Topics Covered

• Introduction
• Getting Started
• Choosing the Benefit Level
• Conditions for entry
• Occupation - Questions and Answers
• Managing the Cost
• Tax relief/payable
• Abilities Tests
• Making a Claim
• Applying for Cover
• Why choose our Product ?

Introduction

Most of us take our good health for granted
because no one expects long-term illness or injury to affect them. However, the sad fact is that people suffer from various disabilities on a daily basis. A recent study* provides some startling figures.

In Ireland,

• 4 people out of every 100 are severely 'hampered'
• 14 people out of every 100 are 'hampered' to some extent in carrying out their daily activities due to chronic physical and/or mental conditions.

These are worrying figures, particularly when the vast majority of people have financial commitments of one sort or another; be it loans, mortgages or household expenses. At Canada Life, we pride ourselves on being market innovators and on responding quickly to our customer's needs. That's why we have developed a new benefit option on our Freedom Plan called Income Protection.

Income Protection is a benefit designed to protect a person against the financial consequences of a long-term illness or injury. It can give a person peace of mind to know that, in the face of such unforeseen and unwelcome events, their financial situation and lifestyle, and that of their dependents wouldn't have to suffer.

The aim of this document is to answer in a simple and clear way any questions you may have in relation to Income Protection. We would, however, ask you to note that this document is only intended as a guide to enable you to understand the product. Full and complete details of the product are contained in our Income Protection Policy Conditions and we would urge any person, intending to take out Income Protection with us, to read these carefully. It is these conditions, along with the appropriate policy schedule that form the legal basis of Canada Life's contract with the person seeking Income Protection cover.

1. What is Income Protection
Income Protection is a benefit designed to replace a person's income if, due to illness or injury, they are unable to go to work and earn an income.

2. Does the State not provide cover if a person is out of work as a result of a disability ?
The State will provide a disability income in certain circumstances but not everyone qualifies for this. In particular, self-employed people are not entitled to anything from the State should they become disabled and, even when a person is entitled to State disability benefits, the amounts paid can be small.

Therefore, relying entirely on the State for your income protection needs could be a mistake and a person should check exactly what their entitlements are from the Department of Social Welfare. Based on this information, a person should then decide on the level of Income Protection cover, if any, they need.

3. How can a person take out Income Protection cover ?
Income Protection is available through Canada Life's Freedom Plan in one of two ways:

• As one of a combination of benefits such as Life Cover, Serious Illness Cover and Hospital Cash - Combined Income Protection
• As a benefit on its own - Standalone Income Protection

4. How does it work ?
There are a few decisions you must make before starting your Income Protection Cover.
The different options and ways in which Income Protection can be taken out are:

• Inflation protector - Level or inflating at 5%
• Income level - Min €100 pw, Max €750 pw
• Deferred period - 13 weeks or 26 weeks
• Cessation age - 55, 60 or 65
• Rate of escalation of payment - 0% or 3%

In summary, each person taking out Income Protection Cover must choose:

• The amount of gross (pre-tax) income they would like to protect and whether or not they want it protected against the effects of inflation
• When they want their cover to finish - cessation age (see Question 3 in Getting Started)
• When they would like their benefit payments to begin in the event of a claim - deferred period (see Question 4 in Getting Started)
• Whether or not they would like their benefit payments in the event of a claim to be protected from inflation - escalation in payment option (see Question 5 in Getting Started)

The choices made affect the price paid for cover. There is tax relief available on the price paid for cover. This tax relief is at a person's marginal rate of income tax. In the event of a claim for benefits under Income Protection, a person qualifies for these benefits provided the criteria set out in the section on Abilities Tests are met and the person is out of work. These benefits payments are subject to tax on a PAYE basis.

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Getting Started

1. What level of benefit should a person choose ?

The level of benefit chosen should be sufficient to ensure that a person can maintain their normal standard of living despite being out of work. So, if receiving half their salary means that they can maintain the living standards to which they are accustomed, then this is the level of benefit that should be chosen. It should be noted that if benefits become payable, they will be taxed as outlined in the Tax Relief/Payable section.

2. Can benefits be protected against the effects of future inflation ?
Yes, benefits can be protected against the effects of future inflation by opting for one our inflation options - Variable Inflation Option or Fixed Inflation Option. If a person chooses either of these options, Canada Life will automatically increase their chosen benefit levels by 5% every year, without the need for medical evidence.

Explanation of Terms Used:

• Fixed Inflation Option - under this option, benefits and premiums both increase at 5% per annum.
• Variable Inflation Option - under this option, benefits increase at 5% per annum, premiums charged start off lower than the equivalent premium for a Fixed Inflation Option but then subsequently increase at a rate greater than 5% per annum.

3. For how long can a person protect their income ?
With Income Protection, a person can protect their income from the age at which they take it out, up until the age they intend to retire.
Canada Life offers three possible ages at which a person's cover can cease:

• 55 years
• 60 years
• 65 years

4. What's a Deferred Period and what are the choices ?
A Deferred Period is the continuous amount of time a person must be absent from work as a result of an accident or an illness that satisfies the Abilities Tests, before Canada Life will begin paying their claim.
A person can opt for a deferred period of either:

• 13 weeks (3 months)
• 26 weeks (6 months)

5. What's an Escalation in Payment option and what are the choices ?
Where the Escalation in Payment option is chosen, the level of Income Protection benefits a person is paid while claiming will automatically increase by 3% every year. This option is described in more detail in Question 3 in the section on Making a Claim. If a person opts for Escalation in Payment, the price paid for cover increases.

6. Can more than one person be covered for Income Protection under one policy ?
Yes. The flexibility to cover two people for Income Protection under one policy is a feature unique to Canada Life's Freedom Plan. Each person is covered completely independently. They choose their own benefits based on their own income levels, and choices of cover.

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Choosing the Benefit Level

1. Can a person choose any level of benefit they want ?
Yes but... The maximum Income Protection benefit a person can choose is limited to the lower of:

• 67% of their gross annual income less income from any other sources, e.g. state sickness benefits
• €39,000 per annum (€750 per week)

2. Why are limits imposed on the maximum level of benefits a person can choose ?
Limits are imposed on benefit levels because a person will not usually need as great an income while they are disabled.

3. What is the minimum level of benefit a person can choose ?
The minimum level of benefit a person can choose is €5,200 per annum (€100 per week).

4. If a person's financial circumstances change, can they change their level of benefit ?
Yes, a person has the option to increase or decrease benefits at any time subject to the maximum/minimum levels of benefits already specified. In addition, where a person wishes to:

• Increase benefits, it may be necessary for them to provide medical evidence and information on their state of health.
• Decrease benefits, the amount paid for a Standalone Income Protection contract cannot fall below €25 per month as a result of any decrease in benefits.

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Conditions for entry

1. What are the minimum and maximum ages at which a person can take out Income Protection ?
The minimum age at which a person can take out Income Protection cover is age 18. The maximum age at which a person can take out Income Protection cover is the cessation age chosen less 10 years. So, if a person chooses a cessation age of 55, the maximum age at which they can take out Income Protection cover is 45 next birthday.

2. Are there any limits on the length of time for which Income Protection can be taken out ?
The length of time for which Income Protection can be taken out cannot be less than 10 years.

3. Are there any other conditions that must be met before a person can take out Income Protection ?
Yes, a person must be:

• Resident in Ireland for tax purposes
• In full-time employment and earning an income. Please note that a person cannot take out Income Protection cover to protect rental or dividend income or interest on investments. If these conditions are not satisfied, then a person cannot avail of Income Protection.

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Occupation - Questions and Answers

1. What is an occupation class ?
An occupation class is the name given to the category that a person's job falls into. There are four occupation classes and occupations are broadly classified as follows:

1. Professional
2. Clerical/Skilled
3. Unskilled/Light Manual
4. Heavy Manual

2. Could a person be refused Income Protection cover because of their occupation ?
A person may be refused cover but this is unlikely. Almost all occupations are covered by Canada Life's Income Protection plan. Examples of occupations that would be not covered are miners and steeplejacks. There are also some occupations, for example a pilot, for which cover may only be available to a specified age that is less than the chosen cessation age. For full details, please refer to Canada Life's Income Protection Occupation Guideline Chart.

3. What happens if a person changes their occupation ?
If a person changes their job or occupation, they will need to inform Canada Life of this fact immediately by sending a full description of their new job to Canada Life. Canada Life then reviews the amount being charged for Income Protection. The amount being charged may increase, decrease or stay the same. In addition, a change of job may affect a person's deferred period, cessation age or in very rare circumstances, cover may need to be cancelled.

4. What happens if a person becomes unemployed ?
If a person becomes unemployed after they have taken out Income Protection with Canada Life and then subsequently becomes disabled, no benefit will be paid out because there is no earned income to replace. In these circumstances, a person should consider cancelling their policy.

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Managing the Cost

1. How much does it cost ?
The cost a person pays is affected by their chosen level of benefit and whether or not it's inflation protected, and features such as the cessation age, deferred period and escalation in payment options. In addition, the cost a person pays for Income Protection depends on their:

• Age Broadly, the cost a person pays increases with age. This is because the older a person gets, the greater their chances of becoming disabled and the longer the period of time they need to spend out of work as a result
• Sex On average, women suffer more ill-health than men and subsequently pay more for protecting their income
• Smoker Status On average, non-smokers suffer less ill-health than smokers and therefore pay less for protecting their income
• Occupation Some occupations are more prone to accidents/illnesses occurring than others. Once the details of a person's occupation are provided, Canada Life will assign them an occupation class (See Question 1 in Occupation - Questions & Answers)
• Health If our Underwriting Department determine (based on the application form filled out or on subsequent medical evidence obtained) that a person has worse than average health, then we may increase the cost charged for protecting that person's income.

2. Will Canada Life review the cost of Income Protection in the future ?
Based on current prices, we expect that it will not be necessary to increase the cost of a person's cover over the duration of their plan. However, Canada Life will only guarantee not to change the cost of cover for the first 10 years of a person's policy. After this initial period of guarantee, the cost charged will be reviewed every 5 years until a person's chosen cessation age, and may increase, decrease or remain the same as a result of this review.

3. Are there any other charges imposed when Income Protection is taken out ?
If a person has a Standalone Income Protection contract, we will charge a fee of €3 per month. However, if Income Protection is taken out with other benefits such as Serious Illness Cover or Life Cover, the normal fee charged on our Freedom Plan of €4 per month remains the same irrespective of whether or not Income Protection is added as a benefit.

4. What happens if a person decides to stop paying for their Income Protection cover ?
If a person decides to stop paying for their Income Protection cover, Income Protection cover will cease. In addition, if a person has taken out Standalone Income Protection, then their policy will lapse without any cash value.

5. What flexibility does a person have with regard to paying for the cover provided ?
A person has a number of options. They can pay:

• Monthly, quarterly, half-yearly or yearly by direct debit
• Quarterly, half-yearly or yearly by cash
• Weekly or monthly by payroll deduction

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Tax relief/payable

1. Can a person claim tax relief on the amount paid for Income Protection ?
Yes. A person can claim tax relief on the amount paid for Income Protection provided they are:

• Resident in Ireland for tax purposes
• In full-time employment and earning an income. Please note that a person cannot take out Income Protection cover to protect rental or dividend income or interest on investments. If these conditions are not satisfied, then tax relief will not be available on the amount paid for Income Protection.

2. How much can a person claim back from the Revenue Commisioners ?
Tax relief is available on the amount a person pays for Income Protection provided they satisfy the conditions set out in Question 1. Tax relief is calculated by multiplying the:

• Amount paid to Canada Life for Income Protection by
• Client's marginal rate of income tax

3. What does a person need to do in order claim back any tax relief due to them ?
A permanent health insurance certificate showing the amount paid for Income Protection will be supplied by Canada Life to any person with Income Protection benefits. This certificate must then be sent by the relevant person to the Revenue Commissioners in order to claim back the tax relief available to them on this product.

4. Is there any tax payable when a claim for Income Protection benefits occurs ?
Yes, tax is payable on a pay-as-you-earn (PAYE) basis when a claim for Income Protection benefits occurs. Canada Life will deduct the tax due in the same way as an employer deducts income tax and PRSI from an employee.

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Abilities Tests

1. What are the Abilities Tests ?
The Abilities Tests are an objective way of determining whether a person is disabled or not. Determining a person's incapacity using these tests is a new innovation for the Irish market. Canada Life are delighted to lead the way once again in the promotion of a product which is innovative, simple and clear.

The Abilities Tests consist of two distinct categories:

• Physical Health Test which is concerned with a person's temporary inability to perform a number of basic activities
• Mental Health Test which requires that a person must be suffering from one of a list of mental illnesses. A person must satisfy either the Physical Health Test and/or the Mental Health Test

2. In what circumstances is a person classified disabled under the Physical Health Test ?
A person will be classified as disabled under the Physical Health Test if, as a result of an illness or an injury, they are unable to do any three out of the first ten activities listed below or if they can't do the eleventh activity only.

1. Sitting in a Chair
   You cannot sit in a chair for 30 minutes.
   "Sitting" means the ability to maintain the position of the trunk without the aid of the arms of the chair, or any other person, object or appliance.
2. Getting up from a Chair
   You cannot get up from a chair without using its arms.
   "Without using its arms means without using the arms of the chair and without the assistance of any other person, object or appliance.
3. Standing
   You cannot stand for a period of 10 minutes.
   "Stand" means the ability to stand and perform light tasks, using one hand for support.
4. Walking
   You cannot walk a distance of more than 200 metres on flat ground without stopping.
   "Walk" means normal walking without the use of sticks, crutches or other assistive devices.
5. Lifting
   You cannot lift a 2kg bag of potatoes from counter height using either hand.
   "Either hand" means both arms have to be disabled in order to satisfy the test The test is not concerned with the ability to do this with both hands together. The "bag of potatoes" is without handles.
6. Walking up and down Stairs
   You cannot walk up and down a flight of 12 stairs without holding on or taking a rest.
   This means the inability to do both tasks within a reasonable period, which is not necessarily one immediately after the other.
7. Bending and Kneeling
   You can neither bend nor kneel as if to pick up something light from the floor and straighten up again unaided.
   This activity begins from the standing position.
   The intention is that the posture can be reached in such a way as to allow performance of tasks commonly required in the average home or place of employment.
8. Using Your Hands
   You cannot turn on a sink tap or the control knobs on a cooker with one hand.
   Inability to do this with either hand will satisfy the test.
   Tasks may be commonly performed a little more clumsily with the non-dominant hand, but the test is concerned with ability not performance.
9. Reaching with Your Arms
   You cannot reach behind your back to put on a coat or jacket with either arm.
   "Reach" means the upward and outward motions of the arms.
   "A coat or jacket" means any normal coat or jacket with sleeves.
   "Either arm means both arms have to be unable to satisfy the test.
10. Fits and Blackouts
    You suffer fits and blackouts such that reasonable medical opinion requires the revocation of your ordinary Irish driving license (or in circumstances where such a condition would preclude you from obtaining an ordinary Irish driving license if you did not hold one).
11. Seeing
    You are certified either blind or partially sighted by an Irish registered Consultant Ophthalmologist.
    'Certified blind' means where you are so blind that you cannot do any work for which eyesight is essential. Your best corrected vision is not greater than 3/60 in the better of your 2 eyes.
    'Certified partially sighted' means you are substantially and permanently disabled by defective vision caused by congenital defect or illness or injury. Your best corrected vision is not greater than 6/60 in the better of your 2 eyes.

3. In what circumstances is a person classified disabled under the Mental Health Test ?
A person will be classified as disabled under the Mental Health Test if they are diagnosed by a Consultant Psychiatrist as suffering either:

From one of the following eight severe mental illnesses:

1. Dementia
2. Organic Amnesic Syndrome
3. Delirium Disorders
4. Schizophrenia
5. Persistent Delusional Disorders
6. Schizoaffective Disorders
7. Bipolar Affective Disorder
8. Anorexia Nervosa

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Making a Claim

1. When can a claim for benefits be made ?
A claim for benefits can be made if a person has satisfied the criteria set out under the Abilities Tests and, as a result, has suffered a loss of earnings, for a period longer than their deferred period.

2. What is the maximum benefit a person can claim ?
The maximum benefit a person can claim is the lower of:

• The Income Protection benefit initially chosen increased by inflation where this applies
• 67% of their gross annual income in the 12 months prior to claim less income from any other sources, e.g. state sickness benefits. It is important that a person reviews their benefit level when changes occur to their gross annual income. For example, if their benefit level is too low, they won't be able to maintain the living standards to which they are accustomed.

3. Will benefits increase in line with inflation when they are being paid out?
Benefits will increase by 3% every year while they are being paid out, if the person claiming opted for the Escalation in Payment option when they initially took out Income Protection cover. If the Escalation in Payment option is not chosen, benefits payable throughout the period of disability will remain the same.

4. When will benefits cease to be paid ?
Benefits will cease to be paid when a person:

• No longer meets the criteria set out under the Abilities Tests
• Returns to work
• Dies
• Reaches their cessation age

5. Are there any exclusions to the payment of benefits ?
Benefits will not be paid if a disability arises as a result of:

• Self inflicted injury or illness
• The taking of alcohol or drugs
• Participation in a criminal act whether convicted or not
• War
• Participation in hazardous pursuits, for example, mountaineering, motor sport or private aviation
• AIDS or HIV

6. Are there any steps a person should follow when making a claim ?
A person making a claim should:

• Complete and return the claim form supplied to them by Canada Life, within 1 month of the end of the deferred period. A separate claim form will also be sent to a person's local GP (Refer to Question 7 on GP Certified Symptoms), Medical Consultant, Consultant Ophthalmologist or Consultant Psychiatrist depending on the conditions a person is suffering from under the Abilities Tests.
• Provide evidence of their earnings to Canada Life.
• Provide their birth certificate.
• Provide their policy schedule.
• Provide medical or any other information considered necessary under the Mental Health Test
  

• Undergo Functional Analysis Tests (independent medical tests) carried out by a Medical Consultant appointed by Canada Life
• Provide any medical or other information considered necessary.

7. What are "GP Certified Symptoms" and what do they mean ?
"GP Certified Symptoms" are symptoms, satisfying the Physical Health Test conditions, the existence which a person can report the existence to their local GP (or a Medical Consultant appointed by us if we require). Their local GP must then verify or certify their existence. It is a method of speeding up the claims reporting and claims payment process and is unique to Canada Life.
For example, if a person tells their local GP that they can't:

• Stand for a period of 10 minutes or more
• Walk more than 200 metres without stopping
• Turn on a sink tap with either their right or left hand AND their GP verifies, having examined them, that this is the case using the required claim form, then we will pay the claim. Claims, however, will only be paid using the GP Certified Symptoms basis for a period of 12 months. Canada Life still reserves the right to obtain the opinion of a medical consultant.

8. When should Canada Life be notified of a persons disability and possible claim for benefits ?
If a person intending to claim has a deferred period of:

• 13 weeks, then, the steps outlined in Question 6 should be completed no later than 10 weeks after the person becomes disabled and unable to work.
• 26 weeks, then, the steps outlined in Question 6 should be completed no later than 20 weeks after the person becomes disabled and unable to work.

9. How often will Canada Life pay a person's valid claim for benefits ?
If all the conditions necessary to claim and all the documentation necessary is in place, Canada Life will pay a person's claim for benefits on a monthly basis, where the first payment starts one month after the end of the deferred period chosen.

10. If a person recovers from a disability and within six months suffers from a relapse, will another deferred period have to be completed before claiming ?
No, if a person suffers a relapse of their previous disability within six months of those benefits ceasing, a person's full benefits will be paid again immediately. It will not be necessary to complete the deferred period again.

11. Is a person covered if they go abroad ?
A person is covered for Income Protection benefits if they decide to travel to Norway, Australia, Canada, New Zealand, Switzerland, USA, Hong Kong, Saudi Arabia, Japan, South Africa, Singapore, Iceland, the Czech Republic and any country within the European Union. However, a person will not be covered if the period of stay in any of these countries is more than 13 weeks in any 12 consecutive calendar months.

12. What happens if a person returns to work on a part-time basis ?
If a person returns to work on a part-time basis and continues to meet the criteria set out under the Abilities Tests, the benefits payable will be proportionately reduced so that the maximum benefit claimed does not exceed the limits specified in Question 2.

13. Is a person charged for Income Protection benefits while they are claiming ?
No, a person will not be charged for Income Protection benefits while they are claiming.

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Applying for Cover

Canada Life will subsequently send them the following:

• Income Protection Policy Conditions detailing the legal basis of the contract between Canada Life and the person applying for cover
• Policy Schedule detailing the specific details of the cover applied for

This document does not form part of any contract.

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Why choose our Product ?

1. New objective definition of disability
Our new and innovative definition of disability is clearly laid out and easy to understand. It defines the exact circumstances in which a person will be paid thus leading to less disputes over claims which have tended to be a feature of traditional PHI products. Less disputes means less delays in payments being made.

2. Available to a wider range of people

• Cover is available to almost all occupations with a few exceptions, for example, miners and steeplejacks.
• Cover is potentially available to people who would be declined for traditional PHI cover on medical grounds.

3. Affordable cover
Our product offers more affordable cover with prices up to 35% cheaper than those on offer from some of our competitors.

4. Straightforward underwriting
The underwriting process for Income Protection is more straightforward than traditional PHI. Our non-medical limits are almost double those of our competitors. This means that policies are processed quicker and less time is spent obtaining medical evidence.

5. Lower ratings for those not in full health
Some clients may have suffered or be suffering from an illness that means they would either have been heavily 'rated" or perhaps even declined for traditional PHI. The difference with our product offering is that, in the vast majority of cases, we impose lower ratings than those imposed on a traditional PHI policy. This makes our charge for income protection even lower.

6. Simpler way to claim benefits
We aim to keep our procedures for claiming benefits as hassle free for the client as possible. That's why, during the first year of paying a client's claim, in almost all circumstances, we will pay out based on the opinion of the client's doctor. This is known as "GP Certified Symptoms" Reporting.

7. Market Leaders with our innovative Freedom Plan
Canada Life's Freedom Plan is the first product in the Irish market to offer a person the:

• Choice of Life, Serious Illness, a host of other benefits such as Hospital Cash and now Income Protection all within one product.
• Facility to cover two clients for Income Protection under the one contract, known as Dual Life Standalone Income Protection.

8. Freedom with our Freedom Plan
Canada Life's Freedom Plan is an all-in-one plan where a person has the flexibility to take out any combination of benefits they like. As a person's needs are likely to change over time, the importance of a flexible product is paramount. Freedom offers clients flexibility not just at the point of sale but throughout the duration of their plan.

9. Overseas coverage for limited periods

10. Income Protection - Choices for cover

• Income Protection benefit of up to €750 per week available.
• Wide range of choices with regard to deferred periods, cessation ages and inflation protection.

11. Revenue approved
Approval from the Revenue Commissioners for Canada Life's Income Protection as a PHI scheme means that the client ban obtain tax relief on premiums of up to 10% of earned income.

Contact Us for more information

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