Many Canadians receive group insurance, otherwise known as employee benefits, from their employer. These plans usually include some form of health and/or life insurance coverage. Group insurance comes in different funding formats. Employers can choose from different funding methods to suit their company's needs.

There is a wide range of funding methods. Fully pooled plans are where the insurance company sets the premium and also absorbs all the risk. Self insured plans have the employer bearing the risk, with the insurer paying the eligible claims. Experience rating occurs where all or part of the risk is shared by both parties. The funding method that is best for your company depends on many factors, such as:

• Number and/or type of employees
• Type of risk you wish to cover
• Premium volume
• Prior claims patterns
• Employer’s ability to accept risk

For a business with a smaller number of employees,  a non-refund or non-retention accounting plan is a good option. Benefits which are payable infrequently (i.e. death or long-term disability benefits) are usually pooled so that these claims are combined with those of other groups. Due to the low incident rate of these types of claims, it is better for the insurance company, rather than the sponsor (employer), to determine required premium rates based on analysis for the entire block of business. There is some funding flexibility available for short-term disability benefits. The sponsor can purchase a weekly indemnity benefit, as well as be self-insured through a sick leave and/or salary continuation plan. Additional supplementary health and dental benefits are usually insured, although their cost will often be adjusted to reflect your actual experience. The larger your employee group is, the more likely your plan will be experience rated, with past claims patterns establishing your future premium requirements.

A fully pooled basis plan does not participate and/or share in the financial results generated by the experience of the plan. The insurance company keeps any profits generated if the amount of premiums paid exceeds claims and expenses. However, the insurance company is responsible for absorbing the costs of any losses if claims and expenses exceed the premiums paid.

For a business with a larger amount of employees, there are different options for group insurance. Benefits such as accidental death and dismemberment (AD&D) and business travel accident are typically fully insured due to the fact that these claims are infrequent and usually in high amounts. As a group grows in size, more funding methods become available as the claiming patterns tend to be more predictable.

Prospectively Rated Approach: This is similar to a fully pooled group in all aspects except for the setting and/or renewal rates. However, unlike a pooled group, premium rates for a prospectively rated plan are determined either in whole or part by the group's claims experience. Although future rates are determined by past claims, this plan is similar to the pooled approach in that the insurer assumes the risk of any shortfalls, but also benefits from any surplus.

At the other end of the spectrum are plans for large employers where a large amount of small claims are expected. This plan can be set up on an ASO Basis "Administrative Services Only". With this arrangement the employer bears the expense of the total amount of claims paid each period plus a handling charge to the insurance company. An ASO account can be set up in 2 ways, depending on what works best for you.

Billed In Advance: Rates are established based on prior claims activity. At the end of the policy year, total premium paid is compared to claims paid. The sponsor is fully refunded any surplus, and assumes immediate responsibility to pay the insurer any deficit which may be owed. This plan offers the sponsor the advantage of level plan funding throughout the year.

Monthly Billed In Arrears: A float of approximately 6 weeks of estimated claims is taken. At the end of the month a bill is produced showing actual paid claims plus expenses. At the end of the policy year an accounting is done, with any surplus being refunded to the sponsor, and with any deficit being the responsibility of the sponsor. Under this plan, there should not be a substantial surplus or deficit, as actual claims are being billed on a monthly basis. These benefits can be insured, but their ultimate cost will equal the client's actual expenses, plus the reserve charges, a cancellation risk margin and premium taxes. There is no pooling and as such, the long term cost can be considerably higher than that under an ASO arrangement.

Larger employer's group life insurance and long-term disability typically are insured with some form of experience rating or partial pooling being applied by the insurer. The characteristics of a group and it's premium volume determine the financing method(s) chosen. A partially experience-rated contract is the closest to the fully pooled method, which recognizes the employer's experience, whether it is good or bad. If a surplus is realized at the year's end, a refund could be issued, or the premium rates could be lowered. This arrangement is known as "retention" or refund accounting.

Refund accounting establishes the rates based on prior years claims similar to a regular experienced rate account. However, it differs with regards to the sharing of the risk. At the end of the year, an accounting is performed with total claims paid being compared to the premiums paid after all the expenses and reserves are removed. If a surplus remains a certain percentage is made available to the policyholder either in a rate reduction for the following year, or in a lump sum. Deficits are the sole responsibility of the sponsor and are usually amortized over a 2-3 year period under a deficit recovery component which is built into the future rates. This type of funding arrangement requires a Claims Fluctuation Reserve, which is a specialized buffer as a safeguard against financial deficits. This is a fund established by the insurer with the sole purpose of offsetting any deficits. It is funded from previous plan surpluses. This provides the insurer with protection against shortfalls due to future poor experience, as well as the possibility of the plan terminating in a deficit. Once the CFR is fully funded, and future surplus is available to the sponsor in the form of a refund, and the "risk charge" is usually reduced.

Stop Loss – ASO and Retention: Most plans, whether fully insured, ASO, or somewhere in between have some sort of protection against catastrophic claims. Stop loss protection is a part of the financing methods which places emphasis on the maximum level of claims to be recognized by the insurer in its experience rating claims. Stop Loss is an arrangement whereby claims are either self-insured or experience rated up to a certain dollar value, after which additional claims are pooled by the insurer. The insurance company calculates the probability of absorbing this loss and charges an appropriate stop loss premium.

Stop Loss – Fully Insured Plans: As newer and more expensive drug therapies have become available, many employers experienced severe financial loss due to only a few employees making claims. This is a new addition that is available to sponsors which limits the claim amount used in premium setting to approximately $10,000, after which it is pooled by the insurers.

If you are an employer who wishes to start up a benefits package, or are looking for a new group insurance plan, please contact one of our brokers for assistance.

Parents across Canada will be sending their children off to college or university in a few short weeks. For many, this will be the first time their child is leaving home. When considering what your child needs before they leave home, you may want to consider buying them a life insurance policy if they are not already insured.

Purchasing a policy for a young adult has certain advantages. By purchasing life insurance when you are healthy, you can take advantage of cheaper premiums. If you choose to purchase whole or universal life insurance coverage, you are also starting a solid financial investment for your child. This will give your child a head start on an investment plan for their future. You can also choose term life coverage, which will cover the debts incurred by your child in case of death.

While most government student loans will be forgiven in the event of an unexpected death, students generally have other debts that will not be. The majority of young adults incur debt in the form of credit cards, car loans, etc. that will still be owed. Term life coverage can offset these debts, as well as funeral expenses. Parents can purchase a term life policy which will cover their child during their university/college years until the child is in the workplace and able to afford their own insurance.

Buying whole life insurance for your college-aged child has a lot of advantages. Acquiring coverage while the insured person is in good health means that the premiums will be lower. The premiums for whole life cover can also be spread out over a long period of time. A parent can therefore cover the costs while their child is in school, and then allow the child to take over the payments. This will give your child the advantage of lower premiums because it was bought early on. Whole life policies also have a cash value, so your child will have a head start on financial planning. This can be especially helpful throughout your child's life.

You may also want to consider the benefits of purchasing universal life coverage. This will allow you to obtain coverage for your child which is flexible. Your child can adjust his/her policy as their needs dictate, such as getting married, having children, buying a home, etc. This type of life insurance allows your child the benefits of having a policy that builds up cash value, but is less rigid than whole life.

It is advisable to discuss these options with your child to determine which type of policy fits their needs and your budget. Take advantage of their current good health status, in order to save them money in the future. Consult with one of our representatives who can assist you with any questions or concerns.

As wedding season is here, many couples are facing not only decisions about wedding planning, but also about how to spend their money as a married couple. Combining finances and financial planning can be a tricky and daunting task. It is important for every couple to sit down and thoroughly discuss financial issues before combining their finances and agree on common financial goals.

Combining your finances with someone else brings with it new responsibilities and concerns. The money you spend is no longer just "yours", rather it now "ours", making you accountable to another person regarding your spending habits. Worrying about someone else's spending can be stressful, especially when it doesn't conform to your idea of how to spend joint money. In order to make this financial transition a little smoother, we’ve included some helpful ideas regarding shared money.

• Establish 3 bank accounts. With this system, each person has their own bank account, plus a joint account for household expenses, etc. This allows the couple to both contribute to the relationship, while maintaining some financial independence. Decide how much money each of you will contribute to the joint account every pay period, with the remaining balance to go into your personal account. You can also set up a fourth account, for joint savings if you wish.
• Decide on a budget as a couple. Make sure that your financial priorities are the same; one person may want to save for a house, while the other wants an expensive vacation, or new vehicles every few years. Devising a budget as a couple means that you must first decide on how much to save, what you are saving for, etc. Only after you decide what percentage of your incoming money you plan on saving can you then divvy up the rest.
• Discuss issues such as children, retirement, etc. Having children is not only a major step in life, but brings with it certain financial issues. Your financial planning for the future will be a lot easier if you have an idea of when you plan on having children, how much you plan on saving for future education, etc. Retirement is also a major event that requires certain financial planning to be put in place early. By discussing these issues early on, you can avoid financial pitfalls later.
• Cover all your bases. Major purchases, such as a home, bring with it certain additional expenses which need to be considered. For instance, are you factoring in how much you will need to spend for lawn care, general maintenance, etc? Do some research about what your major purchase will entail, and make sure that this purchase fits your budget. If you plan on owning vehicles, consider the cost of gas, insurance, maintenance, parking, etc.
• Communicate with each other regarding major expenditures. If you are spending money in the joint account, apprise each other beforehand in order to make sure you do not overspend. You may decide that purchases that benefit you as a couple such as furniture or electronics, will be purchased from funds in your joint account. Discuss these purchases before actually buying the items, in order to ensure that enough money is in the account, and that you are both in agreement.

By deciding together as a couple what your financial goals are and what your ambitions are, you can avoid some common pitfalls. Remember, as your family grows, and your assets accumulate, to consult with your insurance broker to make sure you have sufficient life insurance coverage that reflects your new status.

The Government of Newfoundland and Labrador has released a consumer protection document regarding the sale of insurance. Known as The Principles for the Sale of Insurance, this document details the consumer's rights which must be provided to the purchaser of any insurance policy. A copy of this document must be provided to the purchaser of any policy and with any renewal or cancellation notice. The government has asked that the insurance industry comply with this request by July 1, 2007.

For those residents of Newfoundland and Labrador who are considering purchasing insurance, or those who already have existing policies, we have listed the main points of this document. It is important for all residents to closely read and understand this document, as it outlines your consumer rights and obligations.

• The consumer's interest takes priority over the interests of the insurance company and/or their agents, brokers and representatives.
• The consumer's right to privacy shall be protected as outlined in the Personal Information Protection and Electronic Documents Act. The consumer's personal information shall only be used for the purpose in which it was collected. Written consent must be obtained for use of your information in any other regards.
• Coverage cannot be canceled, be refused renewal of policy, or be charged an increase in premium for an incident in which no claim was paid.
• The consumer has the right to the knowledge of which insurance companies the agent, broker and/or representative represents. The consumer must also be made aware of any present or potential conflict of interest the agent, broker, and/or representative may have.
• The consumer has the right to know the ownership and financing arrangements between agents, brokers, and/or representatives and the insurance companies that they represent. This includes disclosure of any and all compensation arrangements for the product which is purchased, as well as the amount of commission paid out.
• If insurance coverage has been denied, the consumer has the right to be informed in writing of the reason(s) why. This also applies to policies that are cancelled or not renewed.
• The consumer is entitled to be made aware of the complaint resolution process of the insurance company.
• Upon purchase or renewal of any insurance policy, the customer must be provided with the following:

I. The full range of deductibles available, and the cost of coverage with each of the deductibles.
II. All of the different types of coverage available, the costs of each different policy, and any discount that may be available.
III. The total amount of the premium for all quotes obtained for the policy being sold. Upon request, a detailed breakdown by coverage of the premiums quoted must be provided. The consumer is also entitled to all of this information in writing if they so request.

If you are not a citizen of Newfoundland and Labrador, but are interested in finding out your province’s own statutes on insurance, Life-Quotes.ca has information listed for each province. You can also contact us directly with your questions.

The gap between the life expectancy between men and women is growing. In 1920, women outlived men by an average of one year. Today the average difference has grown to over 5 years. The main cause of this discrepancy in lifespan can be attributed to attitude towards healthcare and preventative medicine.

Part of the reason that men live shorter lives than women is lack of a healthy lifestyle. They are more likely to engage in unhealthy behavior and less likely to regularly access medical care. It has been estimated that 60% of men are overweight or obese, which if not dealt with, can cause serious health problems. Men also have traditionally been employed in more dangerous occupations, exposing themselves to more work related injuries and illnesses, but yet often do not have sufficient health insurance coverage.

Recent studies show that more than half of premature deaths in men are preventable. By following a few basic health tips, men can improve their health and increase their chances of living a long, healthy, productive life.

Healthy Diet:  By simply cutting down on foods that are high in fat, salt, and/or sugar, you can decrease your cholesterol and lower your blood pressure. Try to incorporate more healthy foods, such as fruit, vegetables and whole grains into your diet. When you do eat foods that aren't healthy, try to stick to smaller portions.
Regular Exercise: 20 minutes of exercise 3 times a week can help improve your health. As well as helping to maintain a healthy weight, regular exercise is important for cardiovascular health. Team sports is a great way to great exercise and have fun at the same time.
Avoid getting sunburnt: Men need to use sunscreen just as much as women do. Even if you are not prone to sunburn, by protecting your skin from high UV rays will decrease your chances of getting skin cancer.
Hydration: Drink at least 8 glasses of water per day to ensure that you are hydrated.
Regular Doctor Visits: Get a physical at least once a year. Even if you don't feel sick, it is important, especially as you get older, to get examined on a regular basis. For men who are older, it is important to regularly get screened for prostate cancer. The earlier health problems are caught, the better chance of successfully treating it. Discuss these health concerns with your doctor and set up an appropriate schedule for testing.

A health calculator can be helpful in assisting you to live a healthier life. Standardlife.ca offers a health calculator, which provides information, quizzes and articles in order to help you live a healthier, longer life. Improving your health can also mean better life insurance rates.