Group Insurance is designed to insure classes of persons against the financial hazards of death, accident and sickness. Employers customarily offer this type of insurance to their employees but it can also be set-up by associations for their members’ benefit.
To be able to subscribe to a group plan usually requires that the participants or employees be actively working on a full-time basis, the amount of insurance or benefit be specified in the master contract between the employer and the insurance company(ies), employee contributions (if any) be made by payroll deduction, mandatory employer contribution, and minimum participation requirement levels (usually 85% of eligible employees in groups of less than 50 lives and 75% of larger groups must participate).
The components of group insurance plans usually include life insurance, accidental death and dismemberment, short term disability and long term disability, extended health, and dental benefits. This can be supplied to a group of one, up to groups of thousands.
There are also group investment options available including:
- Group Registered Retirement Savings Plans (RRSPs)
- Deferred Profit Sharing Plans (DPSPs)
- Registered Pension Plans (RPPs)
Some Highlights of Group Benefits
Deferred Profit Sharing Plans (DPSP)
A DPSP is a retirement savings plan where an employer makes contributions from the profits of the business. The employer is not required to contribute if there are no profits in that year.
Employer contributions are limited to one-half of the limit for registered pension plans. Employees are not allowed to make contributions to a DPSP. A DPSP lets you withdraw money before retirement age.
Dental Benefits
Group Dental Insurance plans help pay for:
- Dental examinations
- Basic services (x-rays, fillings, polishing etc.)
- Major services (metal inlays/onlays, crowns, bridgework and dentures
- Orthodontic services.
In some cases you may be responsible for a small amount of the expense in a year. The deductible amount and may also be required to pay a percentage of the cost over and above the deductible. There are in most cases specified maximum benefit amounts.
Braun Financial has Dental Benefits plans available for people who are not covered by Group Plans.
Extended Health Care
Coverage pays for most health care expenses not covered by government plans. These commonly include:
- Prescription drugs
- Special nursing
- Medicines
- Artificial limbs
- Wheelchairs
- Emergency Hospital/ Medical expenses incurred outside Canada in excess of amounts covered by government plans
You may be responsible for a small amount of the expense in a year – the deductible amount – and may also be required to pay a percentage of the cost over and above the deductible. There are in most cases specified maximum benefit amounts.
Short Term Disability
- Covers brief absences from work due to illnesses or injury, available to age 65.
- Pays a tax-free (if employee pays 100% of premium) weekly income while away from work.
- Benefit is based upon a percentage of current earnings up to specified maximum amount.
- Benefits resume for employees who become disabled from the same cause, within 14 days of return to work, up to the maximum benefit period.
Long Term Disability
This is the most Important Benefit.
- Covers lengthy absences from work due to illness or injury, available to age 65.
- Benefits are not taxable (if employee pays 100% of the premium) and are base upon a percentage of current earnings up to a specified maximum benefit amount.
- Coverage can be for 2 years, 5 years or to age 65.
- “Own Occupation” benefit will vary depending on plan design.
Life Insurance and Accidental Death & Dismemberment
- Group life insurance pays money to the beneficiary if you die while insured by the plan.
- The amount may be the same for every one but usually varies according to a set formula.
- Benefit formula is usually one or two times an employee’s annual income up to a specified maximum amount.
There is usually a conversion option that allows you to convert all or a percentage of your coverage to an individual policy without medical evidence. You must make application for this conversion within 31 days of your date of termination of membership in this group.
If you would like more information about Group Benefits, visit the Canada Revenue Agency.
