LIFE & CRITICAL ILLNESS INSURANCE Underwriting Guide

Transcription

1 LIFE & CRITICAL ILLNESS INSURANCE Underwriting Guide

2 We know that prospecting and selling new cases is hard work. That s why the underwriters at Transamerica Life Canada work with you every step of the way to help you place your business easily and promptly. At Transamerica, we believe in underwriting that makes sense. Created with you and your clients needs in mind, our accessible and straightforward guidelines make it even easier to get your clients the protection they need. By listening to your feedback, as well as studying industry best practices and conducting competitive reviews, we continue to make changes to our underwriting that respond to the evolving needs of our markets and your business. The guide Underwriting plays a large role in the processing of an application at Transamerica. This easy-to-use and comprehensive underwriting guide contains the key information you need to submit a case to Transamerica, speed up the underwriting process and ensure that your clients receive the best possible offer. The information here will also help you prepare your clients for the underwriting process and manage their expectations, resulting in a better sales experience for your clients, with no unpleasant surprises. Look for this icon throughout this guide for helpful tips on getting your policy issued faster. Look for this icon throughout this guide for extra information that s good to know. Look for this icon for helpful tips on building and maintaining excellent client relations. Preparing your clients for the underwriting process and maintaining open and honest communications throughout is an important aspect in managing their expectations, maintaining excellent client relationships and helping them to feel as comfortable as possible. If you have any questions about the underwriting process, please send us an at [email protected], or call the WFG Advisor Direct Team at WFG-ROCKS ( ).

3 Table of contents Underwriting tools at a glance Summary chart of underwriting programs and risk classifications Overview of required forms iii iii iv 1. Underwriting requirements 1 Let LifeView, Transamerica s illustration software, do the thinking for you 1 Underwriting Requirements Chart 2 Medical Conditions Underwriting Pocketbook 3 Pre-screening checklist 3 Application and underwriting requirement status and follow-up 5 2. Underwriting programs 6 Face/benefit amount and age availability 6 3. Underwriting risk classifications 8 Risk classifications 8 Preferred and Elite underwriting risk classes for life insurance 8 Preferred and Elite underwriting risk classification criteria 9 Underwriting Build Chart (height and weight) Insurance amounts guidelines Immigration guidelines Foreign travel guidelines Attending Physician Statement (APS) guidelines Financial underwriting guidelines The underwriting process: What to expect 25 Different types of insurance measures different types of risk 25 How does critical illness underwriting differ from life insurance underwriting? 25 Hypothetical (preliminary insurability) inquiries 26 Ratings 26 Exclusions for critical illness The application journey Getting your clients applications processed faster 33 [ i ]

4 [ ii ] Underwriting Guide

5 Underwriting tools at a glance Summary chart of underwriting programs and risk classifications This chart provides a handy reference guide to help you easily determine which underwriting program and classifications are available to your clients, based on their ages and the face amounts they are applying for. Age Applicable underwriting program Face amount Insurance plan Applicable risk classifications (see Section 3 for definitions of risk classifications) 0-16 Non-medical $500,000 $250,000 Universal life and term Critical illness Standard non-smoker Medical $500,001+ Universal life and term Non-medical $500,000 $250,000 Universal life and term Critical illness Standard non-smoker Standard smoker $500,001+ Universal life and term Elite non-smoker Preferred non-smoker Standard non-smoker Medical Preferred smoker Standard smoker $250,001+ Critical illness Standard non-smoker Standard smoker Non-medical $250,000 $99,999 Universal life and term Critical illness Standard non-smoker Standard smoker $250,001 - $500,000 Universal life and term $100,000+ Critical illness Standard non-smoker Standard smoker Medical $500,001+ Universal life and term Elite non-smoker Preferred non-smoker Standard non-smoker Non-medical $250,000 Universal life and term Preferred smoker Standard smoker Standard non-smoker Standard smoker Medical $250,001 - $500,000 Universal life and term >$0 Critical illness $500,001+ Universal life and term Standard non-smoker Standard smoker Elite non-smoker Preferred non-smoker Standard non-smoker Preferred smoker Standard smoker [ iii ]

6 Age Applicable underwriting program Face amount Insurance plan Applicable risk classifications (see Section 3 for definitions of risk classifications) $500,000 Universal life and term >$0 Critical illness Standard non-smoker Standard smoker 56+ Medical $500,001+ Universal life and term Elite non-smoker Preferred non-smoker Standard non-smoker Preferred smoker Standard smoker Overview of required forms For more information on requirements for our underwriting programs, refer to the section Underwriting Requirements. Underwriting Program Application required Additional requirements Non-medical The current Long Form Application (LP257) must be completed.* Be sure to provide complete details on the application, particularly for any yes answers. Medical When a paramedical or medical is needed, you do not need to complete the medical section. Although by always completing the medical section on the insurance application it can help to provide more details to the underwriter, which can result in speedier processing of your client s application. It can also help you manage your client s expectations with regards to the risk classification the underwriter applies. Include a cover letter or use the remarks section if you need more room. Refer to the Underwriting Requirements Chart (WFG-LP1214). Special note about edition dates If you order the application from informco, you will receive the most recent version. It is important to note that, with the introduction of our Critical Illness Protection Rider, we also launched a new life insurance application that integrates the short form and long form application into one application. How and when do you integrate the new application into your practice? For business WITH a CI Rider As of August 20, 2012 new life insurance applications which combines the short and long form application into one easy-to-use application LP257 (8/12) will be required on all new business that includes a CI rider. For business WITHOUT a CI Rider For sales that do not include a CI rider, you can submit business using the old life application LP257 (09/09) until September 21, September 21 Transition period ends September 22 and onwards Only the new application (LP257 (8/12) will be accepted. * To determine the most current edition of our applications, visit Transamerica s website at or click on Marketing Marketing Materials/Forms and Applications in our LifeView illustration software. [ iv ]

7 1. Underwriting requirements Transamerica offers two useful tools that are designed to assist you in determining the underwriting requirements for your clients: 1. LifeView, Transamerica s illustration software, which performs the analysis for you; and 2. Transamerica s Underwriting Requirements Chart 1. Let LifeView, Transamerica s illustration software do the thinking for you When selling a life insurance plan combined with a critical illness rider, the fastest way to determine the underwriting requirements needed is to use LifeView. LifeView will look at the requirements needed for both the life insurance plan and the critical illness rider and will provide you with a one line summary on what is needed based on the information that you ve provided in the illustration. Then you simply select the higher of the requirements between the life insurance and critical illness rider and order the necessary requirements. Where do you find this information? LifeView illustration software is available online at or can be ordered through Transamerica s icanorder system, which is available through the same site. Please discuss the operation of LifeView with your Transamerica Sales Director to ensure you maximize the flexibility of this tool. The image below is an example of where you can find the underwriting requirements on your clients insurance illustration. PR-3 Prepared for: [Owner Name] August 8, 2012 Prepared by: [agent name] 7 of 14 Section 4 - Underwriting Requirements Client1, Age 35 Face Amount $350,000 Non-Medical. Critical Illness Benefit $250,000 Non-Medical. [ 1 ]

8 2. Underwriting Requirements Chart Using the Chart, refer to the amount of insurance being applied for and the proposed insured s age (to his or her nearest birthday). The amount of insurance being applied for is defined as the total amount of insurance currently applied for, plus any amount issued by Transamerica within the last six months. Also note that the critical illness coverage in force, for all companies, cannot exceed a total of $2,000,000. For juveniles, the amount cannot exceed $250,000. Remember, when offering a critical illness rider on a universal life or term insurance plan, underwriting requirements will be based on the life insurance requirements in addition to the critical illness requirements. In order to prevent duplication of requirements, order the highest applicable level of requirements and add additional tests where indicated. Insurance Products Underwriting Requirements Chart Life Insurance Products & Critical Illness Protection Riders Transamerica s Underwriting Requirements Life Insurance Products Age (Nearest Birthday) $0 to $99,999 $100,000 to $250,000 $250,001 to $500,000 $500,001 to $999,999 $1,000,000 to $2,499,999 $2,500,000 to $3,000,000 $3,000,001 to $5,000,000 $5,000,001 to $10,000,000 $10,000,001 and over 0-16 A A A A&D B&D B&D B&D&FQ B&D&6 C&D& A A A B2 B2 B2 B2&5 B2&6&D C3&6&D A A A B2 B2 B3 B3&5 B3&6&D C4&6&D A A B2 B2 B3 B3 B3&5 B3&6&D C4&6&D B1 B1 B2 B3 B3 B3 C3&5 C4&6&D C4&6&D B1 B2 B3 B3 B3 C3 C4&5&D C4&6&D C4&6&D B1 B3 B3 B3 C3 C3 C4&5&D C4&6&D C4&6&D 71 & up B2 B3 B3&D C3&D C3&D C4&D C4&5&D C4&6&D C4&6&D The age and amount requirements are based on the total Life Insurance amount applied for with Transamerica in the last 6 months. Critical Illness Protection Riders Age $1,000,001 to (Nearest $0 to $99,999 $100,000 to $250,000 $250,001 to $500,000 $500,001 to $1,000,000 $2,000,000 Birthday) 0-16 A A A A B2 B2&D&FQ B2&D& A A B2 B2&D&FQ B3&D& A B1 B2 B3&D&FQ B3&D& B2 B2 B3 B3&D&FQ B3&D& B2 B3 B3&D B3&D&FQ B3&D& B3 B3 B3&D B3&D&FQ B4&D&6 Notes about underwriting requirements If a client is applying for both Life Insurance and Critical Illness, the higher of the underwriting requirements will always apply. Do not duplicate requirements, instead order the higher of the requirements. The Critical Illness underwriting requirements are based on the total Critical Illness benefit applied for with Transamerica in the last 6 months. Prostate Specific Antigen (PSA) will automatically be part of the blood test for all males age 51 and up, for all amounts. A Non-Medical B Paramedical C Medical Exam D Attending Physician s Statement FQ Financial Questionnaire (within the application) 1. Urine/HIV 2. Blood Profile & Urine/HIV 3. ECG, Blood Profile & Urine/HIV 4. Stress ECG, Blood Profile & Urine/HIV 5. Financial Questionnaire, Credit Check, Motor Vehicle Report, & Other Financial Information 6. Inspection Report & Motor Vehicle Report Not required under age 16. Other Financial Information (submit one of the following): Cover Letter Third Party Verification (such as): Notice of Assessment or Investment portfolio statement or Financial statement or Bank statement Additional requirements may be ordered as determined by the Underwriting Department. Residents who have been in Canada less than 12 months: Hepatitis screening is always required Those in category A or B1 must provide B2 requirements Critical illness insurance is an important part of an overall financial solutions package. It can be challenging, though, to go through the application process only to have it come back with a rating, or be declined altogether. Becoming familiar with the underwriting process can help you understand why some cases are rated, and others are declined. It will assist you in generating new business, and help you place rated business. [ 2 ] UNDERWRITING REQUIREMENTS

9 Two tools to help you manage your clients and explain what to expect 1. Medical Conditions Underwriting Pocketbook The Medical Conditions Underwriting Pocketbook is a useful tool that provides a basic overview of the most common medical conditions we encounter and can help you easily gather the information we need to properly assess your client. Medical conditions Underwriting pocketbook Simply refer to the Pocketbook for specific details to provide, to determine if there are additional underwriting requirements and to prepare your client for possible underwriting ratings. Below is an example of the type of information that you ll receive in Transamerica s Pocketbook. The Transamerica Life Canada medical conditions pocketbook Asthma Details of information Expected requirements Potential underwriting decision Current age. Date of diagnosis. Severity of symptoms. Frequency of attacks. Type of medication. Dosage of medication. Any hospitalization or ER visits. Any limitation of activities. Smoking habit. Any other medical condition. Respiratory questionnaire. Minimal severity: standard. Moderate severity: rated %. Severe condition: 250% to decline. By providing this important information up front, you can help get your clients the coverage they and their families need more quickly, while helping us provide you with the best possible offer. Please note that while the Pocketbook can help you prepare your client for potential ratings, the final underwriting decision may differ once all factors are assessed. Blood pressure Details of information Expected requirements Potential underwriting decision Current age. Date of diagnosis. Type of medication/treatment. Dosage of medication. Current blood pressure reading. Compliance with medication and follow-up. UNDERWRITING REQUIREMENTS Any hospitalization or ER visits. Paramedical. Blood profile. Home office urine specimen. Depends on severity and control. Typical case: standard if well controlled and, if treated, treatment well followed. [ 3 ]

10 2. Critical illness pre-screening checklist The pre-screening checklist has been created to assist you in a thorough evaluation of the proposed insured prior to submitting an application that includes critical illness insurance. Remember, this checklist is for critical illness insurance. If your client is automatically declined for critical illness, it does not mean that he or she will be declined for life insurance. Remember: critical illness insurance is subject to a more rigorous underwriting process than life insurance. Automatically declining for critical illness coverage: Below is a partial list of conditions that will result in an automatic decline for critical illness coverage. Please do not submit an application for critical illness if the proposed insured has, or has ever been diagnosed with, any of the following conditions. Please note that there may be other conditions that could also result in a decline for your client. If your client is currently under medical investigation, please wait until this has been completed before submitting an application. PROPOSED INSURED Adult AIDS, AIDS related disease or positive HIV Treatment for alcohol or drug abuse in the last three years Alzheimer s Disease Aplastic anemia Amyotrophic Lateral Sclerosis (ALS or Lou Gehrig s Disease) Benign brain tumour Cancer (some exceptions for skin cancer other than melanoma or certain early-stage cancers may apply. Please consult with the underwriting department for more information.) Cystic fibrosis Diabetes treated with insulin Heart disease such as heart attack, angina, coronary bypass surgery, angioplasty or valve replacement surgery Huntington s Chorea Kidney failure Motor neuron disease Multiple sclerosis Organ transplant Parkinson s Disease Permanent paralysis Stroke or transient ischemic attack Systemic lupus erythematosus Juvenile AIDS, AIDS-related disease or positive HIV Aplastic anemia Autism Benign brain tumour Cancer Cerebral palsy Cystic fibrosis Congenital heart disease Diabetes Down s syndrome Kidney failure Motor neuron disease Multiple sclerosis Muscular dystrophy Organ transplant Permanent paralysis Stroke Critical Illness coverage will not be offered to juveniles with any immediate family history of one of these illnesses: Familial polyposis of the colon Huntington s Chorea Polycystic kidney disease If any member of the proposed insured s immediate family (i.e., siblings and parents) has had one of the above conditions, the policy may be rated or in some cases, declined. [ 4 ] UNDERWRITING REQUIREMENTS

11 Application and underwriting requirement status and follow-up Regular follow-ups on underwriting requirements with the third-party vendor through whom you ordered requirements, and communication on application decisions, are important to keep your client engaged and interested in the life insurance product throughout the process. How can you find the current status of your pending business? There are two ways for you to learn about your business with Transamerica: 1. WFG Rocks Contact Center For the current status of your pending new business application and underwriting requirements, please contact the WFG Contact Center by at or toll-free at WFG-Rocks ( ). 2. Real-time updates available online The transamerica.ca site assists advisors, managers and marketing associates who use our products and services. There are two sections on the site: the public portion and the secure or sign-in portion. Anyone can access the public portion to view product information, sales concepts and tools. Advisors who have placed business with Transamerica, as well as managers and other office personnel, can self-enroll for access to the sign in portion of the site. Once on the secure portion of the site, they can view pending business, client information and in-force business through WebCAPPOW, as well as advisor marketing materials, and forms. Simply go to UNDERWRITING REQUIREMENTS [ 5 ]

12 2. Underwriting programs Transamerica offers two underwriting programs: Non-medical underwriting The proposed insured s insurability will be assessed by the underwriter based on the information provided in the Long Form Life Insurance Application. This includes questions related to medical history, family history, financial situation, lifestyle and other important factors necessary for the underwriters to determine the risk class the applicant represents. There is: no medical or paramedical examination by a health professional required no blood specimen required no urine specimen required If it is determined by the underwriter that any of the above three medical requirements are necessary, the applicant will fall under what we call medical underwriting. Medical underwriting also applies where the underwriter assesses the need for further information about a client based on the information provided in the Long Form Application for Non-medical Underwriting. In order to qualify for non-medical underwriting, the proposed insured must have lived in Canada for at least 12 months. Medical underwriting Medical underwriting means the proposed insured s insurability will be assessed by the underwriter based on the information provided in a Life Insurance Application, along with specific medical requirements. Face/benefit amount and age availability Non-medical Medical Life insurance Critical illness Life insurance Critical Illness Age Face amount Age Benefit amount Age Face amount Age Benefit amount 0 16 $500, $500, Not applicable 0 45 $250, $500, $500, $250, $250, $99, $250, $100, Not available 50+ Not available 56+ $ $0+ [ 6 ]

13 Remember, when offering a critical illness rider on a universal life or term insurance plan, underwriting requirements will be based on the life insurance requirements in addition to the critical illness insurance requirements. In order to prevent duplication of requirements, order the highest applicable level of requirements and add additional tests where indicated. Tip: Providing complete details to all questions that are answered with a yes, and ensuring that your client s application is in good order, can help the underwriter to quickly make a decision and avoid processing delays. For any questions answered yes, please provide details in the comments section of the application or in a cover letter. Note: Transamerica reserves the right to request additional medical requirements for any proposed insured (such as blood and urine testing, physician s report, medical examination, etc.) based on the initial assessment of the application. Note about misrepresentation It s important to ensure that the questions on the application and any questionnaires are answered truthfully and completely. Any non-disclosure of information or misrepresentation can lead to voided contracts and unpaid claims. UNDERWRITING PROGRAMS [ 7 ]

14 3. Underwriting risk classifications In this section of the Guide we will define the underwriting risk classifications that are available for Transamerica insurance plans. The underwriting risk classification (also referred to as rate class ) determines how much your clients will pay for their insurance. To ensure that our underwriting remains accessible, and that it reflects your clients needs, we offer non-smoker rates to those who occasionally smoke cigars. Risk classifications We offer five underwriting risk classifications: Elite non-smokers Preferred non-smokers Standard non-smokers Preferred smokers Standard smokers Life only Life only Life and CI rider Life only Life and CI Rider Tobacco use Zero use in the last 24 months Zero use in the last 12 months Zero use in the last 12 months Smoke more than 12 cigars per year, use a pipe or chewing tobacco, but do not use any other tobacco products Are users of tobacco products. Health Excellent medical and non-medical history Good medical and non-medical history Average medical and non-medical history Good medical and non-medical history Average medical and non-medical history Lifestyle Statistically excellent risks Statistically good risks Statistically average risks Statistically good risks. Statistically average risks. Tobacco use definition Tobacco use includes cigarettes, cigarillos (little cigars), cigars, pipes, shisha/hookah (waterpipe), marijuana, hashish, betel nuts, snuff, chewing tobacco, e-cigarettes, nicotine patch, NicoretteR Gum or any other smoking cessation products and/ or any ingestion of nicotine, regardless of negative or positive results in a cotinine (metabolite of nicotine) test. We will offer cigar smokers standard non-smoker rates if their cigar use is limited to 12 cigars per year and their urine test results are negative for cotinine (nicotine). For those qualifying for non-medical underwriting, a urine test is not needed. Preferred and Elite underwriting risk classes for life insurance Preferred and Elite underwriting is automatically applied when the underwriting amount for a life insured is $500,001 and greater,* and the insured is 16 years of age or older. For Preferred and Elite underwriting, we consider facts that go beyond the gender and smoking habits of your clients. We look at other health-related factors, such as physical build, lifestyles and personal and family health history to consider client s eligibility for an Elite, Preferred or Standard classification. If, based on these factors, your clients have a longer life expectancy, our preferred underwriting program can substantially reduce their life insurance premiums. * The underwriting amount is based on the total amount of life insurance for a particular life insured, including single life and joint life coverages and riders. NICORETTE is a registered trademark of the GlaxoSmithKline Group of Companies. [ 8 ]

15 Preferred and Elite underwriting risk classification criteria Elite Preferred Preferred smoker Tobacco &/or nicotine usage Includes smoking cessation products None in the last 24 months. None in the last 12 months. More than 12 cigars per year OR uses pipe & chewing tobacco only. Blood pressure Ages 44: 130/80 Ages 45 64: 140/85 Ages 65 80: 145/90 Never taken prescription medication for high blood pressure. Ages 44: 150/90 Ages 45 64: 155/90 Ages 65 80: 155/90 If taken only one prescription medication for high blood pressure, must meet Elite blood pressure criteria. Ages 44: 150/90 Ages 45 64: 155/90 Ages 65 80: 155/90 If taken only one prescription medication for high blood pressure, must meet Elite blood pressure criteria. Build chart See Elite column of Build Chart See Preferred column of Build Chart Cholesterol Amount shown is the maximum allowed. Family health history* Not applicable if proposed insured is age 60+ or adopted. Driving history Includes 24-hour suspensions or refusal to provide a breathalyzer sample. Alcohol/drug abuse treatment If previous history of treatment, must not be using any amount at present. Personal health history Aviation Ages 44: 210 Ages 45 80: 220 Never taken prescription medication for cholesterol and cholesterol/hdl ratio is 5 or less. No immediate family member has died or been diagnosed with a medical condition prior to age 61. Not more than two speeding violations in the last two years. No DWI or reckless driving charges in the last 10 years. No treatment in the last 10 years (includes counselling). Ages 44: 250 Ages 45 80: 260 Cholesterol/HDL ratio is 6.5 or less. If taking only one prescription medication for cholesterol, must meet Elite cholesterol criteria. No more than one family member has died or been diagnosed with a critical condition prior to age 61. Not more than four speeding violations in the last two years. No DWI or reckless driving charges in the last five years. No treatment in the last five years (includes counselling). See Preferred column of Build Chart Ages 44: 250 Ages 45 80: 260 Cholesterol/HDL ratio is 6.5 or less. If taking only one prescription medication for cholesterol, must meet Elite cholesterol criteria. No more than one family member has died or been diagnosed with a critical condition prior to age 61. Not more than four speeding violations in the last two years. No DWI or reckless driving charges in the last five years. No treatment in the last five years (includes counselling). No ratable health impairments. No personal history of coronary artery disease, cardiovascular disease, diabetes or cancer. A passenger, pilot or crew member on a regularly scheduled, major passenger airline is acceptable under each underwriting program. Other occupational aviation or pleasure aviation may be considered under the Standard or Substandard (rated) underwriting classification. An exclusion may apply for pleasure aviation only. * Immediate family members means parents and siblings. Medical condition includes (but is not limited to) coronary artery disease, cardiovascular disease, diabetes or cancer. UNDERWRITING RISK CLASSIFICATIONS [ 9 ]

16 Elite Preferred Preferred smoker Foreign travel/ residence Avocation Travel to, or planning to travel, in a ratable or excludable foreign country is not accepted. Participation in ratable hazardous activities is not accepted. If participation is not considered standard, may be treated as an exclusion, except where participation is occupational. Hazardous activities include (but are not limited to) hang-gliding, ultralight, soaring, skydiving, ballooning, powered racing, competitive skiing, scuba diving and skin diving > 60 feet. Client relations tip: The appropriate class can only be determined after all evidence has been submitted and assessed, so to best manage your client s expectations and avoid potential disappointment, care is recommended when speaking to your clients about their risk classification. While it is acceptable to let them know there is a possibility they may qualify for a Preferred or Elite underwriting risk classification if you think they will be eligible we recommend providing them only with quotes for the Standard classes. This helps prevent them from being disappointed if the premium quoted later is higher, because they did not in fact qualify for the better risk classification. Tip: A request for a change to a better class may be granted after two years, with a new paramedical, blood profile and urine HIV. Good to know: Clients who are currently taking a prescription medication for cholesterol may still qualify for a Preferred classification if their cholesterol/hdl ratio is 5 or less. [ 10 ] UNDERWRITING RISK CLASSIFICATIONS

17 Underwriting Build Chart (height and weight) Effective October 15, 2010 FOR ADVISOR USE ONLY Underwriting Build Chart Elite Non-Smoker Weight in pounds (lbs) Preferred Smoker & Non-smoker) Weight in pounds (lbs) Standard Smoker & Non-smoker Weight in pounds (lbs) Male or Female Male or Female Male or Female Height Height Height Weight Min Max Weight Min Max Weight Min Max Clients who do not meet the above criteria could be considered in a Substandard rating class or declined. Each client assessment is based on the full underwriting assessment of their file Yonge Street Toronto, Ontario M2N 7J8 TM Trademarks of Aegon Canada ULC &/or its subsidiary companies. Aegon and the Aegon logo are registered trademarks of Aegon N.V. Aegon Canada ULC and its subsidiary companies are licensed to use such marks. Transamerica and the pyramid design are registered trademarks of Transamerica Corporation. Transamerica Life Canada is licensed to use such marks. LP /12 UNDERWRITING RISK CLASSIFICATIONS [ 11 ]

18 4. Insurance amounts guidelines The following chart provides an outline of some of the financial purposes and methods used by our underwriters in arriving at acceptable amounts of insurance. These are guidelines only, and the amount of insurance, as well as the premium deposit, needs to be justified. In some cases, while the guidelines may still apply, the amount may be reduced or even declined if we do not have enough information to justify the amount, or if we believe that the amount is not justifiable. The information is presented as follows: Underwriting formula: How the underwriter calculates the amount of coverage that can be approved according to the type of insurance and need. Notes: These are the specific details, included in your cover letter, or under the remarks section of the application, that the underwriter uses to justify the amount of coverage requested, and to make the most competitive decision right from the outset. This can streamline the underwriting process by reducing the need for additional information about the sale. Life INSURANCE CRITICAL ILLNESS Underwriting formula Underwriting formula Notes Purpose of insurance Income replacement Age Multipliers for earned income Age Multipliers for earned income to to Nonworking spouse: Children: Other adult (unemployed) Same amount as the working spouse 50 % of parents up to a maximum of $500,000. Anything above this amount will be reviewed on a case-by-case basis. 50% of working spouse limit up to a maximum of $250,000 25% of smallest parent s limit as long as all children insured equally limit up to a maximum of $250,000 Up to $100,000 can be issued without justification [ 12 ]

19 Life INSURANCE CRITICAL ILLNESS Underwriting formula Underwriting formula Notes Purpose of insurance Estate preservation Usually based on: projected net worth multiplied by estate tax rate and other estate planning practices Buy or sell partnership, stock redemption Percentage of ownership multiplied by the corporation s Fair Market Value (FMV). The amount of coverage should be consistent with the proposed insured s share of the business. Provide third-party verification via corporate financial statements and corporate letter outlining how the value of the corporation was determined. Also, indicate coverage in place or pending for all partners and owners. If an owner does not have coverage, we will require an explanation. A buy-sell agreement should be in place. Key person 5 10 times income (depending on circumstances). Maximum 3 times the key person s income. Provide a cover letter outlining key value to the company, how the amount was determined, financial impact of loss, specific skills and experience. Similar coverage should exist on all key persons. Loan: Business collateral No more than 30 70% of loan. Insurance only for a key individual. Insurance needs must be first taken care of before seeking the business collateral loan amount. It is difficult to justify CI coverage for these reasons. Include details of loan: amount, purpose, duration, other collateral, interest rate, and repayment period. Income replacement for life insurance With the LifeScripter tool from Transamerica, we have automated the income replacement calculation for you making it simpler for you to determine your client s income replacement need. If you are not using this tool but would still like to have a guide in terms of acceptable amounts of insurance, we have provided within the table above which includes factors produced by LifeScripter for selected ages based on the following assumptions: Income replacement % 90% Interest rate 5% Inflation rate 3% Retirement age 65 Tip: The key to fast approval is good application packaging. Be sure to include a complete application, cover letter, details of foreign travel (if applicable), illustration and any other supporting documents. INSURANCE AMOUNT GUIDELINES [ 13 ]

20 5. Immigration guidelines Life insurance If your client is new to Canada and is in one of the following groups, he or she may still qualify for our insurance coverage: permanent resident skilled workers program nannies non-resident (non-landed immigrants) Married to a Canadian or a permanent resident If your client is married to a Canadian or a permanent resident and is residing in Canada, but has not yet been granted permanent resident status, he or she may still qualify for life insurance coverage. Your client will be required to show: There is an immigration request in process; a photocopy of the immigration forms is needed Confirmation of the spouse s immigration status (see chart below for more details) Coverage of up to 100% of the face amount on the primary life insured will be considered for spouses, and up to 50% for children. Once permanent resident status has been granted, your client may then qualify for our life insurance as a permanent resident. (Refer to our guidelines for permanent residents immediately below.) Permanent resident Skilled workers program Nannies Non-resident Minimum residency No minimum requirement for residency in Canada. No minimum requirement for residency in Canada. No minimum requirement for residency in Canada. Applicant must have resided in Canada for more than three months. Required documentation: Canadian status / work permit Not applicable Applicant needs to provide valid residency documentation, such as: Social Insurance Number; Photocopy of immigration status card; or Immigration papers such as photocopy of work permit. Applicant must have valid work permits and the intention to stay in Canada. A photocopy of immigration status documentation is required, such as: Social Insurance Number; Photocopy of immigration status card; or Immigration papers. Applicant must have valid work permits and the intention to stay in Canada. Applicant must have valid residency documentation, such as: Social Insurance Number; Photocopy of immigration status card; or Immigration papers. Applicant must have valid work permits and the intention to stay in Canada. A photocopy of valid permit is needed. Face amounts Face amount is based on the product minimum and maximum. Face amount is based on the product minimum and maximum. Face amount may not exceed $250,001. Face amount may not exceed $250,001. [ 14 ]

21 Permanent resident Skilled workers program Nannies Non-resident Eligible classes Applicants may be considered for Elite or Preferred class.* Financial questionnaire or justification may be required so that Elite or Preferred class* may be granted. Elite or Preferred class* is not available. Elite or Preferred class* is not available. Rider availability As per product. As per product. Accidental Death and Dismemberment and Waiver of Premium Riders are not available Accidental Death and Dismemberment and Waiver of Premium Riders are not available. Basic requirements Important information Client must live in Canada. For new immigrants living in Canada for less than 12 consecutive months, we will require the following: paramedical blood test with hepatitis B and C screen urine HIV All medical requirements must be completed in Canada. Only Canadian assets will be taken into account when justifying the need for, or purpose information of, insurance. Face amount may be limited to $250,001, but may be higher depending on immigration status. After 12 months in Canada, regular age and amount requirements apply, and clients may be considered for an Elite or Preferred class, depending on their underwriting status and face amount unless the client is still a contract worker. In this case, elite and preferred rates would not be available. Additional forms: A financial questionnaire may be required. A cover letter explaining the purpose of the insurance and to identify the source of deposits/ premiums is recommended. Other requirements No additional requirements. Applies to skilled workers such as nurses, doctors, engineers, etc., or applicants under the business owner or entrepreneur programs. No additional requirements. No additional requirements. Applicants must be employed in such a field in Canada. * For universal life and term applications starting at $250,001 and ages 17+. IMMIGRATION GUIDELINES [ 15 ]

22 Critical illness Compared with life insurance, the underwriter will often need more details about the health of a client in order to perform a critical illness risk appraisal. The underwriter may investigate any sickness or symptom lasting more than a few days to ensure that a major condition is not developing. Transamerica s immigration guidelines for critical illness insurance are based on a number of factors including: The original country risk, which takes into account: the general political, social and economic infrastructure the quality and availability of medical services high-risk regions within a country where HIV is prevelant in the society specific risks presented by crime or terrorism How long the client has been in Canada and the medical history established in Canada. If the client does not have a doctor in Canada and has an existing illness or a medical condition and we are unable to obtain any medical data or history within Canada, the client may be declined for CI coverage. Transamerica will request that clients have lived in Canada long enough to have an established medical history regarding their health. While our immigration guidelines are reviewed on a regular basis, global politics are unpredictable and the risk profile of a specific client status can change within any given period of time, necessitating a review of current events by the underwriter. New immigrants Our critical illness protection rider has been designed for people living in Canada. Here are our guidelines for new immigrants: A limited amount will be offered to the following immigration status categories: Maximum face amount Nannies up to $100,000 Clients under a Provincial Immigrant Nominee Program Landed immigrant (permanent resident) up to $250,000 Maximum critical illness limits per financial guidelines apply For any clients who have been in Canada less than one year, a paramedical, a blood profile including a hepatitis screen and a urine specimen will be required. [ 16 ] IMMIGRATION GUIDELINES

23 Individuals for whom coverage is not available Unfortunately, we are not able to consider the following: Life insurance Critical illness 1. Individuals with student permits or visas. X X 2. Individuals with temporary work permits. 3. Refugees: Transamerica will not consider any application until resident status has been granted. (See Life insurance immigration guidelines chart for limitations.) X X X 4. Seasonal workers. X X 5. Individuals living outside of Canada. X X Tip: To avoid unnecessary underwriting delays, please ensure you complete the travel question included in the application and provide details about past and future travel. Tip: Always complete the full section on residency on the application and include the applicant s number of years in Canada and resident status for income tax purposes. Tip: For clients who have been in Canada for less than 12 months, provide information that illustrates their intention to stay in Canada. IMMIGRATION GUIDELINES [ 17 ]

24 6. Foreign travel guidelines At Transamerica Life Canada, we understand the importance of travelling, and that it s something more and more of your clients are engaging in. We are pleased to offer foreign travel guidelines that respond to the needs of your clients and that make it easier for your clients to experience the world while still getting the protection they need. Some highlights include: Most travel up to twelve weeks a year to common travel destinations will be considered standard We currently decline less than 15 countries, which means your client still has almost 200 countries to explore Foreign travel guidelines are subject to change, based on world events. Due to the frequent changes, we are unable to provide you with a list of restricted countries. Please contact your New Business Case Coordinator for current information. The following websites offer useful up-to-date information about travelling: Foreign Affairs Canada: CDC Health Information for International Travel: Getting the best offer: It s all in the details There are numerous risks associated with foreign travel, including, but not limited to, war and political unrest, disease, availability and quality of medical care, crime, civil unrest, environmental factors and unsafe conditions of transportation. Because of these risks, as well as the lack of clear, objective data on foreign travel mortality, insurers approach each situation with caution. Providing Transamerica with as many details as possible on the items below can make all the difference in helping to get your client the best offer. Transamerica is looking more for a pattern of future travel than evidence of the occasional trip. Make sure to provide full details on the application and any related questionnaires, such as: Location, location, location! Where are your clients going? Where have they been? Duration of travel The longer the duration of the trip, the greater the risk. Sometimes a very short trip to a dangerous spot can be acceptable, if the overall risk looks manageable. Purpose of travel Business? Make sure to specify type of business, whether your client s location will be at a branch office or a worksite in a remote area, etc. Visiting family? Include details such as whether your client will be staying with them or in a hotel. Vacation? Specify whether your client is going with a tour group or on a solo trip, and where your client will be staying. Frequency of travel Is this a one-time trip, or is this a trip that your client will be making every year? When such details are provided, Transamerica will have a better idea of the likelihood of future travel and the associated risks and will be able to feel more comfortable with the scenario, resulting in better ratings and rates for your client. Tip: To avoid unnecessary underwriting delays, be sure to complete the travel questions in the application, providing complete details about future travel. To get the best offer, Transamerica must feel comfortable with the information and the travel scenario, so include specific details about where your clients are travelling, where they re staying and the reasons for travel. Good to know: Some extended travel may be considered rated, excluded or declined, depending on the country and duration of the stay. [ 18 ]

25 7. Attending Physician Statement (APS) guidelines Transamerica reserves the right to request an APS at any time including: at any time for cause, i.e., a potentially rateable impairment (see partial list below) when there has been medical consultation within a certain period of time other than for a cold, flu, normal pre-natal or routine checkup (see table below) when there has been any visit to the emergency room in the last year Critical Illness Age Face amount Reason All ages All face amounts Visit to the physician within two months of application Life Insurance Age Face amount Reason 0 45 $2,500,000 and over Visit to the physician within one month of application $1,000,000 and over Visit to the physician within one month of application $500,000 and over Visit to the physician within three months of application 71+ $250,000 and over Visit to the physician within six months of application Transamerica has internal guidelines advising when an APS is needed for cause. You can expect an APS for the following causes: Life insurance Abnormal cardiac test and other test Brain disorders Cancers and tumours Uterine polyps unless benign histology confirmed Cardiac problems Congenital heart disease Lymph node disorder Multiple sclerosis Muscular dystrophy Pancreatic disorders Parkinson s Disease If child is less than six months old and born prematurely PSA abnormalities Critical Illness Abnormal PAP COPD and respiratory disorders for which a regular follow-up is required Crohn s Disease or ulcerative colitis Diabetes, non-controlled or non-compliant with treatment Endocrine disorders, except long-standing stable hypothyroidism Epilepsy not well controlled or with seizure in the last three years Family history of hereditary disease Glomerulonephritis, or kidney disorders other than kidney stones Heart conditions [ 19 ]

26 Life insurance Significant seizures / epilepsy (or current) gastrointestinal problem rheumatoid arthritis problem endocrine disorders arrhythmias heart murmurs hypertension kidney disorders psychiatric illness, depression/anxiety Stroke or similar disorders Past suicide attempts Recent syncope Ulcerative colitis and other similar disorders If stress ECG done with check-up within last year Any non routine diagnostic testing within one year (echo, scan, etc ) Critical Illness Heart murmur other than functional Hypertension associated with hyperlipidemia, smoking or obesity Musculoskeletal disorders with any limitation or treatment other than anti-inflammatory Non routine diagnostic test done in the last three years Premature child less than one year old Significant psychiatric illness, depression or anxiety requiring follow-up or treatment Skin lesions for which a regular follow-up is required Sleep apnea Vertigo or syncope without definite diagnosis within the last three years Keep in mind that this list of causes covers only some of the more common causes seen, but does not limit the ordering of an APS for situations of concern that the underwriter may identify. [ 20 ] Attending PhySICIAN STATEMENT (APS) GUIDELINES

27 8. Financial underwriting guidelines Financial underwriting is used to justify the amount of insurance applied for. Underwriters determine the amount of coverage to allow by assessing: For life insurance: The financial loss created by the untimely death of the proposed life insured. For critical illness: The financial loss created by contracting one of the covered conditions of the proposed life insured. To ensure the amount of coverage is the ideal amount for the proposed insured, the underwriter needs to understand his or her financial situation, including such aspects as the proposed insured s personal and business annual income. Refer first to our Insurance Amount guidelines (page 12) as this will give you an understanding of what we would consider a reasonable amount of insurance. If your clients are within the guidelines, you are our key source of their financial information. By giving us a comprehensive picture of your clients financial situation up front, you can make the process more convenient for them, while also enabling us to make the underwriting decision faster. The following provides an overview of what we look for. If you have completed a needs analysis for your client, please provide a copy. Tip: Instead of writing a formal cover letter, these details can be provided in the remarks section of the application. Cover letters The more details provided with the application, the better. By providing a complete picture of your client s situation, you can help reduce processing delays and the need for underwriting requirements. Although not required, cover letters are possibly the best tool you can use to accelerate the underwriting process. A detailed cover letter submitted with a Life Insurance Application can improve the turnaround time for your clients case. Cover letters can assist the underwriter to better understand the purpose of the insurance and assess your client s health, lifestyle and financial situation by providing details not included on the application. Tip: Instead of writing a formal cover letter, these details can be provided in the remarks section of the application. Importance of a cover letter from advisors At Transamerica, we recognize that each sale is unique, and take a purpose driven approach to financial underwriting. A cover letter from you explaining the financial need for the insurance amount applied for is helpful. To learn more about writing an effective cover letter, see the guidelines below. [ 21 ]

28 To help you write an effective cover letter, here is the information we generally look for in personally-owned and corporate-owned applications: Personally-owned applications Background and purpose Coverage amount Personal details Financial details Purpose of and need for the insurance your client s insurance history Information regarding any in-force insurance Any discussion you have had with a Transamerica underwriter prior to submitting the case detailing anything agreed to, requirements modified, etc. Explanation of reason(s) behind special ownership, beneficiary, payor and other arrangements Explanation of any potential issues with completing underwriting requirements How the face amount was determined The funding source for the insurance The source of the initial premium Financial needs analysis done with your client Information that may suggest a lower risk of mortality: healthy eating habits, indications of a healthy lifestyle, etc. Professional background, accomplishments and designations A background of, and the underlying facts for, any underwriting risks/ concerns Sensitive histories, especially alcoholism, drug abuse, and psychiatric conditions Impairments, criminal records, bankruptcies, and/ or driving records Details on unusual or potentially ratable occupations and/or avocations Proposed insured s income and net worth (including details of assets and liabilities). If your client is applying for a face amount of $1,000,000 or above, these details need to be captured on the application Third-party verification, such as T4, investment portfolio, etc. Details of past and future travel [ 22 ] Financial UNDERWRITING GUIDELINES

29 Corporate-owned applications Background and purpose Coverage amount Personal details Financial details Purpose of and need for the insurance The business s insurance history Information regarding any in-force insurance Any discussion you have had with a Transamerica underwriter prior to submitting the case detailing anything agreed to, requirements modified, etc. How the face amount was determined The funding source for the insurance The source of the initial premium Financial need analysis done with your client Job details and percentage of ownership in the company for the proposed life insured Details about loan agreements Projections on new business ventures Fair Market Value (FMV) of the corporation Income and net worth of the corporation Third-party verification, such as financial statement and an accountant s letter Explanation of reason(s) behind special ownership, beneficiary, payor and other arrangements Explain any potential issues with completing underwriting requirements Forms you will need to complete It is important to ensure that the following steps are taken: 1) Complete the Financial Questionnaire within the application 2) Order a Motor Vehicle Report (MVR) from your service provider 3) Provide one of the following additional pieces of information: a) A cover letter (see the section Importance of cover letters from advisors above for details on what to include) b) A third-party confirmation such as a Notice of Assessment (T1, T4) c) A copy of the client s investment portfolio statement, financial statement or bank statement Next steps Upon receipt of the application, Transamerica will perform a credit check, in addition to reviewing the information provided above. Inspection reports An inspection report may be conducted, only with the applicant s approval, if the policy applied for is very large or if there is anything uncovered that indicates that Transamerica needs additional information. For amounts starting at $5,000,001, we will require inspection reports. An inspection report is a confidential interview, conducted by telephone. Your clients can schedule a time for the interview that is convenient for them and can feel confident that the interviewee will be a professionally- trained employee of a service provider authorized by Transamerica. Financial UNDERWRITING GUIDELINES [ 23 ]

30 An inspection report allows Transamerica to make the best offer possible to your client. By gathering important financial information, an inspection report provides a more complete picture of the financial circumstances surrounding the amount of insurance being requested. Client relations tip: By advising and preparing your clients ahead of time for the inspection report, you can help ensure that they feel comfortable and have a pleasant experience, This can greatly speed up the issuance of the policy. Client and third-party identification and verification For policies with face amounts starting at $5,000,001, Transamerica has contracts with vendors to provide inspection reports, which include third-party identification and verification. These vendors collect details about your client s income and net worth from valid financial references, as well as specific information about the financial references themselves that allows for follow-up of information. Acceptable sources for third-party verification include a financial advisor who is at arm s length from the insurance sale and who is an accountant, tax lawyer, banker or any other advisor who has legitimate access to the client s true financial situation (but who is not connected to the sale). This verification must include the source s designation, as well as information on your client: unearned income, a breakdown of assets and liabilities, investment portfolio, T4 and T5 and net worth. [ 24 ] Financial UNDERWRITING GUIDELINES

31 9. The underwriting process: What to expect Insurance is based on a rather uncomplicated premise: it is easier for a group of people to share the cost of an unexpected event than for a single individual to bear the inevitable burden. Before any group of people can share in the risk of an event happening, however, a risk appraisal must be completed. The purpose of a risk appraisal is to fairly evaluate each individual so that all persons in a similar risk class fall in the same category, or group, and, as a result, pay the same premiums for similar insurance coverage. If insurance companies didn t do this, everyone would pay the same amount, regardless of their risk class, and those who are healthy would, in effect, help to cover those who are less healthy, and that wouldn t be fair. The insurance company determines what risk class an individual should be placed in based on many factors, including medical history, as well as physical condition at the time of application for the policy, family medical history and lifestyle attributes, such as whether or not the person smokes, drinks excessively, uses unprescribed drugs, has a bad driving record or is involved in any hazardous activities. Together, all this information helps the insurance company arrive at a fair premium for each client. The lower the risk, the lower the premium charged. Simply put, the higher the risk, the higher the premium charged. Different types of insurance measures different types of risk Type of insurance Risk it measures What it measures Claim Life Mortality Probability of death On death Critical illness Incidence of illness The risk of being diagnosed with one of the covered conditions in the contract On diagnosis of a covered illness (following a survival period) How does critical illness underwriting differ from life insurance underwriting? There is a distinct difference between the underwriting of critical illness insurance and life insurance because critical illness insurance pays out when a disease is diagnosed and the insured survives the 30-day survival period, and not when a person dies from that disease. Because more people will be diagnosed with a disease than will actually die from that disease, the incidence rate for payment of CI claims would be higher than for life insurance and the underwriting chart will reflect this higher incidence rate with more stringent requirements. The main difference between the two is risk factor analysis. Risk factors such as family history, build (height and weight), and medical history are included in the analysis that an underwriter goes through when determining whether an individual can qualify for CI insurance and at what premium cost. It is important that you understand critical illness insurance and the covered illnesses before you sell the product. Your client should be encouraged to fully disclose all elements of family history including all respective dates and ages of impairments. Any non-disclosure of information or misrepresentation can lead to voided contracts and unpaid claims. The underwriting process can be made better and faster by ensuring that your client provides complete information on their health and the health of their family. [ 25 ]

32 Using the Critical Illness Pre-Screening Checklist and providing clear and complete information on the application will help the underwriter fairly and accurately evaluate the risk. Do not hesitate to submit a memo with the application to elaborate on information you feel would be pertinent to the case. Hypothetical (preliminary insurability) inquiries Life insurance As an advisor, you will sometimes want to understand how Transamerica would assess a particular situation/ medical condition before the sale is made in order to manage the expectations of your clients. For life insurance cases, Transamerica offers a service that enables you to ask an underwriter the probability based on a brief description of illnesses or situations, the service also gives you an idea of the underwriting. This lets you advise your client of possible requirements and the potential application of an extra premium. All provinces (except Quebec) [email protected] Quebec [email protected] Critical illness As the critical illness risk is different than life risk, with the chance of increased anti-selection, we will not accept preliminary insurability inquiries on critical illness. In the Canadian marketplace, all CI-covered conditions are standardized therefore any difference in underwriting decisions from company to company is highly unlikely. Ratings What is a rating? Certain factors such as our gender, age, family history, current conditions, lifestyle choices and whether or not you smoke can affect when you are likely to die. Depending on these factors, one individual may have a greater risk of dying earlier than another. If there is an increased risk of an individual dying earlier than normal, then the individual s mortality is also considered to be higher than normal. An individual who presents a greater-than-average-risk with regards to mortality, may be charged a higher premium rate to offset that risk. In the insurance industry, individuals with a higher mortality are said to have extra mortality. The increased risk, and thus the extra premium charged, for an individual is quantified using one of two methods: extra percentage tables permanent and temporary flat extra premiums Extra percentage tables When there are health issues, for example, elevated blood pressure, the extra percentage tables are used. The increased risk, or extra mortality, of an individual is quantified as a percentage where 100% represents the normally expected health risk (mortality). This percentage is then applied to the standard premium or cost of insurance. As an example, consider two individuals, Anne and Sally. Both are female, both age 35 and both are non-smokers. However, Anne has a health condition that increases her risk of dying sooner than Sally, who is healthy. Therefore, Anne would receive a rating for elevated mortality. Say that Anne s health condition has a rating of 50%, this would mean that Anne s insurance policy would carry a rating of 150% (100% normal mortality + 50% extra mortality). If Anne s health condition improves over time, the rating may be reduced or removed if she applies to have it reviewed and if the underwriting is favourable with regard to the entire medical history. An application for a rating review can be made two years after the rating was applied. [ 26 ] The underwriting process: WHAT TO ExPECT

33 In some cases, when the risk is particularly high (typically higher than a rating of 400%), an insurance company may not be prepared to assume the risk and the proposed insured may be declined. Critical illness Critical illness insurance is an important part of an overall financial solutions package but it can be frustrating to go through the application process only to have it come back with a rating, or to have it declined altogether. Becoming familiar with the underwriting process can help you understand why some cases are rated, and others are declined. That will assist you in generating new business, and help you place rated business. When underwriting for critical illness, the underwriter must obtain full details of the family history and past history of all applicants. In family history, for example, the age of occurrence of a disease is more important than the date of death from the disease. It is also likely that it will be necessary to request more attending physician statements, to obtain the pathology of long-ago tumors, for example, or to request details of recent check ups (which may have influenced the applicant s desire to obtain critical illness coverage). Transamerica s Critical Illness Protection Rider offers a maximum rating of +150% = (100% normal mortality + 150%) 250%). Due to the limited maximum percentage amount, you may see more declines on your critical illness business than on your life insurance business. As critical illness is a benefit that is payable to the insured during their lifetime, anti-selective behaviour, when compared to life insurance applicants, may be higher. In fact, the experience in other countries, where the coverage has been available for longer periods, confirms the need for precise policy wording, as well as for tight and conservative underwriting, and complete analysis for both medical and financial risk. When there is a critical illness rating does that mean the life insurance will be rated as well? The short answer is no. Remember that underwriting for critical illness insurance is more stringent because we re underwriting the potential for diagnosis of a disease. Because we re talking about diagnosis rather than death, the incidence is higher than it is for life insurance, and that means the underwriting chart used for critical illness is more stringent than for life insurance. If the risk is different, that means the underwriting is different. Permanent and temporary flat extra premiums Permanent This approach calls for a fixed extra premium per thousand dollars of sum insured/face amount over and above the Standard premium charge. The additional mortality risk is likely to be present over an indeterminate period of time. For example, Bob has a history of reckless driving and has received three speeding tickets over the last two years. Because those who drive recklessly are more likely to die sooner than those who don t, Bob will receive a rating. If Bob changes his driving habits and no longer speeds, he may apply after two years to have the rating removed or decreased. Some avocations such as scuba diving or mountain climbing could draw an extra premium for the life of the policy or until the lifestyle of the insured has changed and an application is made to have it removed. Temporary Similar to permanent, this approach also calls for a fixed extra premium per thousand dollars of sum insured/face amount over and above the standard premium charge. However, unlike a permanent flat extra, a temporary flat extra is charged on a temporary basis or for a designated period of time. The extra premium may only be charged for a fixed number of years. The underwriting process: WHAT TO ExPECT [ 27 ]

34 For example, Gary is a hobby pilot and does not have enough flight experience time according to his record. In two years, he will have achieved his required number of flying hours. So Gary receives a temporary rating for those two years, which will drop off automatically without the need for review. Reconsideration of ratings and declines If your client receives a rating, he or she may be eligible for future reconsideration of that rating. Likewise, if your client has been declined, there may be circumstances under which we would review that decision. A reconsideration will only be possible if the overall medical history and/or lifestyle has improved. Reconsideration of medical ratings is not always possible. Some conditions are unlikely to improve over time. For example, consider type 1 diabetes (insulin dependent). The longer the client has type 1 diabetes, the greater the risk of complications and thus the greater the mortality. As such, type 1 diabetic ratings are unlikely to be eligible for reduction in subsequent years. Reconsiderations will help you deliver the rated policy to your client. It will also provide you with a basis to follow up with your client in the future with the chance to review the rating or to turn a declined individual into a client (insured). Exclusions for critical illness As explained earlier, in some instances there is an increased risk when assessing a critical illness risk compared with a life risk. For some conditions, instead of a rating, an exclusion may apply. When an exclusion is applied, the insured will cannot make a claim for the excluded condition since the condition is no longer being covered with his or her plan. If an exclusion is applied, the contract will be amended outlining the medical condition that has been excluded. This will be shown on the Policy Amendment Pages which will need to be signed and returned as part of the delivery requirements in order to settle the policy. More common medical exclusions for critical illness A few of the more common medical exclusions include any condition, disorder or illness resulting directly or indirectly from: multiple sclerosis Alzheimer s Disease, Parkinson s Disease primary or secondary melanoma certain types of cancer such as thyroid cancer, colon cancer or breast cancer, only to name a few [ 28 ] The underwriting process: WHAT TO ExPECT

35 The following case study will help illustrate the importance of family history in underwriting critical illness insurance: Sex Age Smoking status General health Family history Underwriting decision Male 35 NS Good Mother diagnosed with diabetes at age 45 and sister diagnosed with diabetes at age 39. Critical illness decision: Rated at 125% Life decision: Standard The reason for the critical illness rating is because there is a risk that the client will be diagnosed with diabetes at the same age. This means the client has an increased risk of having blindness, kidney failure or contracting a heart condition as a result of the diabetes, which are conditions covered under the critical illness plan. The following case study will help illustrate the importance of medical history in underwriting critical illness insurance. Sex Age Smoking status General health Medical history Underwriting decision Female 28 NS Good Had an episode of optic neuritis five years ago; investigation was normal Critical illness decision: Exclusion for multiple sclerosis and total blindness Life decision: Standard The CI will have an exclusion for multiple sclerosis and blindness since an optic neuritis could be one of the first symptoms of having a diagnosis of multiple sclerosis or blindness. The following case study will help illustrate the importance of current health in underwriting critical illness insurance: Sex Age Smoking status General health Lab findings Underwriting decision Male 47 NS Good Cholesterol/HDL ratio of 8.5 Critical illness decision: Rated at 125% Life decision: Standard An elevated cholesterol/hdl ratio increases the risk of having a coronary or vascular event. This means a higher probability of having a heart attack or a stroke. The underwriting process: WHAT TO ExPECT [ 29 ]

36 10. The application journey This section of the Guide will help you understand everything you need to know about our underwriting process. We will explain the journey your client s application will take from the time you submit it to when the policy is issued, as well as provide details about our underwriting programs and tips on preparing your clients for the process. With a better understanding of the process, you will be able to ensure your policies are delivered quickly and smoothly, and that your client remains engaged throughout. The process: Your client s application journey Applicant with the assistance of the advisor, completes the life insurance application. Advisor orders any medical requirements as per the Underwriting Requirements Chart. Distributor office mails application to the Transamerica office. Application arrives at Transamerica s New Business department, which then: verifies that the information is complete inputs the application on the Transamerica computer system and gives the file to the underwriter The underwriter reviews and determines whether to issue coverage right away or to request additional information or reports to determine whether applicant is an acceptable risk. MIB search is conducted. Additional report required Issue coverage An AES notification is sent requesting additional information, reports or other requirements. New Business department issues policy contract and mails it to the distributor's office for delivery to the policyowner. Advisor commission is paid. The distributor sends additional information, reports or requirements. [ 30 ]

37 What is MIB Group, Inc.? MIB Group, Inc. (formally known as the Medical Information Bureau) is a non-profit organization that protects insurers, applicants and policyholders from insurance fraud and misrepresentation. MIB Group, Inc. collects applicant data within a central database. When your client applies for a life insurance product, a search is done on that applicant through this database. Because of this valuable service, we are able to keep our rates low and approve more cases faster. The information found is treated as confidential information and is only available to the underwriter assessing the application. As with all private, personal information, your client may access the information through MIB Group, Inc. and correct any inaccuracies. What information does the MIB have? When an application is made to an MIB member company, any information that is of significance concerning the client s health, lifestyle or financial situation or that may affect his or her longevity is submitted to, and stored in, the MIB database. Stored data includes information regarding medical conditions, medical tests, lifestyle information, financial information and/or activity index. There is also nonmedical information about such things as potentially hazardous hobbies, or the results of a motor vehicle report showing a poor driving history. All information is encrypted using a code system to ensure that the data remain confidential and protected. If you re interested in learning more about the MIB Group, Inc., please refer to the MIB Group, Inc. website at For more details about the MIB Group, Inc., please review the Notices section of the application. The paramedical: What your client can expect For those clients who require a paramedical and/or medical exam, a health care professional from one of our approved service providers will arrange a time and place for the exam that is convenient for your client. The health care professional will ask your client questions related to medical history, take height and weight measurements, as well as blood pressure readings, and will request either a urine or blood specimen, or both, based on the underwriting requirements chart. Where is the exam performed? At your client s convenience, the health professional will come to your client s home or workplace, or your client can arrange to visit the provider s office. It is important to provide your clients with information on what to expect and how to prepare for the exam. Let them know what is going to happen, how long it will take and who will be coming to meet with them. Advise them to wear short sleeves or a loose-fitting top at the time of the exam. There is no disrobing required. Advise them to drink a glass of water one hour before the exam and to avoid caffeine before the exam. your clients should avoid any vigorous or strenuous exercise prior to the exam. Clients should also avoid food intake within four hours of the exam. If they are currently on medications, experiencing any health problems, menstruating or on a high-protein diet, please have them notify the nurse. your client should have a picture ID available at the time of the exam. Advise them to limit salt and high-cholesterol foods 24 hours prior to the exam. your client should have all important information on hand for the exam, including: names, addresses and numbers of any doctors or clinics visited in the last five years names and dosages of current medications The application journey [ 31 ]

38 Estimated examination time 10 to 20 minutes for blood draw and urine 20 to 30 minutes for paramedical examination, blood draw and urine 30 to 45 minutes for paramedical examination, blood draw, urine and EKG Client relations tip: Set your client s expectations for the amount of time involved and the evidence that will be required. Good to know: Generally speaking, percentage and permanent extra premiums can only be reviewed after two years and new medical evidence will be required. The change of the rating is subject to the new evidence received and the assessment by the underwriter at that time. Good to know: For the rating of any of the lives to be reviewed on a joint life policy, new medical evidence is required on all lives insured. The rating reconsideration may be declined if any of the lives insured are no longer in the same risk class as when the policy was originally issued. Interested in shorting the turnaround time of your applications requiring paramedicals? Using the new epara could save up to nine days on standard turnaround times. In March 2012 Transamerica began an epara pilot conducted by Hooper-Holmes Canada in the Greater Toronto Area. In fact, we were one of the first in the industry to utilize this new technology. So far the results have been incredible. With this new technology we are now able to offer your clients a time savings of up to 35%. (Our standard 26 days for turnaround time from the time an application is received to the time it is mailed was reduced to 17 days.) How it works: epara is a digitized paramedical app that resides on a tablet device to give our health professionals an efficient tool to complete paramedicals electronically. It is the same paramedical visit your clients are used to but instead of a paper format the information will be captured electronically! Here s a quick overview of the benefits to you and your clients: improved turnaround time paramedical received by Transamerica electronically same day potentially faster policy issue ensures accuracy and completeness of all paramedicals eliminates paperwork or misplaced documents enhanced security features no information resides on the device after it has been transmitted environmentally friendly You can expect to see the epara being rolled out to more larger Canadian cities such as Vancouver and Montreal soon! [ 32 ] The application journey

39 11. Getting your clients applications processed faster In this section of the guide, we will discuss the keys to faster processing of your clients applications. In addition to pointers that will help you submit more in good order applications, you will also learn about the importance of cover letters. The biggest cause of processing delays is not in good order applications. This means applications that are incomplete, that have inconsistent or incorrect information or that just don t have enough information. Remember the following pointers to ensure that your clients applications are processed without delays and to help Transamerica provide your clients with the best possible offer. 1. Complete the application! Remember to answer every applicable question on the application, and review your client s application once completed to ensure nothing has been missed. Any missing information will require us to issue an amendment that your client will need to sign. Common omissions that are result in delays include the type of insurance, the face amount, the relationship of the owner to the proposed life insured(s), the distribution code and advisor information. 2. Remember W5! For any questions on the application to which your client answers yes, ensure that you include a detailed explanation that covers the 5Ws (and 1H): what, when, why, where, who and how. Answering these questions completely is essential to helping your client qualify for our non-medical underwriting program. Without these details, the underwriter may need to order additional underwriting requirements. 3. Watch for inconsistent or incorrect information. Errors and inconsistencies that we often find on applications include those related to: The client s age (the illustration software can help you determine the correct age for the premium) The client s birth date (note the requested format for the date) The breakdown of the proceeds of insurance, listed as share % on the application. (The total percentage for the shares must add up to 100%. If there is a primary and contingent owner, the shares for each should add up to 100%.) The illustration (Always check that the information on the application matches that of the illustration!) 4. Include questionnaires where needed. If your client responds yes to certain questions on the Life Insurance Application, you will be prompted to submit an additional underwriting questionnaire. These questionnaires are used to provide the detailed information required by the underwriter for case assessment. When submitting an underwriting questionnaire, check to ensure the proposed insured has duly completed, signed and dated the questionnaire. We have many types of questionnaires, including Diabetic, Aviation, Blood Pressure, Respiratory, Smoking/ Tobacco, Motor Vehicle Racing, Alcohol Usage, Drug Usage, Seizure, Chest Pain, Parachuting/Skydiving, Back Pain, Scuba Diving, Headache, Nervous Disorder, Mountaineering, Gastrointestinal, Foreign Travel, Arthritis, Occupation and Driving. For a printable tip sheet of common mistakes made on applications, check out our Tips to speed up processing of applications on Transamerica s website ( [ 33 ]

40 Tip: Take the time and the space to complete the available questionnaires and to provide detailed information about your client. Providing the underwriter with these details can help to decrease processing delays and ensure your client is getting the best deal. Tip: Transamerica uses the proposed insured s age nearest to his or her birthday when determining underwriting requirements. Therefore, if a person is age 55 and four months, age 55 is used for underwriting purposes. However, if a person is age 55 and seven months, they are considered age 56 for underwriting purposes. For more information... To learn more about insurance plans from Transamerica, check out our many other training and educational tools. With webinars, elearning courses, and a team of sales directors, we re with you every step of the way! Visit Transamerica s website at or contact your sales director to learn more. British Columbia Western Canada Central & Eastern Canada [ 34 ] Getting YOUR CLIENTS APPLICATIONS PROCESSED FASTER

41 Notes: [ 35 ]

42 Notes: [ 36 ]

43 Transamerica Life Canada is a leader in the Canadian marketplace, providing a broad range of individual life insurance and protection products and services, all designed to help Canadians protect against financial risk and transform their tomorrows. Distribution is through a number of channels, resulting in a national network of thousands of independent advisors. For over 100 years, Transamerica Life Canada has been delivering on its promises and intends to continue that strength and stability to be able to keep making the things that make tomorrow better. Transamerica Life Canada is an Aegon company. As an international insurance, pensions and asset management company based in The Hague, Aegon has businesses in over twenty markets in the Americas, Europe and Asia. Aegon companies employ over 23,000 people and have millions of customers across the globe. Giving back to the community in different ways is a part of who we are at Transamerica Life Canada. Each year, we allocate funds to our in the spirit of hope charitable giving program which donates to numerous non-profit organizations that serve health, community and well-being causes across the country Yonge Street Toronto, Ontario M2N 7J8 prosperity universal life and prosperity term are trademarks of Transamerica Life Canada. Transamerica and the pyramid design are registered trademarks of Transamerica Corporation. Transamerica Life Canada is licensed to use such marks. All other trademarks are those of their respective owners. WFG-LP1218 3/14