Being kept from your business by a disability or illness isn’t something owners like to think about. Who would? But it’s important to be aware of the coverages available to manage potential risks, and whether they are required in your situation.
For the plans below, evidence of good health is required in order to qualify. Pricing is based on the age, gender, occupation and smoking status of the applicant, and also the structure and total amount of insurance applied for.
Long Term Disability (LTD) Insurance
LTD insurance protects a business owner’s income in the case that a disability or illness or accident prevents them from working. The coverage amount is based on a percentage of their income, and the benefit can be structured to pay out after a 30 to 180 day waiting period. The coverage can be set up to pay disability benefit for a five year period or to age 65. If premiums are paid personally, any disability benefits received are non-taxable.
If there are at least two owners or employees to insure, an Income Loss Replacement Plan can be arranged, which means that the premiums are a tax deduction for the business.
There are a variety of coverage riders are available; the most important of which are:
o Partial Disability coverage, which allows a proportionate disability payment in the event the insured is able to work but in a reduced capacity.
o Cost of Living Adjustment (COLA), which indexes disability payments for cost of living increases each year. This option is especially important for younger business owners.
o Future Earnings Protection Option (FEPO), which allows the insured to add increasing coverage as earnings increase, without having to provide evidence of good health. This is a good benefit to select when income will be rising in the near future.
Business Overhead Expense (BOE) Insurance
BOE insurance pays ongoing business expenses in the event a business owner becomes disabled. This plan can be structured on a reimbursement basis, although a lump sum monthly benefit is preferable. The BOE benefit can help to keep a business running while an owner recuperates. Items such as equipment, building or vehicle leases, and staff wages can be covered. The premiums are tax-deductible for the business. Benefits are taxable if received; however tax deductions for the overhead expenses being paid by the business offsets this.
Critical Illness (CI) Insurance
CI insurance provides a tax-free lump sum in the event of serious illness, such as cancer, heart attack or stroke. Most insurers offer plans that cover at least 22 illnesses. The benefit payable can be used to seek private medical treatment or care, pay personal expenses such as a mortgage, or for business purposes, such as hiring an interim manager. The plan can be structured to provide a return of premiums if no claims are made. Critical Illness coverage is available in amounts ranging upwards from $25,000 to several million dollars. For situations where disability insurance is not available, or is too expensive, clients may consider purchasing CI insurance.
Assuris is a not-for-profit organization that protects Canadian policyholders against a loss of benefits due to the financial failure of a member company. All life insurance companies in Canada are required, by the federal, provincial and territorial regulators, to become members of Assuris. This means if you buy a policy from a Canadian insurer, you are protected. What is the coverage offered by Assuris? If your life insurance company fails, your policies will be transferred to a solvent company. Assuris guarantees that you will retain at least 85% of the insurance benefits you were promised. Insurance benefits include Death, Health Expense, Monthly Income and Cash Value. Your deposit type products will also be transferred to a solvent company. For these products, Assuris guarantees that you will retain 100% of your Accumulated Value up to $100,000. Deposit type products include accumulation annuities, universal life overflow accounts and dividend deposit accounts. Products that are covered by Assuris: Life Insurance, Critical Illness Insurance, Health Expense, Disability Income, Long Term Care Insurance, Annuities, Segregated Funds and Group Insurance. True Benefits sells only Canadian insurer products. All of our clients have Assuris' protection. For more information, visit www.assuris.ca.
Assuris is a not-for-profit organization that protects Canadian policyholders against a loss of benefits due to the financial failure of a member company.
All life insurance companies in Canada are required, by the federal, provincial and territorial regulators, to become members of Assuris. This means if you buy a policy from a Canadian insurer, you are protected.
What is the coverage offered by Assuris?
If your life insurance company fails, your policies will be transferred to a solvent company. Assuris guarantees that you will retain at least 85% of the insurance benefits you were promised. Insurance benefits include Death, Health Expense, Monthly Income and Cash Value.
Your deposit type products will also be transferred to a solvent company. For these products, Assuris guarantees that you will retain 100% of your Accumulated Value up to $100,000. Deposit type products include accumulation annuities, universal life overflow accounts and dividend deposit accounts.
Products that are covered by Assuris:
Life Insurance, Critical Illness Insurance, Health Expense, Disability Income, Long Term Care Insurance, Annuities, Segregated Funds and Group Insurance.
True Benefits sells only Canadian insurer products. All of our clients have Assuris' protection. For more information, visit www.assuris.ca.
Dear Rachel: I run a successful business with twenty employees and would like to start offering benefits, but want to get an idea of the cost first. I've looked online but can't find anything. Could you please give me some insight on what I'm getting myself into?
The answer is: it depends... but that's not very helpful! So, I've compiled a list of benefits, design options, and ballpark costs to get you started.
Age - Is your average employee age 35? Great news! Your Life Insurance and Long Term Disability premiums will reflect this. Conversely, if your employees are all in their 60's it can really affect costs.
Gender - Did you know that statistically, women are more likely than men to make a Long Term Disability claim? This can be reflected in your disability premiums when your employee base trends towards one gender or the other.
Volume - Single or family? Depending on whether your employees have dependents, rates for Health, Dental and Vision can vary. Expect to pay approximately double the Single rate for Family coverage.
Life and Dependent Life Insurance, Accidental Death & Dismemberment (AD&D), Short and Long Term Disability and Critical Illness coverage amounts all vary depending on plan design. They can be indexed to earnings or offered as a flat amount; your premium cost is based on the total volume of coverage.
Sample monthly rates:
- Life Insurance can range from $0.10 to $1.00 per $1,000 of coverage; Dependent Life Insurance can range from $1.00 to $4.00 per employee with dependents.
- AD&D from $0.03 to $0.25 per $1,000.
- Short and Long Term Disability can range vastly depending on the plan design; expect to pay between $0.20 and $1.00 per $10 of weekly earnings for Short Term, and between $0.20 and $3.00 per $100 of monthly earnings for Long Term Disability.
- Critical Illness can range from $0.10 to $4.00 per $1,000 of coverage.
Industry - Are your employees working in a professional office at a desk? Or are they involved in manual tasks such as lifting inventory and using heavy machinery? Depending on what industry your business is in, your employees are more likely to make certain types of claims.
Turnover - If you've had a benefits plan for a while, have you marketed your plan more than every three years? Does your employee base have a lot of "churn"? This can add up to extra risk for the insurer that you may not be a loyal customer, or that there will be additional administration required. Insurance carriers love stable employee bases because it helps them to predict claiming patterns more accurately when setting rates.
Extended Health Coverage (EHC): What's driving the cost of EHC is prescription drug coverage; drugs tend to comprise the majority of claims your employees will make. Typical coverage is 80% coinsurance (or 20% out of pocket to the employee), and a marquee plan will offer 100%.
Other "rate affecters": Paramedical practitioner coverage for services such as physio, chiro, and massage. Typical coverage ranges from $200 to $500 per practitioner per year. Hospital room upgrades can include a semi-private or private room.
What You'll Pay: Rates for Health coverage generally range from $30 Single to $150 per employee with dependents per month.
Dental: Dental plans are usually divided into three increasing levels of coverage, Basic, Major and Orthodontic Services. Basic covers regular cleanings and check-ups. The best plans cover recall exams every six months, but this can range to 9 or 12 months. Major coverage is for more in depth work such as crowns and bridges. Orthodontics can be limited to dependent children only or be inclusive of adults.
Other "rate affecters": Each of these coverage levels comes with its own coinsurance level and possible deductibles. Cream of the crop plans offer 100% Basic, 80% Major and 50% Orthodontics, but for some small businesses offering only 80% Basic can be a welcome perk. Coverage maximums also affect the rate; offerings range from $500 to $3,000 for each of Basic and Major or a combination of the two. Ortho usually comes with a lifetime maximum of $1,000 but this can range from $500 to $5,000.
What You'll Pay: Rates for Dental coverage generally range from $30 Single to $150 per Employee with Dependents per month.
Health Spending Accounts / Cost Plus: There are ways to offer flexible personalized coverage without insurance. These arrangements allow small business owners to set annual limits, and employees to spend coverage credits at their own discretion.
Again, it needs to be said that these are ballpark figures and your rates will be specific to your plan and the employees it will cover. If you want to get started with a quote or for more information, please feel free to contact me at firstname.lastname@example.org or 604.872.2866. Or, you can request a quote here.
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I used True Benefits to sort through a tricky health insurance issue related to immigration status and an expired work permit. Rachel recommended a cost effective solution and quickly verified the policy was the best choice for my situation. My new health coverage was effective within 2 hours of my initial call to Rachel! I highly recommend working with Rachel at True Benefits for cost effective solutions and friendly and efficient service.
Your attention to detail and willingness to never to never take "no" for an answer on my behalf left me in awe of your business ethics.
I will continue to use your services, based on your work ethic and my ability to trust that the policy you are suggesting is perfect for me.