Transition LTD – Disability insurance for employees who lose their group LTD coverage due to job termination

Fact: Most employees rely solely on their group LTD benefit for their income protection needs.

Fact: In the event of job termination, group LTD coverage usually ends on the last day worked.

Fact: An outplaced employee is not eligible to purchase regular individual disability insurance.

Transition LTD is a unique product designed for your clients who lose their group LTD coverage as a result of job termination. Transition LTD allows terminating employees to protect themselves against the potentially catastrophic consequences of a long term and possibly career-ending injury or illness. It can provide peace of mind until your client is re-employed and covered elsewhere, or has an insurable track record from self-employment and can qualify for regular disability coverage.

Fact: There has recently been an unprecedented level of interest in this product as a result of recent legal cases suggesting that employers may have a legal obligation to continue all benefits, including disability coverage, for the full severance period for terminated employees.

Transition LTD may be purchased directly by the employee, or by the employer. By providing this benefit as part of a severance package, the employer may be protected from potential liability if the employee were to suffer a serious illness or injury during their notice period.

Transition LTD can help insurance advisors establish and/or solidify client relationships, leading to cross-selling and referral opportunities.

Transition LTD is underwritten very liberally and very quickly. Applications are usually approved within a few days based on the application only, and with an occasional client telephone interview.

Transition LTD is underwritten by Reliable Life Insurance Company of Hamilton, Ontario. Reliable Life is a member of the Old Republic Insurance Group of companies, one of North America’s largest publicly held insurance enterprises.
 

Please Note: This is intended as a summary of the important features of the plan.  The actual policy provisions will prevail.  We will provide a sample of the entire policy contract on request.

Qualification: An application form must be completed.  Reliable Life may request additional medical information. You must be 60 years old or less and have been employed full-time at full pay for at least the past 12 months.  You must apply for coverage within 90 days of outplacement.

Premium: A single premium is paid at time of application or policy delivery. If you become re-employed and covered under a new group LTD plan, you may cancel your Transition policy and receive a partial refund. When we receive a cancellation request and proof that new coverage is in place, we will refund 50% of the pro-rata premium for the remaining coverage period.

Coverage Period: The coverage periods offered are 6, 9, 12, 15, 18, 21, or 24 months. The coverage period applied for may not be less than the period of severance or salary continuance.

Elimination Period: In the event of qualifying disability during the coverage period, benefits begin 3 months after the end of the coverage period and continue, while disability continues, to the end of the Benefit Period.

Benefit Period: Two benefit periods are available – to age 60 (available if you are 55 or less) and to age 65.

Definition of Disability (actual policy wording):
TOTAL DISABILITY or TOTALLY DISABLED means that as a result of Injury or Sickness:

1. Prior to the Benefit Start Date and for the first two years thereafter, You are unable to perform the substantial duties of Your Regular Occupation and You are not expected to be able to do so for a period of at least one year from the date of disability. During this period, Total Disability will not exist if you are engaged in any gainful occupation.
2. Thereafter, You are unable to perform the substantial duties of any occupation for wage or profit in which You might reasonably be expected to be engaged, with due regard to Your education, training and experience.
3. You are receiving care by a Physician that is appropriate in nature and frequency for the condition causing your Total Disability.

Benefit Amount: The monthly benefit amount is based on your final base salary at time of outplacement. The maximum benefit is 2/3 of the first $2,500 of monthly salary, 50% of the next $2,500 and 40% of the excess, with an overall maximum of $10,000 per month. The minimum amount is $1,000/mo. Benefits are non-taxable.
An indexing option is available, under which benefits are increased each year based on the increase in the CPI, to a maximum of 3% each year.
Benefits may be reduced if income is received from other sources during a disability (includes wages, government benefits or group LTD benefits).

Rehabilitation Benefit: The plan provides for continuation of benefits if the claimant is enrolled in a rehabilitation programme approved by Reliable Life.

Exclusions:

• War; riot; insurrection; military service
• Attempted suicide; intentionally self-inflicted injuries
• Criminal activity or illegal endeavour
• Parachuting, hang-gliding, bungee jumping, rock or ice climbing, motorized racing or speeding contests
• Flying except as a commercial passenger
• Driving while intoxicated
• Use of controlled substances other than as prescribed
• Psychiatric or psychological disorders
• Cosmetic or elective treatment
• Disabled outside Canada or the U.S. for more than 120 days unless hospitalized
• Incarceration
• Undisclosed pre-existing conditions

 Please Note: This

Here are the steps to follow in applying for Transition LTD coverage:

1. Get a Quote Important: We will not consider a Transition LTD application unless we have first provided a quote.
2. Have your client FULLY complete the Application Form, and submit it to us.
   Important: There is often an urgency to put this coverage in place quickly to avoid a gap in coverage between expiry of the group LTD coverage through the former employer, and the coverage under this policy. To minimize any delays you may wish to fax the application (416-322-6846) to us and forward the original by mail or courier.
   

A cheque for the single premium amount is not required to be submitted with the application, but we highly recommend it, to expedite placement of the coverage once approved. Cheques are made payable to “Reliable Life Insurance Company”.

If you are not already contracted with us, we will initiate contracting upon receipt of an application. To begin processing, however, we will request a copy of your current license, and proof of E & O coverage.

Please DO NOT order any underwriting requirements. We will arrange for all necessary underwriting requirements, after initial review and assessment of the application.

Important Underwriting Information:

General:

Transition LTD is designed to enable us to offer coverage to the majority of applicants. Historically, over 95% of all applications have been approved. Others may receive coverage with an exclusion for certain serious pre-existing medical conditions, or with an additional premium.

Medical Underwriting Requirements:

Because the coverage is in force for a short term, it can be underwritten much more liberally than would normally be the case for a disability insurance application. Most applications are approved within a few days, based only on the information in the application. Sometimes the underwriter will conduct a telephone interview with the applicant to clarify answers on the application.

For cases with a monthly benefit of $7,500 or more, we require a paramedical, blood profile and urinalysis. In addition, we require an Attending Physician’s Statement (APS) if the applicant is 45 or older.

The underwriter reserves the right to order additional requirements on any case.

Financial Underwriting Requirements:

Financial documentation is not required, with one exception: The maximum monthly benefit is based on the applicant’s final annual base salary. Some applicants may qualify for a higher amount if they have received significant and consistent bonuses. In order to take bonuses into account in determining the available amount of coverage, we require 3 years financial documentation.