Many advisors have been reluctant to recommend GCII to clients over concerns that inferior definitions might result in an abnormal number of rejected claims, causing them to lose clients and possibly face lawsuits.
Definitions of Covered Events
The wording of a covered condition should be medically and legally sound. An example can be seen in some plans’ Cancer definition. One definition states “Cancer is a malignant tumour characterized by uncontrollable growth and spread of malignant cells and the invasion of tissue.” That definition doesn’t cover “Leukemia” or “Hodgkin’s Disease”, as neither is a tumour. Can you imagine contracting either of those types of Cancer only to find out you’re not covered?
A definition can also create confusion at time of claim if its wording is not legally precise. If a policy’s transplant definition states “both kidneys”, this wording could cause a problem. We all know you can survive with one kidney. But, consider the dilemma if an insured is in a car accident severely damaging a kidney so that it has to be removed and several years later contracts a virus which causes their remaining kidney to fail and require a transplant. The definition states “both kidneys”. Such a dilemma has been avoided by VitalCheque as the definition simply states “a kidney”. This is only one of many examples of problems that can be caused by poor definitions of covered conditions to eliminate unwelcome surprises at claim time.
Unilateral Termination & Claim Denial
Well, with some plans that risk exists. Once your plan is activated you might think everything is fine; but, not necessarily. Should you be diagnosed with Cancer, a claim within the first 90 days after your plan was put into effect, some plans will deny a Cancer claim and also terminate your coverage. It’s bad enough to be stricken with Cancer and not receive a benefit because of the initial qualifying period; but, to have coverage cancelled could be devastating, since you would now be uninsurable and unable to obtain any alternative CII policy.
Whatever you do, don’t simply read a list of covered conditions and think that you are covered upon the diagnosis of any of the events listed.
Unusually Restrictive Conditions
Some plans go beyond the normal symptoms and confirmed diagnosis by requiring you be unable to perform two or more activities of daily living. This additional restriction means that even though you have Parkinson’s disease you will not receive a payment until such time as you have deteriorated to a state which may require institutionalized care. Who knows how long the wait will be? Your wait could be years, or you might even die before qualifications are met.
A severe definition is one of the many means by which a carrier’s risk can be reduced or delayed. It’s bad enough receiving news that you’re ill; the last thing you want is a delayed, or possibly a denied, claim payment.
Group vs. Individual Approval Process
GCII doesn’t subject the applicant to such a rigorous acceptance process. True groups, with mandatory participation, automatically grant acceptance to all eligible employees. Voluntary or optional group applicants must complete a simplified underwriting process which is usually comprised of written statements and questions.
Another provision for GCII is the “pre-existing condition” limitation. Assuming the pre-existing condition limitation is “24/24” months, then coverage for a covered condition would be excluded and a claim denied if the insured suffers a covered condition within the 24 month period prior to enrolment in the GCII plan and subsequently experienced the same condition within 24 months after the coverage’s effective date.
“First occurrence limitation” is a restriction that applies when an insured has suffered a covered condition less than 5 years prior to the plan’s effective date and a recurrence of that condition occurs after the plan’s effective date and within 5 years of its first occurrence. A claim would be honoured only if an insured had been symptom free and not receiving any treatment during the five year period between the initial event and the recurrence.
Choice of Plans
Convertibility & Portability
Remember to always read the policy so you are aware of the Exclusions, Limitations, and Restrictions and understand the definitions of the covered conditions.
The opinions expressed above are based entirely from extensive discussions and research conducted by Horizon Planning Group Inc., a VitalCheque agent & MGA and GCI Services Inc. This information is provided for general information. Although every effort has been made to ensure the accuracy of the information contained in this website and attached documents, Horizon Planning Group Inc. nor GCI Services Inc. is not liable for errors or omissions. Reproduction of the documents, exactly as is without any changes, is permitted. However changes or alterations to this document either in whole or part are expressly prohibited.