be of no benefit to the insured. 2.6 Waiting period The waiting period is the time frame the insured must satisfy before the benefit is paid. For SOLO Business Expense, the waiting periods are either: 30, 90+ or 120 days. For waiting periods of 30 and 90 + days, the monthly benefit would be paid on the first day in the event of hospitalization and day surgery. 34 SOLO Business Expense

4 The "+" sign indicates that the monthly benefit is payable on the first day in the event of an accident. This option is available with a waiting period of 90 days only. The following table indicates the different waiting periods in the event of an accident or an illness. Waiting period selected Disability due to an accident Without hospitalization or one-day surgery With hospitalization or one-day surgery Real Waiting Period Disability due to an illness Without hospitalization or one-day surgery With hospitalization or one-day surgery Solo Business Expense Satisfying the waiting period The insured does not have to be continuously disabled to satisfy the waiting period. The waiting period can be satisfied through successive periods of disability. For example, a successive period of disability lasting seven (7) days or more can be accumulated to satisfy the waiting period of 30 days or more provided it resulted from the same cause. However, the successive disability period cannot be separated by more than 180 days for occupation classes B, A, 2A or 360 days for occupation classes 3A and 4A. 2.7 Benefit period The benefit period is the time frame when the insured is disabled and is receiving a monthly benefit. The benefit period starts on the day of the first monthly benefit payment and ends at the first occurrence of the following events: end of the disability; end of the benefit period selected by the insured; at the policy anniversary nearest to the insured's 65th birthday; the death of the insured. For SOLO Business Expense, the benefit period are either: 24 months or 36 months. 2.8 Multiple causes of disability During the benefit period, if another illness or accident (other than the one that had caused the original disability) occurs which is also covered, no additional benefit will be paid under the terms of this coverage. Moreover, no benefit will be paid if the insured stays disabled at the end of the benefit period related to the first disability and another cause of disability occurs. 2.9 Recurrent disability When the insured recovers from a disability and then becomes disabled again due to the same cause, he/she is entitled to a recurrent disability. SOLO Business Expense 35

5 If the insured becomes disabled again within six (6) months for occupation classes B, A and 2A or within the twelve (12) months for occupation classes 3A and 4A from the end of the original or last disability and it is attributed to the same or a related cause, the disability is deemed to be the continuation of the same disability. In this case, the insured is not required to satisfy the waiting period again. Moreover, the payment of the monthly benefit will be added but will not exceed the benefit period selected. Conversely, if the disability was a result of another cause, the insured would be required to satisfy the pre-selected waiting period again in order to receive the monthly benefit for the benefit period selected Continuation of coverage after age 65 When the insured attains the age of 65, SOLO Business Expense may continue if the insurance is changed to a Term 1 (YRT) disability plan, without any medical proof. This continuation is possible every year for 5 years, up to age 70. To be eligible, the insured must: Work full-time (i.e. be gainfully employed at least 30 hours per week and 40 weeks per year. Not disabled; Ask for this extension 30 days before the policy anniversary nearest to the insured's 65th birthday, and 30 days before each renewal period thereafter; Provide financial justification The new temporary insurance includes the following features: Monthly benefit equal to the lesser of $2,000 or 50% of the initial monthly benefit; A fully integrated monthly benefit; A minimum waiting period of 30 days; A maximum benefit period of 2 years; 1-year temporary rate, at attained age; Exclusions on the SOLO Business Expense contract will still apply on the new temporary insurance Policy and Coverage termination The coverage will terminate on the first occurrence of the following dates: Death of the insured; Contract expiry date: - at the policy anniversary nearest to the insured's 65th birthday; - policy contract lapse. SOLO Business Expense exchange to Disability Income Special Built-In features SOLO Business Expense includes a special feature (at no additional cost) which will help DFS differentiate itself from other competitors in the DI market. 36 SOLO Business Expense

6 Exchange clause (at issue age) An entrepreneur that started a business with a small number of employees but over the years has steadily and rapidly expanded the business may find that he/she no longer needs a business expense coverage as the business could continue to operate if he/she was disabled. Alternatively, close to retirement an entrepreneur may decide to sell his/her established business to become a salaried employee elsewhere for a couple of more years and in doing so would want to exchange Business Expense coverage into Disability Income coverage. As a result, DFS is allowing changes to and from SOLO Business Expense to SOLO Disability Income protection. Solo Business Expense The insured may exercise this exchange clause based on the following conditions: Prior to age 65; Within the first seven years from date of issue (one-time only); At issue age; No additional risk to the insurer (i.e. the waiting period cannot be shortened, the benefit period cannot be extended and the benefit amount cannot be higher, etc); No medical evidence required; Financial information is required to safeguard against being over-insured (i.e. eligible business expense could be higher than the monthly benefit related to the annual income); Possibility to add optional riders at attained age and with medical evidence; The Critical Illness benefit is not included in the exchange clause. As soon as the business has 11 employees or more, you may recommend to the insured to convert SOLO Business Expense to SOLO Disability Income, because with 11 employees or more, the insured would not receive any monthly benefit under SOLO Business Expense Other benefits include SOLO Business Expense also includes other benefits Organ donation If the insured coverage has been in-force for at least six (6) months prior to the organ donation, he/she would receive a monthly benefit for a disability resulting from an organ donation. In this case, the insured is considered as being totally disabled due to a sickness Presumptive total DI If following an accident or illness, the insured suffers from a total and irreversible loss of sight in both eyes, hearing in both ears, speech, the use of both hands or both feet and the use of a hand and a foot, he/she will be presumed totally disabled whether or not he/she is able to work or requires treatment by a physician. Total and permanent loss means: Loss of use of a hand; Loss of use of a foot; Loss of a hand and the wrist joint following an amputation; Loss of a foot and the ankle joint following an amputation; Loss of sight in both (2) eyes (visual acuity twenty over two hundred (20/200) or less, or a field of vision of less then twenty (20) degrees); Loss of speech following a physical lesion or a sickness that last at least 6 consecutive months; Loss of hearing in both ears, with hearing threshold of ninety (90) decidels. SOLO Business Expense 37

7 Rehabilitation If the insured is receiving a monthly benefit under the terms of the SOLO Business Expense contract, DFS will pay the cost of services related to a rehabilitation program. This program cannot be covered by another service or insurance policy and DFS must approve the program in writing prior to any participation Waiver of premium The payment of the insured's policy premium is waived after the waiting period is satisfied and as long as the monthly benefit is being paid. The SOLO Business Expense benefit does not include the return of portions of premiums paid in advance neither the billing of portions of premiums when disability ends. Example: An insured is paying the policy premium on the 28 th of each month. The last payment made was on January 28 th and a couple of days later (Jan 30) the insured is involved in an accident which results in a disability. After satisfying the 14-day waiting period, DFS applies the waiver of premium to the policy and the next premium due on February 28 th is subsequently waived. The premium paid on January 28 th will not be refunded (not even pro-rated) while the premium scheduled for February 28 th does not have to be paid as it is waived. If the disability ends on March 29 th and the insured returns to work on that day, he/she will not have to pay any premiums that were waived. Therefore, the next premium payment would only be due the following month on April 28 th Assistance Service The insured has access to legal assistance services to answer any questions of a legal nature that may arise in their daily life. The assistance service is currently provided at no additional cost by Sigma Assistel, a subsidiary of DFS Specific rules for home-based workers If the insured works at home, certain restrictions may apply to the protection. No restrictions The Business Expense coverage is offered with no restrictions if the insured works at home and carries on a business, i.e.: he/she has different phone numbers for his/her home and work or a Website for his/her business; and he/she has a separate entrance for the business on which a sign is displayed; and customer traffic. With restrictions The Business Expense coverage is offered with restrictions if the insured works at home but is not carrying on a business in accordance with the above requirements. In this case, the minimum waiting period is 120 days and the maximum benefit period is 24 months. 38 SOLO Business Expense

8 2.15 Employment continuation criteria Insured with prior experience related to his/her occupation, allowing the employment continuation Past employment stability; At least $50,000 earned income; Work at least 30 hours per week end on a year-round basis in an insurable occupation; Favourable factors as indicated above. Insured without prior experience to his/her occupation Past employment stability; At least $12,000 earned income; Work at least 20 hours per week end on a year-round basis in an insurable occupation; Favourable factors as indicated above. Solo Business Expense 2.16 Eligible business expenses Rent, electricity, telephone and other public services; Salaries of personnel (who do not generate income and whose services are essential during the insured s disability); Employer contributions to the group insurance plan, the employee pension plan or the QPP, the CPP, the workers comp, HRDC and the provincial health care plan; Cleaning; The professional services of an outside accountant; Leasing and amortization of equipment, including automobile; Professional dues; Business taxes and licences; Depreciation of equipment and premises belonging to the insured; Postage stamps and other postage and office supplies; Property taxes for the place of business; Interest charges, except for those on over-drawn accounts; Professional liability insurance premiums; Amortization or periodic repayments of capital, including mortgages. At the start of his/her period of disability, the insured must choose whether the benefits cover the amortization or the reimbursement of capital. He/she cannot subsequently change this selection in the same period of total disability; Fire, theft and casualty insurance premiums. SOLO Business Expense 39