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What is the amount of the premium credit/refund in 2013?
In 2013, the premium credit/refund (hereafter referred to as refund) for Members eligible to receive a refund is equal to:
- 35% of premiums paid for Member and/or Spouse Term Life and/or Child Life coverage for the full policy year from June 1, 2011, to May 31, 2012; and
- 50% of premiums paid for Income Protection coverage for the same policy year.
Why is there a refund?
The CA Select™ Insurance Plan is a group insurance arrangement. Premium rates are set based on accepted insurance practices, actuarial standards, and expected claims experience. Funds not needed to maintain a sound financial position (based on actual plan experience) are typically returned to plan participants in the form of a premium credit or refund. Historically, Members have enjoyed and appreciated these premium credits/refunds.
Refunds are generated from favourable claims results under a specific CA Select™ Insurance Plan for the experience period under review. Once declared, refunds are distributed to eligible Plan Members.
Who is eligible for a refund?
To qualify for a refund, Plan participants must (1) be a Member of an eligible Institute (Ontario, New Brunswick, Prince Edward Island, Newfoundland and Labrador, Nova Scotia or Bermuda) and (2) have been insured and paid their premiums under specific CA Select™ Insurance Plans (e.g., Term Life) for the full "eligibility period". For example, the policy year of June 1, 2011, through May 31, 2012, is the "eligibility period" for the 2013 refund distribution.
Where can I find details of these refunds and applicable taxes?
Individual Premium Notices are sent out in early May to Members who qualify for a premium credit. The Premium Notice provides a detailed breakdown of the premium credit and applicable taxes for each Plan for which you are eligible to receive a refund/credit. If a refund cheque is issued due to the credit exceeding any premiums due, an explanatory letter will be included with your cheque.
How is the 2013 refund calculated on my premium notice?
The 2013 calculation is based on the gross premium (net of any volume discount but prior to any previous year's premium credit) as reported on your 2011 Premium Notice. This is the notice you received two years ago, in May 2011, which was for the policy year from June 1, 2011, to May 31, 2012.
What experience period is used to calculate refunds?
The refundable surplus, if any, is determined annually based on the financial results for the Plan's fiscal period (October 1st through September 30th). Amounts vary from year to year; depending on actual plan experience, there may be no refunds available in some years.
What is the difference between the "eligibility period" and the "experience period"?
The "eligibility period" (the key measurement to determine if you're going to qualify to receive a refund, if declared) runs from June 1 to May 31. The "experience period" or fiscal year runs from October 1 to September 30 and this is the period of time upon which we review financial experience to determine if refunds are possible.
Will my refund be affected if I purchase more insurance coverage?
No. Your refund is based on coverage you hold during an eligibility period (i.e., in 2013, the eligibility period is June 1, 2011, to May 31, 2012). Any purchases made after an eligibility period would have absolutely no impact on any refund generated during the eligibility period.
How are refunds distributed to eligible Members?
If you have ongoing coverage, the refund will be applied as a premium credit on your June 1 premium notice. In other words, the refund will be used to offset (reduce) the premium due for the upcoming year. If your premium credit exceeds the premium due, you will receive a refund cheque for the difference. If you have discontinued all coverage, you will receive a cheque covering the full refund amount.
What happens to my refund if I discontinue coverage?
If you have discontinued all coverage effective on or after June 1, 2012, but were eligible to receive a refund (you are a Member of an eligible Institute and you paid full premiums during the eligibility period – in this case from June 1, 2011, to May 31, 2012), a cheque covering the full refund amount will be mailed to you.
If I am receiving a premium credit this year towards my June 1st premium fees, when will my regular payments begin again?
Your 2013 Premium Notice (see Premium Credit section on the reverse) will note the month when you will begin paying for any eligible credited coverage. If you have both eligible Term Life and Income Protection coverage, these payments may resume at different times, and will be noted on the Premium Notice. Please remember, the onus is on you to know when your premiums are due.
Please note: the first payments will most likely be partial payments with full payments resuming after that time.
Why is the "CREDIT" amount appearing on the front of my 2013 Premium Notice not the same amount as the PREMIUM CREDIT amount shown on the reverse?
This difference may be due to a transaction on your account that resulted in additional funds (in addition to your premium credit) being credited to your account. For example, if at some point you reduced or cancelled your coverage, this additional money owed to you may be allocated to this suspense account. For details specific to your account, please call a Manulife Financial representative directly at 1 866 219-4245.
How is the decision made to declare a refund?
Our objective is to maintain the CA Select™ Insurance Plans in a sound and stable financial position. When results for any Plan's fiscal period produce surplus funds which are not needed to meet this key financial objective, a refund is declared. The Institute has determined that the most equitable distribution of refundable surplus is to base it on premiums and associated tax paid by a Member during the full eligibility period.
Will there be refunds in the future?
There is no guarantee of a refund in any year. The availability and amount of any refund will be reviewed annually and declared in conjunction with the annual billing in May of each year. Historically, refunds have been paid in nine of the last ten years for Term Life, Dependent Life, and Income Protection policies, and seven of the last ten years for Personal Accident policies. We can't predict if this pattern will continue in future. The Institute, with the help of Manulife Financial and independent actuarial consultants, will continue to monitor Plan experience and trends annually — to ensure the Plans remain competitive and on sound financial footing.
Is the refund taxable?
Manulife Financial cannot provide advice on personal tax situations. However, our understanding is that refunds should not be taxable to Members.
Manulife Financial has obtained an opinion from its external tax advisors on the implications of the Income Tax Act on refunds to Members from the Term Life Plan. The opinion indicates that under the existing tax legislation a refund of premiums to a Member should not be deemed a disposition of an interest in a life insurance policy and, furthermore, such amount is not paid to the policyholder (the Institute).
Refunds under Health Plans (Income Protection and Personal Accident Plans) are clearly not taxable.
Did you find out what you wanted to know?
If you have any other questions, you can contact us online
or call Manulife Financial toll-free at 1 866 219-4245
between 8 a.m. and 8 p.m. ET, Monday through Friday.
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