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From the Institute Member's Plans Resource Centre New Member
From the Institute Members' Plans Resource Centre New Member Offer

CPA Select Insurance Plans - 2017 Refunds

Frequently asked questions about CPA Select Insurance Plans’ premium credit/refund:

What is the amount of the premium refund in 2017?
The premium refund for insured members eligible to receive a refund is equal to:
  • 50% of premiums paid (plus sales tax where applicable) for Income Protection coverage for the full policy year from June 1, 2015, to May 31, 2016; and
  • 10% of premiums paid (plus sales tax where applicable) for member and/or spouse Personal Accident Insurance coverage for the full policy year from June 1, 2015, to May 31, 2016.
Why is there a refund?
The CPA Select Insurance Plans are 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 eligible plan members in the form of a premium refund.

Why is there no refund for the Term Life product this year?
There is never a guarantee of a refund for any product in any given year. An annual
review is completed to monitor the actual Plan experience to ensure the Plans remain
competitive and on sound financial footing. This year, the financial results of the Term
Life Plan were adversely impacted by a significant number of claims and high average
payouts relative to the premiums collected – therefore, no refund was declared.

Who is eligible for a refund?
To qualify for a refund, plan participants must (1)
be a member of a participating provincial body from New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario or Prince Edward Island, or from Bermuda, and (2) have been insured and paid their premiums under specific CPA Select Insurance Plans for the full "eligibility period". For example, the policy year of June 1, 2015 through May 31, 2016, is the "eligibility period" for the 2017 refund distribution. It is viewed that the most equitable distribution of refundable surplus is to base it on premiums and associated tax paid by an insured member during the full eligibility period. This eligibility requirement has been in effect for several years.

Where can I find details of these refunds and applicable taxes?
Individual Premium Notices are sent out in early May to insured members. The reverse side of your Premium Notice provides a detailed breakdown of the individual Plan refunds and applicable taxes for which you are eligible to receive a refund. 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 2017 refund calculated on my Premium Notice?
The 2017 calculation is based on the gross premium (net of any volume discount but prior to any previous year's refund) as reported on your 2015 Premium Notice. This is the notice you received two years ago, in May 2015, which was for the policy year from June 1, 2015 to May 31, 2016.

What experience period is used to calculate refunds?
The refundable surplus, if any, is determined annually based on the financial results for the Plans’ fiscal period (October 1 through September 30). The 2017 refund is based on the financial results for the period from October 1, 2015 to September 30, 2016. Refund amounts vary from year to year; depending on actual Plan experience, there may be no refunds 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 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; this is the period 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 (e.g., in 2017, the eligibility period is June 1, 2015 to May 31, 2016). Any purchases made after an eligibility period would only impact future eligibility periods.

How are refunds distributed to eligible insured members?
If you have ongoing coverage, the refund will be applied as a premium credit on your June 1, 2017 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.

What happens to my refund if I discontinue coverage?
If you have discontinued all coverage effective on or after June 1, 2016, but were eligible to receive a refund (you are an insured member of an eligible participating body and you paid full premiums during the eligibility period – in this case from June 1, 2015 to May 31, 2016), a cheque covering the full refund will be mailed to you.

If I am receiving a premium credit this year towards my June 1 premium, when will my regular payments begin again?
The Premium Credit section on the reverse of your 2017 Premium Notice will indicate the month when you will resume regular payments. If you have Personal Accident and Income Protection coverage, these payments may resume at different times, and will be noted on the Premium Notice. Please remember that the onus is on you to know when your premiums are due. Note that the first payment(s) will most likely be partial payment(s) with full payments resuming after that time.

Please remember to check whether Manulife has your current payment instructions. If you have changed your bank or your credit card has been reissued and/or has a new expiry date, please contact Manulife immediately to update your payment instructions (see contact information below).

Why is the credit amount appearing on the front of my 2017 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 details specific to your account, please call a Manulife representative directly (see contact information below).

How is the decision made to declare a refund?
Our objective is to maintain the CPA 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.

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 cycle in May. CPA Ontario, with the help of Manulife and independent actuarial consultants, will continue to monitor the Plan experience and trends annually — to ensure the CPA Select Insurance 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 insured members from the Term Life Plan. The opinion indicates that under the existing tax legislation a refund of premiums to an insured 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 of Chartered Accountants of Ontario (operating as Chartered Professional Accountants of Ontario)].

Refunds under Health Plans (Income Protection and Personal Accident Plans) are not taxable.

For further questions contact Manulife online
or call toll-free at 1 866 219-4245
between 8 a.m. and 8 p.m. ET, Monday through Friday.

CPA Select Insurance Plans are sponsored by the Chartered Professional Accountants of Ontario
and underwritten by The Manufacturers Life Insurance Company (Manulife).