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LLQP (life licence)

LifeLLQP Life Insurance✓A&SLLQP Accident & Sickness Insurance Seg FundsLLQP Segregated Funds & Annuities EthicsLLQP Ethics & Professional Practice (Common Law)

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Accident and Sickness · Components 3-4: recommendation and service (35%)

Group & Business A&S Plans

Group plans are master contracts held by an employer; business owners add overhead, buy-out and key person cover. Who pays the premium decides the tax.

Implement a recommendation2 min read5 sections

Must-know for the exam

Group A&S is one master contract with the employer as policyholder; employees get certificates.
A replacement group plan within 31 days must cover members of the old plan, even if off work, and credit deductibles met (BC s. 116(4)).
After a group plan ends, the insurer still pays for disabilities from before termination if reported within 6 months (BC s. 116(1)).
ASO plans: the employer pays the claims and the insurer administers; stop-loss caps large claims.
Business overhead expense pays fixed business costs, not the owner's salary; premiums deductible, benefits taxable.
Disability buy-out funds a share purchase after a long elimination period, often 12 months or more.
Employer contributions to health and dental plans are not taxable (ITA s. 6(1)(a)(i)); to group CI or AD&D they are (s. 6(1)(e.1)).
Group LTD benefits are taxable when the employer contributed, less the employee's own contributions (s. 6(1)(f)).
Coordination of benefits: your own plan first; for children, the parent whose birthday comes first in the year.

On this page · 5 sections

Traps that cost marks

Thinking each employee holds a separate policy.
Assuming group coverage starts on the hire date.
Ignoring the actively-at-work rule for new plans.
Applying actively-at-work rules to a replacement plan.
Charging a second deductible after a group plan change.
Thinking a plan's end wipes out pending claims.
Thinking the insurer pays claims under ASO.
Assuming ASO plans have built-in claim caps.

Why it matters on the exam

Expect questions on who pays first, what is taxable, and what happens when a plan changes insurers or ends.

Group plan rules

•Probationary periods and actively-at-work clauses delay coverage for new plans and new hires.
•Non-evidence maximums: amounts above need medical evidence.
•Group LTD usually does not convert when you leave; health and life may.

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More on this topic

Exam-style questions

A Victoria engineering firm starts a new group disability and health plan on 1 June. Ana, one of its designers, has been on sick leave since mid-May recovering from surgery and is still off work on 1 June; she expects to return in July. The plan has a standard actively-at-work clause and is not replacing an earlier plan. When does her coverage start?
Acme replaced its group LTD insurer, with the new plan starting 20 days after the old one ended. Mo was on sick leave on the start date but had been insured under the old plan. Can the new insurer exclude him?
Lena, 37, works for a Halifax software company that switched group health insurers on 1 July, with the new plan starting within 31 days of the old one ending. By June she had already met her $100 annual deductible under the old plan, which uses the same calendar year. She submits a prescription claim in August. What applies under the new plan?

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