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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 – which, is well received by Members.
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. To qualify for a refund, Plan participants must be (1) a member of an eligible Institute (Ontario, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Bermuda) and (2) have paid their full premium for the specific Plan during the eligibility period in question.
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” is the Policy year (June 1st to May 31st) that ends within the Plan’s fiscal year (October 1st to September 30th), the "experience period".
Who is eligible for a refund?
Refunds, if any, are provided to Members who held coverage – and paid premium – in a specific CA Select Insurance Plan under which a refund is issued (i.e., Term Life, Income Protection, etc.), for the full eligibility period. For example, the Policy year June 1, 2007 through May 31, 2008 is the “eligibility period” for the 2009 refund distribution.
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 2009, the eligibility period is June 1, 2007 to May 31, 2008). 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 the Member has ongoing coverage, the refund will be applied as a premium credit on their June 1 premium notice. In other words, the refund will be used to offset (reduce) the premium due in the current year. For those Members whose premium credit exceeds the premium due, a refund cheque will be issued for the difference. If the Member has discontinued all coverage, the premium credit will be issued as a refund cheque.
How are refunds calculated?
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.
On which year's premiums will the 2009 refund be calculated?
The 2009 calculation is based on the gross premium as reported on your 2007 Premium Notice.
What is the amount of the refund in 2009?
In 2009, the distribution is equal to:
• 45% of premiums paid for Term Life and/or Child Life coverage
• 45% of premiums paid for Income Protection coverage
• 100% of premiums paid for Personal Accident coverage
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 five of the last six years. We can’t predict if this pattern will continue in future. The Institute, with the help of Manulife 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 cannot provide advice on personal tax situations. However, our understanding is that refunds should not be taxable to Members.
Manulife 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.
Where can I find details of these credits and applicable taxes?
Individual Premium Notices are sent out in early May to Members who qualify for a credit. The Premium Notice provides a detailed breakdown of the premium credit and applicable taxes for each product the Member is eligible for.
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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