CLHIA - GROUP LIFE AND GROUP ACCIDENT AND SICKNESS INSURANCE GUIDELINES FOREWARD The following CLHIA Guidelines replace the former Guidelines of the Superintendents of Insurance. They maintain the spirit of consumer protection and fair practices inherent in the former Superintendents' Guidelines. 1. The Guidelines provide a minimum standard for group insurance practices. 2. Where legislation covers matters dealt with in these Guidelines, such legislation takes precedence over the Guidelines. 3. These Guidelines apply to life insurance, accidental death insurance and dismemberment insurance, disability insurance, accident insurance and sickness insurance, including health and dental. They do not apply to annuities, blanket insurance, creditors group insurance, family insurance, and personal accident and sickness insurance issued to the client base of a credit card issuer. 4. The Guidelines are intended to be dynamic and will be amended from time to time to serve the evolving needs of consumers and insurers, subject to any legislation covering the particular matter. 5. These Guidelines were approved by the CLHIA Board of Directors on June 5, 1994. 6. The Committee on Group Insurance has instituted an Advisory Panel whose mandate is to provide advisory opinions to member companies requiring clarification of the Guidelines. GUIDELINES Definitions: "Disability income benefit" means a benefit provided under a group life insurance contract or under a group accident or group sickness insurance contract whereby the insurer will make periodic income replacement payments to a member or other person insured under the contract in the event of his or her disability due to accident or sickness. "Group insurance" means insurance whereby the lives of a number of persons are insured severally under a single contract between an insurer and an employer or other entity.
"Member" means a person who is insured by contract of group insurance, but does not include a person who is insured because the member is a dependent of that person. "Group Policyholder" means an entity which makes a contract of group insurance with an insurer in respect of members of a group. "Waiver of premium benefit" means a benefit provided under a group life insurance contract whereby the insurer will waive the payment of premiums falling due in respect of the member, or any other person insured under the contract, in the event of, and during the period of, disability of the member. Group Insurance Plan Description for Members An insurer shall issue, or arrange for issue, to each member a certificate where required by law and, a plan description which outlines the principal benefits and conditions under the contract of group insurance. The plan description shall include the following particulars: the name of the insurer and sufficient identification of the contract of group insurance; the name of the group policyholder; the amount or the method of determining the amount of insurance on the member and on any other persons insured under the contract of group insurance through the member; any exclusions or limitations with a notice to the effect that the statements are a summary of some of the provisions of the contract of group insurance; the circumstances under which the insurance terminates and the rights, if any, upon such termination, of the member and of any other person insured through the member; in a suitably prominent position, words to the effect that the insurance information therein is important and suggesting that the plan description should be kept in a safe place; the procedure to followed by a claimant in making a claim including: 1. to whom and where claims should be made; 2. the time limit within which a claim must be made or within which a notice or proof of claim must be submitted; 3. information about obtaining the form required for submission of a claim; where and from whom the member may obtain more detailed information about the benefit or other provisions under the group insurance contract which are relevant to the member.
Life Insurance Conversion Privilege This guideline describes the conditions under which a member may continue life insurance coverage on an individual basis upon termination of the group insurance. In this Guideline; "life insurance" does not include "disability income benefit", "waiver of premium benefit" or "accidental death insurance". Every contract of group life insurance shall provide that a member may, on or before attaining the age of 65 years, and without evidence of insurability, convert up to the full amount of terminated insurance on the member's life limited to the lesser of: 1. the amount of the insurance not replaced under a replacing contract of group life insurance, or 2. $200,000 per member for all contracts of group insurance combined. As a minimum the insurer must offer conversion to an individual contract of term insurance for either a period of one year or up to age 65. The insurer may also offer any other policy designated and currently being issued by the insurer, at the current individual insurance rates. if the group coverage was subject to evidence of insurability and an extra premium had been applied to the group premium, then a comparable extra premium may be applied to the individual contract issued as a result of conversion. application for the individual contract must be made within 31 days after the date of termination of the member's life insurance benefit. A contract of group life insurance need not provide that the conversion privilege applies to reduction or termination of coverage which become effective at specified ages or upon a member's retirement, and which are stipulated in the contract of group insurance. The conversion privilege under this Guideline applies to group life insurance coverage of a disabled member that is continued under a waiver of premium benefit, including the situation where member recovers but does not return to work and therefore ceases to be a member. If there has been a change of insurer, the insurer which has continued the coverage under the waiver of premium must grant the conversion.
Continuation of A Disabled Member's Life Insurance or Disability Income Insurance When Contract or Benefit Terminates To protect a disabled plan member from loss of life or disability insurance coverage: Every contract of group life insurance with a waiver of premium benefit shall provide that, upon termination of the contract or benefit provision, the insurance on the life of a member who is disabled according to the definition of disability included in the contract of group insurance at the time of the termination, must be continued as though the contract or benefit provision were in full force and effect. This clause applies provided that the disability of the member is reported to the insurer not more than 180 days, or such longer period as may be provided in the contract, following the commencement of such disability. Every contract of group insurance with a disability income benefit shall provide that, upon termination of the contract or benefit provision, the disability insurance of a member who is disabled according to the definition of total disability included in the contract of group insurance at the time of its termination, must be continued as though the contract or benefit provision were in full force and effect. This clause applies provided that the disability of the member is reported to the insurer not more than 180 days, or such longer period as may be provided in the contract, following the commencement of such disability. The insurer is not liable to provide the long term disability income benefit in respect of the recurrence of a disability which commenced before the termination of the group insurance contract or benefit provision, and which recurs after a period of 180 days, or such longer period as may be provided in the contract, during which the member was not disabled. Change of Insurer This Guideline protects a plan member from loss of coverage or benefit simply because the policyholder has changed insurers, or because the plan member was not actively at work at the time of the change. This does not apply to any changes to the level of benefits or plan design of the replacing contract at the request or with the agreement of the group policyholder. In this guideline, "replacing contract" means a contract of group insurance issued by the same or another insurer that: 1. is effective no later than 31 days after the termination of another group insurance contract (herein referred to as the "termination contract") and 2. insures the same group of members or part of the group of members as was insured under the terminating contract, and 3. includes one or more of life insurance, accidental death or dismemberment, Accident and Sickness short term disability income, or long term disability income benefit which were also included in the terminating contract, and The replacing contract shall provide that: Any member or any other person insured:
1. who was insured under the termination contract at the time of its termination, and 2. whose insurance under the terminating contract terminated solely by reason of its termination, and 3. who is eligible for insurances under the terms of the replacing contract, shall be insured under the replacing contract. The amount of insurance in respect of any member or any person insured under the replacing contract shall be the lessor of: 1. the amount for which the member is eligible under the terms of the replacing contract, and 2. the amount for which the member was insured under the terminating contract, including voluntary coverages. Insurance under the replacing contract in respect of any member or any other person insured shall become effective on the later of : 1. the date the Member's insurance terminates under the terminating contract, or 2. the date the replacing contract becomes effective. No member or any other person insured who was insured under the terminating contract on its termination date shall be ineligible under the replacing contract solely because the member was not actively at work on the effective date of the replacing contract. Where any member who was insured under the terminating group insurance contract is not actively at work due to accident or sickness on the date of termination of the terminating contract, the following shall apply: 1. A claim for disability income benefit that has not been approved by the insurer of the terminating contract shall be considered by the insurer of the terminating contract as if the contract had remained in force so long as notice of claim is submitted to it within the greater of 180 days after the member became disabled and such longer period as is included in the terminating contract. 2. Where the terminating contract is a contract of group life insurance and includes a waiver of premium benefit, a claim for waiver of premium benefit shall be considered for acceptance by the insurer of the terminating contract as if the contract had remained in force so long as notice of claim is submitted to it within the greater of 180 days after the member became disabled and such longer period as is included in the terminating contract. If such a member dies during the period in which a claim for waiver of premium benefit could have been made, the member having been continuously unable to return to work due to accident, or sickness the terminating insurer shall remain liable for the life insurance claim.
3. The life insurance coverage shall be provided by the replacing insurer on a premium paying basis under the following circumstances: a) where the terminating contract is a contract of group life insurance which does not include a waiver of premium benefit, in respect of the member or any person insured under the contract; or b) where such member does not qualify for continuation of insurance under the waiver of premium benefit in the terminating contract because of age, failure to meet the definition of disability after the period in which a claim for waiver of premium benefit can be made, or failure to submit a claim within the period required No member who is receiving benefits under the terminating contract in accordance with this Guideline may receive duplicate benefits under the new contract. An insurer shall make a reasonable effort to determine whether a contract of group insurance it is proposing to issue is a replacing contract, and if so, what responsibilities it has under this Guideline. As long as it does so, nothing in these Guidelines shall prevent an insurer from withdrawing its contract of group insurance or revising its premiums if the insurer has been given incorrect information or has been misled with respect to amounts of coverage or other data pertinent to the insurer's risk. The insurer of the replacing contract is permitted to require that satisfactory evidence of insurability be submitted in respect of any coverage. However, where the insurer so requires, the replacing contract shall not become effective until after the evidence of insurability required by the replacing insurer has been approved by it. Nothing in this Guideline shall prevent an insurer, upon agreement with the policyholder, from issuing a replacing contract with different terms and conditions than the terminating contract. In particular, it is not necessary that the replacing contract ensures that there is no loss of coverage under all circumstances to any member or any other person covered under the terminating contract, and to which this Guideline applies. Any or all of the benefit required to be paid by the insurer of the terminating contract pursuant to this Guideline may be provided instead by the insurer of the replacing contract. To the extent such provision is made in the replacing contract, the insurer of the terminating contract is not liable to pay benefits. Where a change of insurers has resulting in a dispute between insurers as to which one of them is liable for plan member's life or disability benefits, both insurers shall submit to CLHIA binding arbitration. Coordination with Cost of Living Adjustments in Government Plans In this Guideline, "government sponsored plan or support program cost-of-living, adjustment" means an increase in the level of benefit under any government sponsored plan or support program to reflect an increase in the cost of living, as measured by the appropriate governmental
agency, but does not include any change in the formula used to calculate the initial benefit level under any such plan. The disability income benefit payable to an insured under a contract of group insurance shall not be reduced because of a government sponsored plan or support program cost of living adjustment occurring after the date on which the benefit becomes payable under the group insurance contract. Notwithstanding the above subsection, if a contract of group insurance provides for cost of living adjustment in the level of disability income benefit payable, then such disability income benefit may be reduced by the lesser of: 1. The government sponsored plan or support program cost of living adjustment occurring after the date on which the disability income benefit becomes payable under the contract of group insurance, and 2. The proportion of such adjustment that the percentage rate of the cost of living adjustment made under the contract of group insurance during the same period is of the percentage rate of increase in the government sponsored plan or support program cost of living adjustment.