Anatomy of a Claim

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Anatomy of a Claim
Presents

• Featuring
• Terry Zavitz - CFP, CLU, RHU, GBA

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Zavitz Insurance Inc.

• Insurance professionals in Living Benefits, Life
  and Employee Benefits
• Specializing in Disability, Critical Illness
  Long Term Care
• Over 25 years experience servicing physicians
• Brokers Represent all major carriers

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Zavitz Insurance Inc.

• Licensed in ON, BC, AB, MB, NB and NS
• Affiliations with companies across Canada
• Structured claims management process with
  extensive experience handling disability claims

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• Do I really need disability Insurance?

and if so why as residents or medical students?
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What are You Protecting?

• Your income potential
• Most physicians earn 10 - 20 million over their
  career.
• Although this is your income potential, it is
  also your income loss potential.
• Your investment in the cost of your education.
• Remember, you are your greatest asset!

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Income Potential
Total Income
Age
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Probability of Becoming Disabled for at Least 90
Days
Probability by
Age
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Average Duration of Such Disabilities
Duration By of Years
Age
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Why Get Disability Insurance Now?

• Age
• Health
• Lifetime discount
• Step Rate
• Future Insurance Increases
• U.S. not as favourable
• Changing product

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How Do We Choose One Contract Over Another?

• First, contract language
• Second, price

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Claim 1 - Disability

• The incident
• Mike, a 30 year old surgeon earning 265,000/yr
  begins experiencing severe back pain.
• He makes a claim for disability payments.

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Disability Coverage

• Mike has 3 different insurance policies each with
  a benefit amount of 3000/month after a 30 day
  waiting period.
• Lets see how Mike is paid by each policy

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Mikes Policies
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Total Disability

• Mike is diagnosed with a herniated disc and is
  completely off work. He makes a total disability
  claim for 13 months.
• Policy A Pays 3000/month
• Policy B Pays 3000/month
• Policy C Pays 3000/month for 12 months
• Thereafter no payment as insurance company feels
  he can find alternative employment

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Options to Increase Coverage

• 10 months after start of disability Mike receives
  his option to increase his coverage for Policy A
  B and exercises the option.
• Policy A Allows you to exercise 50 of annual
  amount, takes effect after 90 days.
• Mikes payment increases to 4500 after the 13th
  month
• Policy B Can exercise up to 1000. Will only
  be paid for a new disability.

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Own Occupation Claim

• After 13 months, Mike is recovering from surgery
  and cannot stand for long periods of time, so he
  decides to teach full time at Western.
• Policy A Pays 4500
• Policy B Pays 3000
• Policy C No Payment

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Partial Disability

• After 6 months of teaching, Mike decides to
  return to surgery half days and earns 60 of his
  pre-disability income.
• Policy A Pays 2250 (through Partial Provision)
• Policy B Pays 1500 (through Residual
  Provision)
• Policy C No Payment

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Recovery Benefit

• Mike is back to work full time after 24 months of
  disability.
• Policy A pays 2250 for 4 months
• Policy B No Payment
• Policy C No Payment

Recovery benefit paid for 4 months as long as
there is a continuing loss of income
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Total Benefits Paid

• Policy A - 83,250
• Policy B - 61,500
• Policy C - 36,000

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Location Change

• Mike receives a job offer in Alberta and decides
  to transfer.
• Policy A Goes with Mike without change
• Policy B Mike must pay fees to retain contract
• Policy C Cancelled

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Todays Lesson

• You cannot choose your disability but you can
  choose your disability insurance.

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Is Disability Insurance Enough?

• Disability insurance helps cover your everyday
  expenses, but what if a tragedy like cancer
  strikes and your expenses increase...
• Critical Illness Insurance the required
  supplement

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Claim 2

• The incident
• Mary, age 55 has a stoke and survives. She is
  off work 10 weeks and returns fulltime. During
  that time her spouse stayed home to care for her.
• Mary makes a claim under her disability and
  critical illness policy.

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Disability Policy

• Top of the line contract (A)
• Benefit amount of 8500/month
• Elimination Period of 90 days

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Critical Illness Policy

• 100,000 of T100 coverage
• 30 Day Survival Period
• Benchmark Critical Illness Definitions
• Best Doctors

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Claim Payments

• Disability policy Pays 0
• Critical Illness Policy Pays 100,000
• Money to be used at Marys Discretion
• Doesnt matter that Mary is back working full
  time
• Critical Illness policy now terminated

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Claim 3 Life Insurance

• The incident
• Daniel, age 45 is killed by a drunk driver on his
  way home from work. His spouse makes a claim for
  death benefits.

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Life Insurance Coverage

• Daniel always took careful steps to ensure his
  family was protected. He purchased
• Mortgage Insurance with ABC Bank to cover the
  500,000 mortgage, and
• 500,000 of life coverage with XYZ Insurance so
  his spouse could care for his 3 kids.

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Mortgage Insurance

• Does not require
• Medical tests
• Underwriting
• Lengthy Applications
• Pays balance of mortgage on death
• Beneficiary is the bank
• Decreasing term insurance

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Personal Life Insurance

• Requires
• Medicals
• Lengthy application
• Underwriting
• Policy owner chooses
• Death Benefit
• Beneficiary
• Policy Type

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Claim Payment

• ABC bank now obtains doctors records
• Discovers an annual physical which tested for
  high blood pressure and cholesterol
• ABC bank finds a misrepresentation

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Mortgage Insurance Application
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Claim Payment Contd

• ABC bank cancels the mortgage insurance and
  refunds the premiums paid
• Personal Life Insurance Pays 500,000
• Can only be cancelled for material
  misrepresentation within first 2 years
• Thereafter must prove fraud

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Values

• Its unwise to pay too much but its unwise to
  pay too little. When you pay too much you lose a
  little money. When you pay too little, you
  sometimes lose everything, because the thing you
  bought was incapable of doing the thing you
  bought it to do. The common law of business
  balance prohibits paying a little and getting a
  lot. It cant be done. If you deal with the
  lowest bidder, its well to add something for the
  risk you run. And if you do that, you will have
  enough to pay for something better.

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