LIFE & CRITICAL ILLNESS INSURANCE UNdERwRITINg … · or call the WFG Advisor Direct Team at...

LIFE & CRITICAL ILLNESS INSURANCE UNdERwRITINg gUIdE

We know that prospecting and selling new cases is hard work. That’s why the underwriters at Transamerica Life Canada

work with you every step of the way to help you place your business easily and promptly.

At Transamerica, we believe in underwriting that makes sense. Created with you and your clients’ needs in mind, our

accessible and straightforward guidelines make it even easier to get your clients the protection they need.

By listening to your feedback, as well as studying industry best practices and conducting competitive reviews, we

continue to make changes to our underwriting that respond to the evolving needs of our markets and your business.

The guide

Underwriting plays a large role in the processing of an application at Transamerica.

This easy-to-use and comprehensive underwriting guide contains the key information you need to submit a case to

Transamerica, speed up the underwriting process and ensure that your clients receive the best possible offer. The

information here will also help you prepare your clients for the underwriting process and manage their expectations,

resulting in a better sales experience for your clients, with no unpleasant surprises.

Look for this icon throughout this guide for helpful tips on getting your policy issued faster.

Look for this icon throughout this guide for extra information that’s good to know.

Look for this icon for helpful tips on building and maintaining excellent client relations. Preparing your clients

for the underwriting process and maintaining open and honest communications throughout is an important

aspect in managing their expectations, maintaining excellent client relationships and helping them to feel as

comfortable as possible.

If you have any questions about the underwriting process, please send us an email at [email protected],

or call the WFG Advisor Direct Team at 1-866-WFG-ROCKS (1-866-934-7625).

Underwriting Guide

[ i ]

Table of contents Underwriting tools at a glance iii Summary chart of underwriting programs and risk classifications iii

Overview of required forms iv

1. Underwriting requirements 1 Let LifeView, Transamerica’s illustration software, do the thinking for you 1

Underwriting Requirements Chart 2

Medical Conditions Underwriting Pocketbook 3

Pre-screening checklist 3

Application and underwriting requirement status and follow-up 5

2. Underwriting programs 6 Face/benefit amount and age availability 6

3. Underwriting risk classifications 8 Risk classifications 8

Preferred and Elite underwriting risk classes for life insurance 8

Preferred and Elite underwriting risk classification criteria 9

Underwriting Build Chart (height and weight) 11

4. Insurance amounts guidelines 12

5. Immigration guidelines 14

6. Foreign travel guidelines 18

7. Attending Physician Statement (APS) guidelines 19

8. Financial underwriting guidelines 21

9. The underwriting process: What to expect 25 Different types of insurance measures different types of risk 25

How does critical illness underwriting differ from life insurance underwriting? 25

Hypothetical (preliminary insurability) inquiries 26

Ratings 26

Exclusions for critical illness 29

10. The application journey 30

11. Getting your clients’ applications processed faster 33

Underwriting Guide

[ ii ]

Underwriting Guide

[ iii ]

Underwriting tools at a glanceSummary chart of underwriting programs and risk classificationsThis chart provides a handy reference guide to help you easily determine which underwriting program and classifications are available to your clients, based on their ages and the face amounts they are applying for.

AgeApplicable underwriting program Face amount Insurance plan

Applicable risk classifications (see Section 3 for definitions of risk classifications)

0-16Non-medical

≤$500,000 Universal life and term

Standard non-smoker≤$250,000 Critical illness

Medical $500,001+ Universal life and term

17-45

Non-medical≤$500,000 Universal life and term Standard non-smoker

Standard smoker≤$250,000 Critical illness

Medical

$500,001+ Universal life and term

Elite non-smokerPreferred non-smokerStandard non-smoker

Preferred smoker Standard smoker

$250,001+ Critical illnessStandard non-smokerStandard smoker

46-50

Non-medical≤$250,000 Universal life and term Standard non-smoker

Standard smoker≤$99,999 Critical illness

Medical

$250,001 - $500,000 Universal life and term Standard non-smokerStandard smoker$100,000+ Critical illness




51-55

Non-medical ≤$250,000 Universal life and termStandard non-smokerStandard smoker

Medical

$250,001 - $500,000 Universal life and term Standard non-smokerStandard smoker>$0 Critical illness




Underwriting Guide

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AgeApplicable underwriting program Face amount Insurance plan

Applicable risk classifications (see Section 3 for definitions of risk classifications)

56+ Medical

≤$500,000 Universal life and term Standard non-smokerStandard smoker>$0 Critical illness




Special note about edition datesIf you order the application from informco, you will receive the most recent version. It is important to note that, with the

introduction of our Critical Illness Protection Rider, we also launched a new life insurance application that integrates the

short form and long form application into one application.

For business WITH a CI Rider For business WITHOUT a CI Rider

As of August 20, 2012 new life insurance applications − which combines the short and long form application into one easy-to-use application − LP257 (8/12) – will be required on all new business that includes a CI rider.

For sales that do not include a CI rider, you can submit business using the old life application – LP257 (09/09) – until September 21, 2012.

September 21 – Transition period ends

September 22 and onwards – Only the new application (LP257 (8/12) will be accepted.

How and when do you integrate the new application into your practice?

Overview of required forms

For more information on requirements for our underwriting programs, refer to the section “Underwriting Requirements.”

Underwriting Program Application required Additional requirements

Non-medical The current Long Form Application (LP257) must be completed.*

Be sure to provide complete details on the application, particularly for any “yes” answers.

Include a cover letter or use the remarks section if you need more room.

Medical When a paramedical or medical is needed, you do not need to complete the medical section. Although by always completing the medical section on the insurance application it can help to provide more details to the underwriter, which can result in speedier processing of your client’s application. It can also help you manage your client’s expectations with regards to the risk classification the underwriter applies.

Refer to the Underwriting Requirements Chart (WFG-LP1214).

* To determine the most current edition of our applications, visit Transamerica’s website at www.transamerica.ca or click on Marketing Marketing Materials/Forms and Applications in our LifeView illustration software.

Underwriting Guide

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1. Underwriting requirementsTransamerica offers two useful tools that are designed to assist you in determining the underwriting requirements for your clients:

1. LifeView, Transamerica’s illustration software, which performs the analysis for you; and

2. Transamerica’s Underwriting Requirements Chart

1. Let LifeView, Transamerica’s illustration software do the thinking for youWhen selling a life insurance plan combined with a critical illness rider, the fastest way to determine the underwriting requirements needed is to use LifeView. LifeView will look at the requirements needed for both the life insurance plan and the critical illness rider and will provide you with a one line summary on what is needed based on the information that you’ve provided in the illustration. Then you simply select the higher of the requirements between the life insurance and critical illness rider and order the necessary requirements.

Where do you find this information?LifeView illustration software is available online at www.transamerica.ca or can be ordered through Transamerica’s iCanOrder system, which is available through the same site. Please discuss the operation of LifeView with your Transamerica Sales Director to ensure you maximize the flexibility of this tool.

The image below is an example of where you can find the underwriting requirements on your clients’ insurance illustration.

PR-3

Client1, Age 35Face Amount $350,000Non-Medical.Critical Illness Benefit $250,000Non-Medical.

Section 4 - Underwriting Requirements

7 14of

Prepared for: [Owner Name]August 8, 2012

Prepared by: [agent name]

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2. Underwriting Requirements Chart

Using the Chart, refer to the amount of insurance being applied for and the proposed insured’s age (to his or her nearest birthday). The amount of insurance being applied for is defined as the total amount of insurance currently applied for, plus any amount issued by Transamerica within the last six months.

Also note that the critical illness coverage in force, for all companies, cannot exceed a total of $2,000,000. For juveniles, the amount cannot exceed $250,000.

Remember, when offering a critical illness rider on a universal life or term insurance plan, underwriting requirements will be based on the life insurance requirements in addition to the critical illness requirements. In order to prevent duplication of requirements, order the highest applicable level of requirements and add additional tests where indicated.

Insurance Products Underwriting Requirements Chart

Critical illness insurance is an important part of an overall financial solutions package. It can be challenging, though, to go through the application process only to have it come back with a rating, or be declined altogether. Becoming familiar with the underwriting process can help you understand why some cases are rated, and others are declined. It will assist you in generating new business, and help you place rated business.

Age (Nearest Birthday)

$0 to

$99,999

$100,000 to

$250,000

$250,001 to

$500,000

$500,001 to

$999,999

$1,000,000 to

$2,499,999

$2,500,000 to

$3,000,000

$3,000,001 to

$5,000,000

$5,000,001 to

$10,000,000

$10,000,001 and over

0-16 A A A A&D B&D B&D B&D&FQ B&D&6 C&D&6

17-40 A A A B2 B2 B2 B2&5 B2&6&D C3&6&D

41-45 A A A B2 B2 B3 B3&5 B3&6&D C4&6&D

46-55 A A B2 B2 B3 B3 B3&5 B3&6&D C4&6&D

56-60 B1 B1 B2 B3 B3 B3 C3&5 C4&6&D C4&6&D

61-65 B1 B2 B3 B3 B3 C3 C4&5&D C4&6&D C4&6&D

66-70 B1 B3 B3 B3 C3 C3 C4&5&D C4&6&D C4&6&D

71 & up B2 B3 B3&D C3&D C3&D C4&D C4&5&D C4&6&D C4&6&D

Life Insurance Products & Critical Illness Protection Riders Transamerica‘s Underwriting Requirements

A – Non-Medical

B – Paramedical

C – Medical Exam

D – Attending Physician’s Statement

FQ – Financial Questionnaire (within the application)

1. Urine/HIV2. Blood Profile & Urine/HIV3. ECG, Blood Profile & Urine/HIV4. Stress ECG, Blood Profile & Urine/HIV5. Financial Questionnaire, Credit Check, Motor

Vehicle Report†, & Other Financial Information 6. Inspection Report & Motor Vehicle Report†

† Not required under age 16.

Other Financial Information (submit one of the following):• Cover Letter• Third Party Verification (such as): – Notice of Assessment or – Investment portfolio statement or – Financial statement or – Bank statement

Additional requirements may be ordered as determined by the Underwriting Department.Residents who have been in Canada less than 12 months: • Hepatitis screening is always required• Those in category A or B1 must provide

B2 requirements

Life Insurance Products

Age (Nearest Birthday)

$0 to $99,999 $100,000 to $250,000 $250,001 to $500,000 $500,001 to $1,000,000$1,000,001 to

$2,000,000

0-16 A A

17-40 A A B2 B2&D&FQ B2&D&6

41-45 A A B2 B2&D&FQ B3&D&6

46-50 A B1 B2 B3&D&FQ B3&D&6

51-55 B2 B2 B3 B3&D&FQ B3&D&6

56-60 B2 B3 B3&D B3&D&FQ B3&D&6

61-65 B3 B3 B3&D B3&D&FQ B4&D&6

Critical Illness Protection Riders

Notes about underwriting requirements• If a client is applying for both Life Insurance and Critical Illness, the higher of the underwriting requirements will always apply. • Do not duplicate requirements, instead order the higher of the requirements.• The Critical Illness underwriting requirements are based on the total Critical Illness benefit applied for with Transamerica in the last 6 months.• Prostate Specific Antigen (PSA) will automatically be part of the blood test for all males age 51 and up, for all amounts.

The age and amount requirements are based on the total Life Insurance amount applied for with Transamerica in the last 6 months.

UNDERWRITING REQUIREMENTS

Underwriting Guide

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Two tools to help you manage your clients and explain what to expect

1. Medical Conditions Underwriting Pocketbook The Medical Conditions Underwriting Pocketbook is a useful tool that provides a basic overview of the most common medical conditions we encounter and can help you easily gather the information we need to properly assess your client.

Simply refer to the Pocketbook for specific details to provide, to determine if there are additional underwriting requirements and to prepare your client for possible underwriting ratings.

Below is an example of the type of information that you’ll receive in Transamerica’s Pocketbook.

By providing this important information up front, you can help get your clients the coverage they and their families need more quickly, while helping us provide you with the best possible offer.

Please note that while the Pocketbook can help you prepare your client for potential ratings, the final underwriting decision may differ once all factors are assessed.

3

The Transamerica Life Canada medical conditions pocketbook

Details of information Expected requirements Potential underwriting decision

• Current age.

• Date of diagnosis.

• Severity of symptoms.

• Frequency of attacks.

• Type of medication.

• Dosage of medication.

• Any hospitalization or ER visits.

• Any limitation of activities.

• Smoking habit.

• Any other medical condition.

• Respiratory questionnaire.

• Minimal severity: standard.

• Moderate severity: rated 150–250%.

• Severe condition: 250% to decline.

Details of information Expected requirements Potential underwriting decision

• Current age.

• Date of diagnosis.

• Type of medication/treatment.

• Dosage of medication.

• Current blood pressure reading.

• Compliance with medication and follow-up.

• Any hospitalization or ER visits.

• Any limitation of activities.

• Smoking habit.

• Any other medical condition, such as obesity, diabetes, stroke, etc.

• Paramedical.

• Blood profile.

• Home office urine specimen.

• Depends on severity and control.

• Typical case: standard if well controlled and, if treated, treatment well followed.

Asthma

Blood pressure

Medical conditionsUnderwriting pocketbook


Underwriting Guide

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2. Critical illness pre-screening checklistThe pre-screening checklist has been created to assist you in a thorough evaluation of the proposed insured prior to submitting an application that includes critical illness insurance. Remember, this checklist is for critical illness

insurance. If your client is automatically declined for critical illness, it does not mean that he or she will be declined for life insurance. Remember: critical illness insurance is subject to a more rigorous underwriting process than life insurance.

Automatically declining for critical illness coverage:Below is a partial list of conditions that will result in an automatic decline for critical illness coverage. Please do not

submit an application for critical illness if the proposed insured has, or has ever been diagnosed with, any of

the following conditions. Please note that there may be other conditions that could also result in a decline for

your client.

If your client is currently under medical investigation, please wait until this has been completed before submitting an application.

If any member of the proposed insured’s immediate family (i.e., siblings and parents) has had one of the above conditions, the policy may be rated or in some cases, declined.

PROPOSED INSURED

Adult Juvenile

• AIDS,AIDSrelateddiseaseorpositiveHIV• Treatmentforalcoholordrugabuseinthelast

three years• Alzheimer’sDisease• Aplasticanemia• AmyotrophicLateralSclerosis(ALSorLouGehrig’s

Disease)• Benignbraintumour• Cancer(someexceptionsforskincancerotherthan

melanoma or certain early-stage cancers may apply. Please consult with the underwriting department for more information.)

• Cysticfibrosis• Diabetestreatedwithinsulin• Heartdiseasesuchasheartattack,angina,

coronary bypass surgery, angioplasty or valve replacement surgery

• Huntington’sChorea• Kidneyfailure• Motorneurondisease• Multiplesclerosis• Organtransplant• Parkinson’sDisease• Permanentparalysis• Strokeortransientischemicattack• Systemiclupuserythematosus

• AIDS,AIDS-relateddiseaseorpositiveHIV• Aplasticanemia• Autism• Benignbraintumour• Cancer• Cerebralpalsy• Cysticfibrosis• Congenitalheartdisease• Diabetes• Down’ssyndrome• Kidneyfailure• Motorneurondisease• Multiplesclerosis• Musculardystrophy• Organtransplant• Permanentparalysis• Stroke

Critical Illness coverage will not be offered to juveniles with any immediate family history of one of these illnesses:

• Familialpolyposisofthecolon• Huntington’sChorea• Polycystickidneydisease


Underwriting Guide

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Application and underwriting requirement status and follow-up

Regular follow-ups on underwriting requirements with the third-party vendor through whom you ordered requirements, and communication on application decisions, are important to keep your client engaged and interested in the life insurance product throughout the process.

How can you find the current status of your pending business?There are two ways for you to learn about your business with Transamerica:

1. WFG Rocks Contact CenterFor the current status of your pending new business application and underwriting requirements, please contact the WFG Contact Center by email at [email protected],ortoll-freeat 1-866-WFG-Rocks (1-866-934-7625).

2. Real-time updates available onlineThe transamerica.ca site assists advisors, managers and marketing associates who use our products and services. There are two sections on the site: the public portion and the secure or sign-in portion. Anyone can access the public portion to view product information, sales concepts and tools. Advisors who have placed business with Transamerica, as well as managers and other office personnel, can self-enroll for access to the sign in portion of the site. Once on the secure portion of the site, they can view pending business, client information and in-force business through WebCAPPOW, as well as advisor marketing materials, and forms. Simply go to www.transamerica.ca.


Underwriting Guide

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2. Underwriting programsTransamerica offers two underwriting programs:

Face/benefit amount and age availability

Non-medical underwriting Medical underwriting

The proposed insured’s insurability will be assessed by the underwriter based on the information provided in the Long Form Life Insurance Application. This includes questions related to medical history, family history, financial situation, lifestyle and other important factors necessary for the underwriters to determine the risk class the applicant represents. There is:

• nomedicalorparamedicalexaminationbyahealthprofessional required

• nobloodspecimenrequired

• nourinespecimenrequired

If it is determined by the underwriter that any of the above three medical requirements are necessary, the applicant will fall under what we call “medical underwriting.”

Medical underwriting also applies where the underwriter assesses the need for further information about a client based on the information provided in the Long Form Application for Non-medical Underwriting.

In order to qualify for non-medical underwriting, the proposed insured must have lived in Canada for at least 12 months.

Medical underwriting means the proposed insured’s insurability will be assessed by the underwriter based on the information provided in a Life Insurance Application, along with specific medical requirements.

NON-MEDICAL MEDICAL

Life insurance Critical illness Life insurance Critical Illness

Age Face amount Age Benefit amount Age Face amount Age Benefit amount

0–16 ≤$500,0000–45 ≤$250,000

0–16 $500,001+ 0–16 Not applicable

17–45 ≤$500,000 17–45 $500,001+ 17–45 $250,001+

46–55 ≤$250,000 46–50 ≤$99,999 46–55 $250,001+ 46–50 $100,000+

56+ Not available 50+ Not available 56+ $0+ 51-65 $0+

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Remember, when offering a critical illness rider on a universal life or term insurance plan, underwriting requirements will be based on the life insurance requirements in addition to the critical illness insurance requirements. In order to prevent duplication of requirements, order the highest applicable level of requirements and add additional tests where indicated.

Note: Transamerica reserves the right to request additional medical requirements for any proposed insured (such as blood and urine testing, physician’s report, medical examination, etc.) based on the initial assessment of the application.

Note about misrepresentationIt’s important to ensure that the questions on the application and any questionnaires are answered truthfully and completely. Any non-disclosure of information or misrepresentation can lead to voided contracts and unpaid claims.

Tip: Providing complete details to all questions that are answered with a “yes,” and ensuring that your client’s application is in good order, can help the underwriter to quickly make a decision and avoid processing delays. For any questions answered “yes,” please provide details in the comments section of the application or in a cover letter.

UNDERWRITING PROGRAMS

Underwriting Guide

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3. Underwriting risk classificationsIn this section of the Guide we will define the underwriting risk classifications that are available for Transamerica insurance plans. The underwriting risk classification (also referred to as “rate class”) determines how much your clients will pay for their insurance.

To ensure that our underwriting remains accessible, and that it reflects your clients’ needs, we offer non-smoker rates to those who occasionally smoke cigars.

Risk classificationsWe offer five underwriting risk classifications:

“Tobacco use” definitionTobacco use includes cigarettes, cigarillos (little cigars), cigars, pipes, shisha/hookah (waterpipe), marijuana, hashish, betel nuts, snuff, chewing tobacco, e-cigarettes, nicotine patch, NicoretteR Gum or any other smoking cessation products and/or any ingestion of nicotine, regardless of negative or positive results in a cotinine (metabolite of nicotine) test.

We will offer cigar smokers standard non-smoker rates if their cigar use is limited to 12 cigars per year and their urine test

results are negative for cotinine (nicotine). For those qualifying for non-medical underwriting, a urine test is not needed.

Preferred and Elite underwriting risk classes for life insurancePreferred and Elite underwriting is automatically applied when the underwriting amount for a life insured is $500,001 and greater,* and the insured is 16 years of age or older.

For Preferred and Elite underwriting, we consider facts that go beyond the gender and smoking habits of your clients. We look at other health-related factors, such as physical build, lifestyles and personal and family health history to consider client’s eligibility for an Elite, Preferred or Standard classification. If, based on these factors, your clients have a longer life expectancy, our preferred underwriting program can substantially reduce their life insurance premiums.

Elite non-smokersPreferred non-smokers

Standard non-smokers Preferred smokers Standard smokers

Life only Life only Life and CI rider Life only Life and CI Rider

Tobacco use

Zero use in the last 24 months



Smoke more than 12 cigars per year, use a pipe or chewing tobacco, but do not use any other tobacco products

Are users of tobacco products.

HealthExcellent medical and non-medical history

Good medical and non-medical history

Average medical and non-medical history

Good medical and non-medical history

Average medical and non-medical history

LifestyleStatistically “excellent risks”

Statistically “good risks”

Statistically“average” risks

Statistically “good risks.”

Statistically “average” risks.

* The underwriting amount is based on the total amount of life insurance for a particular life insured, including single life and joint life coverages and riders.® NICORETTE is a registered trademark of the GlaxoSmithKline Group of Companies.

Underwriting Guide

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Preferred and Elite underwriting risk classification criteria

Elite Preferred Preferred smoker

Tobacco &/or nicotine usage Includes smoking cessation products

None in the last 24 months. None in the last 12 months. More than 12 cigars per year OR uses pipe & chewing tobacco only.

Blood pressure Ages ≤44: 130/80

Ages 45–64: 140/85

Ages 65–80: 145/90

Never taken prescription medication for high blood pressure.

Ages ≤44: 150/90

Ages 45–64: 155/90

Ages 65–80: 155/90

If taken only one prescription medication for high blood pressure, must meet Elite blood pressure criteria.

Ages ≤44: 150/90

Ages 45–64: 155/90

Ages 65–80: 155/90

If taken only one prescription medication for high blood pressure, must meet Elite blood pressure criteria.

Build chart See Elite column of Build Chart See Preferred column of Build Chart

See Preferred column of Build Chart

Cholesterol Amount shown is the maximum allowed.

Ages ≤44: 210

Ages 45–80: 220

Never taken prescription medication for cholesterol andcholesterol/HDLratiois 5 or less.

Ages ≤44: 250

Ages 45–80: 260

Cholesterol/HDLratiois6.5 or less. If taking only one prescription medication for cholesterol, must meet Elite cholesterol criteria.

Ages ≤44: 250

Ages 45–80: 260

Cholesterol/HDLratiois6.5 or less. If taking only one prescription medication for cholesterol, must meet Elite cholesterol criteria.

Family health history* Not applicable if proposed insured is age 60+ or adopted.

No immediate family member has died or been diagnosed with a medical condition prior to age 61.

No more than one family member has died or been diagnosed with a critical condition prior to age 61.

No more than one family member has died or been diagnosed with a critical condition prior to age 61.

Driving history Includes 24-hour suspensions or refusal to provide a breathalyzer sample.

Not more than two speeding violations in the last two years. No DWI or reckless driving charges in the last 10 years.

Not more than four speeding violations in the last two years. No DWI or reckless driving charges in the last five years.

Not more than four speeding violations in the last two years. No DWI or reckless driving charges in the last five years.

Alcohol/drug abuse treatment If previous history of treatment, must not be using any amount at present.

No treatment in the last 10 years (includes counselling).

No treatment in the last five years (includes counselling).

No treatment in the last five years (includes counselling).

Personal health history

No ratable health impairments. No personal history of coronary artery disease, cardiovascular disease, diabetes or cancer.

Aviation A passenger, pilot or crew member on a regularly scheduled, major passenger airline is acceptable under each underwriting program. Other occupational aviation or pleasure aviation may be considered under the Standard or Substandard (rated) underwriting classification. An exclusion may apply for pleasure aviation only.

* Immediate family members means parents and siblings. Medical condition includes (but is not limited to) coronary artery disease, cardiovascular disease, diabetes or cancer.

UNDERWRITINGRISKCLASSIFICATIONS

Underwriting Guide

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Elite Preferred Preferred smoker

Foreign travel/residence

Travel to, or planning to travel, in a ratable or excludable foreign country is not accepted.

Avocation Participation in ratable hazardous activities is not accepted. If participation is not considered standard,maybetreatedasanexclusion,exceptwhereparticipationisoccupational.Hazardousactivities include (but are not limited to) hang-gliding, ultralight, soaring, skydiving, ballooning, powered racing, competitive skiing, scuba diving and skin diving > 60 feet.

Client relations tip: The appropriate class can only be determined after all evidence has been submitted and assessed, so to best manage your client’s expectations and avoid potential disappointment, care is recommended when speaking to your clients about their risk classification. While it is acceptable to let them know there is a possibility they may qualify for a Preferred or Elite underwriting risk classification – if you think they will be eligible – we recommend providing them only with quotes for the Standard classes. This helps prevent them from being disappointed if the premium quoted later is higher, because they did not in fact qualify for the better risk classification.

Tip: A request for a change to a better class may be granted after two years, with a new paramedical, bloodprofileandurineHIV.

Good to know: Clients who are currently taking a prescription medication for cholesterol may still qualify for a Preferred classification if their cholesterol/HDLratiois5orless.


Underwriting Guide

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Underwriting Build Chart (height and weight)

FOR ADVISOR USE ONLY

500-5000 Yonge StreetToronto, Ontario M2N 7J8

www.transamerica.ca

LP1403 08/12

Elite Non-SmokerWeight

in pounds (lbs)

Preferred Smoker & Non-smoker)Weight in pounds (lbs)

Standard Smoker & Non-smokerWeight in pounds (lbs)

HeightMale or Female



Weight Min–Max Weight Min–Max Weight Min–Max4’8” 83–149 4’8” 82–158 4’8” 78–168

4’9” 86–154 4’9” 85–164 4’9” 80–174

4’10” 89–160 4’10” 88–169 4’10” 83–180

4’11” 92–165 4’11” 91–175 4’11” 86–186

5’0” 95–171 5’0” 94–181 5’0” 89–193

5’1” 98–177 5’1” 97–187 5’1” 92–199

5’2” 102–183 5’2” 101–194 5’2” 95–206

5’3” 105–189 5’3” 104–200 5’3” 98–212

5’4” 108–195 5’4” 107–206 5’4” 101–219

5’5” 112–201 5’5” 111–213 5’5” 105–226

5’6” 115–207 5’6” 114–219 5’6” 108–233

5’7” 119–213 5’7” 118–226 5’7” 111–240

5’8” 122–220 5’8” 121–233 5’8” 115–247

5’9” 126–226 5’9” 125–240 5’9” 118–254

5’10” 129–233 5’10” 128–247 5’10” 121–262

5’11” 133–240 5’11” 132–254 5’11” 125–269

6’0” 137–247 6’0” 136–261 6’0” 129–277

6’1” 141–253 6’1” 140–269 6’1” 132–285

6’2” 145–260 6’2” 144–276 6’2” 136–293

6’3” 149–268 6’3” 148–284 6’3” 140–301

6’4” 152–275 6’4” 151–291 6’4” 143–309

6’5” 157–282 6’5” 156–299 6’5” 147–317

6’6” 161–289 6’6” 160–307 6’6” 151–325

6’7” 165–297 6’7” 164–315 6’7” 155–333

6’8” 169–304 6’8” 168–323 6’8” 159–342

6’9” 173–312 6’9” 172–331 6’9” 163–350

6’10” 177–316 6’10” 176–335 6’10” 168–355

6’11” 181–320 6’11” 180–339 6’11” 173–360

Clients who do not meet the above criteria could be considered in a Substandard rating class or declined. Each client assessment is based on the full underwriting assessment of their file.

Underwriting Build Chart

TMTrademarks of Aegon Canada ULC &/or its subsidiary companies.Aegon and the Aegon logo are registered trademarks of Aegon N.V. Aegon Canada ULC and its subsidiary companies are licensed to use such marks. Transamerica and the pyramid design are registered trademarks of Transamerica Corporation. Transamerica Life Canada is licensed to use such marks.

Effective October 15, 2010


Underwriting Guide

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The following chart provides an outline of some of the financial purposes and methods used by our underwriters in arriving at acceptable amounts of insurance. These are guidelines only, and the amount of insurance, as well as the premium deposit, needs to be justified. In some cases, while the guidelines may still apply, the amount may be reduced or even declined if we do not have enough information to justify the amount, or if we believe that the amount is not justifiable.

The information is presented as follows:

• Underwriting formula:Howtheunderwritercalculatestheamountofcoveragethatcanbeapprovedaccording to the type of insurance and need.

• Notes: These are the specific details, included in your cover letter, or under the remarks section of the application, that the underwriter uses to justify the amount of coverage requested, and to make the most competitive decision right from the outset. This can streamline the underwriting process by reducing the need for additional information about the sale.

4. Insurance amounts guidelines

LIFE INSURANCE CRITICAL ILLNESS

Underwriting formula Underwriting formula Notes

Purpose of insurance

Income replacement

Age Multipliers for earned income

Age Multipliers for earned income

25 24 18 to 55 7

30 22

35 20

40 17

45 14

50 11

55 8

60 4 56 to 60 5

61+ 3

Nonworking spouse:

Same amount as the working spouse

50% of working spouse limit up to a maximum of $250,000

Children: 50 % of parents up to a maximum of $500,000. Anything above this amount will be reviewed on a case-by-case basis.

25% of smallest parent’s limit as long as all children insured equally limit up to a maximum of $250,000

Other adult (unemployed)

Up to $100,000 can be issued without justification

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Income replacement for life insuranceWith the LifeScripter® tool from Transamerica, we have automated the income replacement calculation for you making it simpler for you to determine your client’s income replacement need. If you are not using this tool but would still like to have a guide in terms of acceptable amounts of insurance, we have provided within the table above which includes factors produced by LifeScripter for selected ages based on the following assumptions:

LIFE INSURANCE CRITICAL ILLNESS

Underwriting formula Underwriting formula Notes

Purpose of insurance

Estate preservation

Usually based on:projected net worth multiplied by estate tax rate and other estate planning practices

Buy or sell partnership, stock redemption

Percentage of ownership multiplied by the corporation’s Fair Market Value(FMV).

The amount of coverage should be consistent with the proposed insured’s share of the business.

Provide third-party verification via corporate financial statements and corporate letter outlining how the value of the corporation was determined. Also, indicate coverage in place or pending for all partners and owners.

If an owner does not have coverage, we will require an explanation.

A buy-sell agreement should be in place.

Key person 5–10 times income (depending on circumstances).

Maximum 3 times the key person’s income.

Provide a cover letter outlining key value to the company, how the amount was determined, financial impact of loss, specific skills and experience.

Similar coverage should exist on all key persons.

Loan: Business collateral

No more than 30 –70% of loan. Insurance only for a key individual. Insurance needs must be first taken care of before seeking the business collateral loan amount.

It is difficult to justify CI coverage for these reasons.

Include details of loan: amount, purpose, duration, other collateral, interest rate, and repayment period.

Income replacement % 90%

Interest rate 5%

Inflation rate 3%

Retirement age 65

Tip: The key to fast approval is good application packaging. Be sure to include a complete application, cover letter, details of foreign travel (if applicable), illustration and any other supporting documents.

INSURANCE AMOUNT GUIDELINES

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5. Immigration guidelinesLife insuranceIf your client is new to Canada and is in one of the following groups, he or she may still qualify for our insurance coverage:

• permanentresident

• skilledworkersprogram

• nannies

• non-resident(non-landedimmigrants)

Married to a Canadian or a permanent residentIf your client is married to a Canadian or a permanent resident and is residing in Canada, but has not yet been granted permanent resident status, he or she may still qualify for life insurance coverage. Your client will be required to show:

• Thereisanimmigrationrequestinprocess;aphotocopyoftheimmigrationformsisneeded

• Confirmationofthespouse’simmigrationstatus(seechartbelowformoredetails)

Coverage of up to 100% of the face amount on the primary life insured will be considered for spouses, and up to 50% for children. Once permanent resident status has been granted, your client may then qualify for our life insurance as a permanent resident. (Refer to our guidelines for permanent residents immediately below.)

Permanent resident Skilled workers program Nannies Non-resident

Minimum residency

No minimum requirement for residency in Canada.



Applicant must have resided in Canada for more than three months.

Required documentation: Canadian status / work permit

Not applicable • Applicantneedsto provide valid residency documentation, such as:

– Social Insurance Number;

– Photocopy of immigration statuscard;or

– Immigration papers such as photocopy of work permit.

• Applicantmusthavevalid work permits and the intention to stay in Canada.

• Aphotocopyofimmigration status documentation is required, such as:



– Immigration papers.


• Applicantmusthave valid residency documentation, such as:



– Immigration papers.


• Aphotocopyofvalidpermit is needed.

Face amounts • Faceamountisbased on the product minimum and maximum.

• Faceamountisbased on the product minimum and maximum.

• Faceamountmay not exceed $250,001.

• Faceamountmay not exceed $250,001.

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Permanent resident Skilled workers program Nannies Non-resident

Eligible classes

• Applicantsmaybeconsidered for Elite or Preferred class.*

• Financialquestionnaireor justification may be required so that Elite or Preferred class* may be granted.

• EliteorPreferredclass* is not available.

• EliteorPreferredclass* is not available.

Rider availability

• Asperproduct. • Asperproduct. • AccidentalDeathandDismemberment and Waiver of Premium Riders are not available

• AccidentalDeathandDismemberment and Waiver of Premium Riders are not available.

Basic requirements

• ClientmustliveinCanada.

• FornewimmigrantslivinginCanadaforlessthan12consecutivemonths,wewillrequire the following:

– paramedical – blood test with hepatitis B and C screen – urineHIV

• AllmedicalrequirementsmustbecompletedinCanada.

Important information

• OnlyCanadianassetswillbetakenintoaccountwhenjustifyingtheneedfor,orpurposeinformation of, insurance.

• Faceamountmaybelimitedto$250,001,butmaybehigherdependingonimmigrationstatus.

• After12monthsinCanada,regularageandamountrequirementsapply,andclientsmaybeconsidered for an Elite or Preferred class, depending on their underwriting status and face amount unless the client is still a contract worker. In this case, elite and preferred rates would not be available.

• Additionalforms: – A financial questionnaire may be required. – A cover letter explaining the purpose of the insurance and to identify the source of deposits/

premiums is recommended.

Other requirements

• Noadditionalrequirements.

• Appliestoskilledworkers such as nurses, doctors, engineers, etc., or applicants under the business owner or entrepreneur programs.

• Applicantsmustbeemployed in such a field in Canada.



* For universal life and term applications starting at $250,001 and ages 17+.

IMMIGRATION GUIDELINES

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Critical illness Compared with life insurance, the underwriter will often need more details about the health of a client in order to perform a critical illness risk appraisal. The underwriter may investigate any sickness or symptom lasting more than a few days to ensure that a major condition is not developing.

Transamerica’s immigration guidelines for critical illness insurance are based on a number of factors including:

• Theoriginalcountryrisk,whichtakesintoaccount:

– the general political, social and economic infrastructure

– the quality and availability of medical services

– high-riskregionswithinacountrywhereHIVisprevelant in the society

– specific risks presented by crime or terrorism

• HowlongtheclienthasbeeninCanadaandthemedicalhistory established in Canada. If the client does not have a doctor in Canada and has an existing illness or a medical condition and we are unable to obtain any medical data or history within Canada, the client may be declined for CI coverage.

Transamerica will request that clients have lived in Canada long enough to have an established medical history regarding their health.

For any clients who have been in Canada less than one year, a paramedical, a blood profile including a hepatitis screen and a urine specimen will be required.

Maximum face amount

Nannies up to $100,000

Clients under a Provincial Immigrant Nominee Program

up to $250,000

Landed immigrant (permanent resident)

Maximum critical illness limits per financial guidelines apply

While our immigration guidelines are reviewed on a regular basis, global politics are unpredictable and the risk profile of a specific client status can change within any given period of time, necessitating a review of current events by the underwriter.

New immigrantsOur critical illness protection rider has been designed for peoplelivinginCanada.Hereareourguidelinesfornewimmigrants:

A limited amount will be offered to the following

immigration status categories:


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Individuals for whom coverage is not available Unfortunately, we are not able to consider the following:

Life insurance Critical illness

1. Individuals with student permits or visas. X X

2. Individuals with temporary work permits.(See Life insurance

immigration guidelines chart for limitations.)

X

3. Refugees: Transamerica will not consider any application until resident status has been granted.

X X

4. Seasonal workers. X X

5. Individuals living outside of Canada. X X

Tip: To avoid unnecessary underwriting delays, please ensure you complete the travel question included in the application and provide details about past and future travel.

Tip: Always complete the full section on residency on the application and include the applicant’s number of years in Canada and resident status for income tax purposes.

Tip: For clients who have been in Canada for less than 12 months, provide information that illustrates their intention to stay in Canada.


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6. Foreign travel guidelinesAt Transamerica Life Canada, we understand the importance of travelling, and that it’s something more and more of your clients are engaging in. We are pleased to offer foreign travel guidelines that respond to the needs of your clients and that make it easier for your clients to experience the world while still getting the protection they need.

Some highlights include:

• Mosttraveluptotwelveweeksayeartocommon travel destinations will be considered standard

• Wecurrentlydeclinelessthan15countries,whichmeans your client still has almost 200 countries to explore

Foreign travel guidelines are subject to change, based on world events. Due to the frequent changes, we are unable to provide you with a list of restricted countries. Please contact your New Business Case Coordinator for current information.

The following websites offer useful up-to-date information about travelling:

• Foreign Affairs Canada: www.voyage.gc.ca/countries_pays/menu-eng.asp

• CDCHealthInformationforInternationalTravel: www.cdc.gov/travel

Getting the best offer: It’s all in the detailsThere are numerous risks associated with foreign travel, including, but not limited to, war and political unrest, disease, availability and quality of medical care, crime, civil unrest, environmental factors and unsafe conditions of transportation. Because of these risks, as well as the lack of clear, objective data on foreign travel mortality, insurers approach each situation with caution.

Providing Transamerica with as many details as possible on the items below can make all the difference in helping to get your client the best offer. Transamerica is looking more for a pattern of future travel than evidence of the occasional trip.

Make sure to provide full details on the application and any related questionnaires, such as:

Location, location, location!

Where are your clients going? Where have they been?

Duration of travel

The longer the duration of the trip, the greater the risk. Sometimes a very short trip to a dangerous spot can be acceptable, if the overall risk looks manageable.

Purpose of travel

• Business?Makesuretospecifytypeofbusiness,whether your client’s location will be at a branch office or a worksite in a remote area, etc.

• Visitingfamily?Includedetailssuchaswhetheryourclient will be staying with them or in a hotel.

• Vacation?Specifywhetheryourclientisgoingwith a tour group or on a solo trip, and where your client will be staying.

Frequency of travel

Is this a one-time trip, or is this a trip that your client will be making every year?

When such details are provided, Transamerica will have a better idea of the likelihood of future travel and the associated risks and will be able to feel more comfortable with the scenario, resulting in better ratings and rates for your client.

Tip: To avoid unnecessary underwriting delays, be sure to complete the travel questions in the application, providing complete details about future travel. To get the best offer, Transamerica must feel comfortable with the information and the travel scenario, so include specific details about where your clients are travelling, where they’re staying and the reasons for travel.

Good to know: Some extended travel may be considered rated, excluded or declined, depending on the country and duration of the stay.

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Transamerica reserves the right to request an APS at any time including:

• atanytimeforcause,i.e.,apotentiallyrateableimpairment(seepartiallistbelow)

• whentherehasbeenmedicalconsultationwithinacertainperiodoftimeotherthanforacold,flu,normalpre-natal or routine checkup (see table below)

• whentherehasbeenanyvisittotheemergencyroominthelastyear

7. Attending Physician Statement (APS) guidelines

Critical Illness

Age Face amount Reason

All ages All face amounts Visittothephysicianwithintwomonthsofapplication

Life Insurance

Age Face amount Reason

0–45 $2,500,000 and over Visittothephysicianwithinonemonthofapplication

46–60 $1,000,000 and over Visittothephysicianwithinonemonthofapplication

61–70 $500,000 and over Visittothephysicianwithinthreemonthsofapplication

71+ $250,000 and over Visittothephysicianwithinsixmonthsofapplication

Transamerica has internal guidelines advising when an APS is needed for cause. You can expect an APS for the following causes:

Life insurance Critical Illness

• Abnormalcardiactestandothertest

• Braindisorders

• Cancersandtumours

• Uterinepolypsunlessbenignhistologyconfirmed

• Cardiacproblems

• Congenitalheartdisease

• Lymphnodedisorder

• Multiplesclerosis

• Musculardystrophy

• Pancreaticdisorders

• Parkinson’sDisease

• Ifchildislessthansixmonthsoldandbornprematurely

• PSAabnormalities

• AbnormalPAP

• COPDandrespiratorydisordersforwhicharegularfollow-up is required

• Crohn’sDiseaseorulcerativecolitis

• Diabetes,non-controlledornon-compliantwithtreatment

• Endocrinedisorders,exceptlong-standingstablehypothyroidism

• Epilepsynotwellcontrolledorwithseizureinthelastthree years

• Familyhistoryofhereditarydisease

• Glomerulonephritis,orkidneydisordersotherthankidney stones

• Heartconditions

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Life insurance Critical Illness

• Significant

– seizures / epilepsy (or current)

– gastrointestinal problem

– rheumatoid arthritis problem

– endocrine disorders

– arrhythmias

– heart murmurs

– hypertension

– kidney disorders

– psychiatric illness, depression/anxiety

• Strokeorsimilardisorders

• Pastsuicideattempts

• Recentsyncope

• Ulcerativecolitisandothersimilardisorders

• IfstressECGdonewithcheck-upwithinlastyear

• Anynonroutinediagnostictestingwithinoneyear(echo, scan, etc…)

• Heartmurmurotherthanfunctional

• Hypertensionassociatedwithhyperlipidemia,smokingor obesity

• Musculoskeletaldisorderswithanylimitationortreatment other than anti-inflammatory

• Nonroutinediagnostictestdoneinthelastthreeyears

• Prematurechildlessthanoneyearold

• Significantpsychiatricillness,depressionoranxietyrequiring follow-up or treatment

• Skinlesionsforwhicharegularfollow-upisrequired

• Sleepapnea

• Vertigoorsyncopewithoutdefinitediagnosiswithinthe last three years

Keepinmindthatthislistofcausescoversonlysomeofthemorecommoncausesseen,butdoesnotlimittheordering of an APS for situations of concern that the underwriter may identify.

ATTENDINGPHySICIANSTATEMENT(APS)GUIDELINES

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Financial underwriting is used to justify the amount of insurance applied for. Underwriters determine the amount of coverage to allow by assessing:

For life insurance: The financial loss created by the untimely death of the proposed life insured.

For critical illness: The financial loss created by contracting one of the covered conditions of the proposed life insured.

To ensure the amount of coverage is the ideal amount for the proposed insured, the underwriter needs to understand his or her financial situation, including such aspects as the proposed insured’s personal and business annual income.

Refer first to our Insurance Amount guidelines (page 12) as this will give you an understanding of what we would consider a “reasonable” amount of insurance.

If your clients are within the guidelines, you are our key source of their financial information. By giving us a comprehensive picture of your clients’ financial situation up front, you can make the process more convenient for them, while also enabling us to make the underwriting decision faster. The following provides an overview of what we look for.

Importance of a cover letter from advisors At Transamerica, we recognize that each sale is unique, and take a “purpose driven” approach to financial underwriting. A cover letter from you explaining the financial need for the insurance amount applied for is helpful. To learn more about writing an effective cover letter, see the guidelines below.

8. Financial underwriting guidelines

Tip: Instead of writing a formal cover letter, these details can be provided in the remarks section of the application.

Tip: Instead of writing a formal cover letter, these details can be provided in the remarks section of the application.

If you have completed a needs analysis for your client, please provide a copy.

Cover lettersThe more details provided with the application, the better. By providing a complete picture of your client’s situation, you can help reduce processing delays and the need for underwriting requirements.

Although not required, cover letters are possibly the best tool you can use to accelerate the underwriting process. A detailed cover letter submitted with a Life Insurance Application can improve the turnaround time for your clients’ case. Cover letters can assist the underwriter to better understand the purpose of the insurance and assess your client’s health, lifestyle and financial situation by providing details not included on the application.

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To help you write an effective cover letter, here is the information we generally look for in personally-owned and

corporate-owned applications:

Personally-owned applications

Background and purpose Coverage amount Personal details Financial details

• Purposeofandneedforthe insurance

• yourclient’sinsurancehistory

• Informationregardingany in-force insurance

• Anydiscussionyouhavehad with a Transamerica underwriter prior to submitting the case detailing anything agreed to, requirements modified, etc.

• Explanationofreason(s)behind special ownership, beneficiary, payor and other arrangements

• Explanationofanypotential issues with completing underwriting requirements

• Howthefaceamountwas determined

• Thefundingsourceforthe insurance

• Thesourceoftheinitial premium

• Financialneedsanalysis done with your client

• Informationthatmaysuggest a lower risk of mortality: healthy eating habits, indications of a healthy lifestyle, etc.

• Professionalbackground,accomplishments and designations

• Abackgroundof,andthe underlying facts for, any underwriting risks/concerns

• Sensitivehistories,especially alcoholism, drug abuse, and psychiatric conditions

• Impairments,criminalrecords, bankruptcies, and/or driving records

• Detailsonunusualor potentially ratable occupations and/or avocations

• Detailsofpastandfuturetravel

• Proposedinsured’sincome and net worth (including details of assets and liabilities).

• Ifyourclientisapplyingfor a face amount of $1,000,000 or above, these details need to be captured on the application

• Third-partyverification,such as T4, investment portfolio, etc.

FINANCIAL UNDERWRITING GUIDELINES

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Next stepsUpon receipt of the application, Transamerica will perform a credit check, in addition to reviewing the information provided above.

Inspection reportsAn inspection report may be conducted, only with the applicant’s approval, if the policy applied for is very large or if there is anything uncovered that indicates that Transamerica needs additional information. For amounts starting at $5,000,001, we will require inspection reports.

An inspection report is a confidential interview, conducted by telephone. Your clients can schedule a time for the interview that is convenient for them and can feel confident that the interviewee will be a professionally- trained employee of a service provider authorized by Transamerica.

Forms you will need to completeIt is important to ensure that the following steps are taken:

1) Complete the Financial Questionnaire within the application

2) OrderaMotorVehicleReport(MVR)fromyour service provider

3) Provide one of the following additional pieces of information:

a) A cover letter (see the section “Importance of cover letters from advisors” above for details on what to include)

b) A third-party confirmation such as a Notice of Assessment (T1, T4)

c) A copy of the client’s investment portfolio statement, financial statement or bank statement

Corporate-owned applications

Background and purpose Coverage amount Personal details Financial details

• Purposeofandneedfor the insurance

• Thebusiness’sinsurancehistory

• Informationregardingany in-force insurance

• Anydiscussionyouhavehad with a Transamerica underwriter prior to submitting the case detailing anything agreed to, requirements modified, etc.

• Explanationofreason(s)behind special ownership, beneficiary, payor and other arrangements

• Explainanypotentialissues with completing underwriting requirements

• Howthefaceamountwas determined

• Thefundingsourceforthe insurance

• Thesourceoftheinitial premium

• Financialneedanalysisdone with your client

• Jobdetailsandpercentageof ownership in the company for the proposed life insured

• Detailsaboutloanagreements

• Projectionsonnewbusiness ventures

• FairMarketValue(FMV)of the corporation

• Incomeandnetworthofthe corporation

• Third-partyverification,such as financial statement and an accountant’s letter


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Client and third-party identification and verificationFor policies with face amounts starting at $5,000,001, Transamerica has contracts with vendors to provide inspection reports, which include third-party identification and verification. These vendors collect details about your client’s income and net worth from valid financial references, as well as specific information about the financial references themselves that allows for follow-up of information.

Acceptable sources for third-party verification include a financial advisor who is at arm’s length from the insurance sale and who is an accountant, tax lawyer, banker or any other advisor who has legitimate access to the client’s true financial situation (but who is not connected to the sale). This verification must include the source’s designation, as well as information on your client: unearned income, a breakdown of assets and liabilities, investment portfolio, T4 and T5 and net worth.

Client relations tip: By advising and preparing your clients ahead of time for the inspection report, you can help ensure that they feel comfortable and have a pleasant experience, This can greatly speed up the issuance of the policy.

An inspection report allows Transamerica to make the best offer possible to your client. By gathering important financial information, an inspection report provides a more complete picture of the financial circumstances surrounding the amount of insurance being requested.


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9. The underwriting process: What to expectInsurance is based on a rather uncomplicated premise: it is easier for a group of people to share the cost of an unexpected event than for a single individual to bear the inevitable burden. Before any group of people can share in the risk of an event happening, however, a risk appraisal must be completed.

The purpose of a risk appraisal is to fairly evaluate each individual so that all persons in a similar risk class fall in the same category, or group, and, as a result, pay the same premiums for similar insurance coverage. If insurance companies didn’t do this, everyone would pay the same amount, regardless of their risk class, and those who are healthy would, in effect, help to cover those who are less healthy, and that wouldn’t be fair.

How does critical illness underwriting differ from life insurance underwriting?There is a distinct difference between the underwriting of critical illness insurance and life insurance because critical illness insurance pays out when a disease is diagnosed and the insured survives the 30-day survival period, and not when a person dies from that disease. Because more people will be diagnosed with a disease than will actually die from that disease, the incidence rate for payment of CI claims would be higher than for life insurance and the underwriting chart will reflect this higher incidence rate with more stringent requirements.

The main difference between the two is risk factor analysis.

The insurance company determines what risk class an individual should be placed in based on many factors, including medical history, as well as physical condition at the time of application for the policy, family medical history and lifestyle attributes, such as whether or not the person smokes, drinks excessively, uses unprescribed drugs, has a bad driving record or is involved in any hazardous activities.

Together, all this information helps the insurance company arrive at a fair premium for each client. The lower the risk, the lower the premium charged. Simply put, the higher the risk, the higher the premium charged.

Risk factors such as family history, build (height and weight), and medical history are included in the analysis that an underwriter goes through when determining whether an individual can qualify for CI insurance and at what premium cost.

It is important that you understand critical illness insurance and the covered illnesses before you sell the product.

Your client should be encouraged to fully disclose all elements of family history including all respective dates and ages of impairments. Any non-disclosure of information or misrepresentation can lead to voided contracts and unpaid claims. The underwriting process can be made better and faster by ensuring that your client provides complete information on their health and the health of their family.

Different types of insurance measures different types of risk

Type of insurance Risk it measures What it measures Claim

Life Mortality Probability of death On death

Critical illness Incidence of illnessThe risk of being diagnosed with one of the covered conditions in the contract

On diagnosis of a covered illness (following a survival period)

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Using the Critical Illness Pre-Screening Checklist and providing clear and complete information on the application will help the underwriter fairly and accurately evaluate the risk. Do not hesitate to submit a memo with the application to elaborate on information you feel would be pertinent to the case.

Hypothetical (preliminary insurability) inquiries

Life insuranceAs an advisor, you will sometimes want to understand how Transamerica would assess a particular situation/medical condition before the sale is made in order to manage the expectations of your clients.

For life insurance cases, Transamerica offers a service that enables you to ask an underwriter the probability based on a brief description of illnesses or situations, the service also gives you an idea of the underwriting. This lets you advise your client of possible requirements and the potential application of an extra premium.

All provinces (except Quebec)

[email protected]

Quebec

[email protected]

Critical illnessAs the critical illness risk is different than life risk, with the chance of increased anti-selection, we will not accept preliminary insurability inquiries on critical illness. In the Canadian marketplace, all CI-covered conditions are standardized therefore any difference in underwriting decisions from company to company is highly unlikely.

Ratings

What is a rating?Certain factors such as our gender, age, family history, current conditions, lifestyle choices and whether or not you smoke can affect when you are likely to die. Depending on these factors, one individual may have a greater risk of dying earlier than another. If there is an increased risk of an individual dying earlier than normal, then the individual’s mortality is also considered to be higher than normal. An individual who presents a greater-than-average-risk with regards to mortality, may be charged a higher premium rate to offset that risk. In the insurance industry, individuals with a higher mortality are said to have extra mortality.

The increased risk, and thus the extra premium charged, for an individual is quantified using one of two methods:

• extrapercentagetables

• permanentandtemporaryflatextrapremiums

Extra percentage tablesWhen there are health issues, for example, elevated blood pressure, the extra percentage tables are used. The increased risk, or extra mortality, of an individual is quantified as a percentage where 100% represents the normally expected health risk (mortality). This percentage is then applied to the standard premium or cost of insurance.

As an example, consider two individuals, Anne and Sally. Both are female, both age 35 and both are non-smokers. However,Annehasahealthconditionthatincreasesherrisk of dying sooner than Sally, who is healthy. Therefore, Anne would receive a rating for elevated mortality. Say that Anne’s health condition has a rating of 50%, this would mean that Anne’s insurance policy would carry a rating of 150% (100% normal mortality + 50% extra mortality).

If Anne’s health condition improves over time, the rating may be reduced or removed if she applies to have it reviewed and if the underwriting is favourable with regard to the entire medical history. An application for a rating review can be made two years after the rating was applied.

THEUNDERWRITINGPROCESS:WHATTOExPECT

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In some cases, when the risk is particularly high (typically higher than a rating of 400%), an insurance company may not be prepared to assume the risk and the proposed insured may be declined.

Critical illnessCritical illness insurance is an important part of an overall financial solutions package but it can be frustrating to go through the application process only to have it come back with a rating, or to have it declined altogether. Becoming familiar with the underwriting process can help you understand why some cases are rated, and others are declined. That will assist you in generating new business, and help you place rated business.

When underwriting for critical illness, the underwriter must obtain full details of the family history and past history of all applicants. In family history, for example, the age of occurrence of a disease is more important than the date of death from the disease. It is also likely that it will be necessary to request more attending physician statements, to obtain the pathology of long-ago tumors, for example, or to request details of recent check ups (which may have influenced the applicant’s desire to obtain critical illness coverage).

Transamerica’s Critical Illness Protection Rider offers a maximum rating of +150% = (100% normal mortality + 150%) 250%). Due to the limited maximum percentage amount, you may see more declines on your critical illness business than on your life insurance business.

As critical illness is a benefit that is payable to the insured during their lifetime, anti-selective behaviour, when compared to life insurance applicants, may be higher. In fact, the experience in other countries, where the coverage has been available for longer periods, confirms the need for precise policy wording, as well as for tight and conservative underwriting, and complete analysis for both medical and financial risk.

When there is a critical illness rating does that mean the life insurance will be rated as well?

The short answer is no.

Remember that underwriting for critical illness insurance is more stringent because we’re underwriting the potential for diagnosis of a disease. Because we’re talking about diagnosis rather than death, the incidence is higher than it is for life insurance, and that means the underwriting chart used for critical illness is more stringent than for life insurance. If the risk is different, that means the underwriting is different.

Permanent and temporary flat extra premiums

PermanentThis approach calls for a fixed extra premium per thousand dollars of sum insured/face amount over and above the Standard premium charge. The additional mortality risk is likely to be present over an indeterminate period of time.

For example, Bob has a history of reckless driving and has received three speeding tickets over the last two years. Because those who drive recklessly are more likely to die sooner than those who don’t, Bob will receive a rating.

If Bob changes his driving habits and no longer speeds, he may apply after two years to have the rating removed or decreased.

Some avocations such as scuba diving or mountain climbing could draw an extra premium for the life of the policy or until the lifestyle of the insured has changed and an application is made to have it removed.

TemporarySimilar to permanent, this approach also calls for a fixed extra premium per thousand dollars of sum insured/face amount over and above the standard premium charge. However,unlikeapermanentflatextra,atemporaryflatextra is charged on a temporary basis or for a designated period of time. The extra premium may only be charged for a fixed number of years.


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For example, Gary is a hobby pilot and does not have enough flight experience time according to his record. In two years, he will have achieved his required number of flying hours. So Gary receives a temporary rating for those two years, which will drop off automatically without the need for review.

Reconsideration of ratings and declines

If your client receives a rating, he or she may be eligible for future reconsideration of that rating. Likewise, if your client has been declined, there may be circumstances under which we would review that decision. A reconsideration will only be possible if the overall medical history and/or lifestyle has improved.

Reconsideration of medical ratings is not always possible. Some conditions are unlikely to improve over time. For example, consider type 1 diabetes (insulin dependent). The longer the client has type 1 diabetes, the greater the risk of complications and thus the greater the mortality. As such, type 1 diabetic ratings are unlikely to be eligible for reduction in subsequent years.

Reconsiderations will help you deliver the rated policy to your client. It will also provide you with a basis to follow up with your client in the future with the chance to review the rating or to turn a declined individual into a client (insured).

Exclusions for critical illness

As explained earlier, in some instances there is an increased risk when assessing a critical illness risk compared with a life risk. For some conditions, instead of a rating, an exclusion may apply. When an exclusion is applied, the insured will cannot make a claim for the excluded condition since the condition is no longer being covered with his or her plan.

If an exclusion is applied, the contract will be amended outlining the medical condition that has been excluded. This will be shown on the Policy Amendment Pages which will need to be signed and returned as part of the delivery requirements in order to settle the policy.

More common medical exclusions for critical illnessA few of the more common medical exclusions include any condition, disorder or illness resulting directly or indirectly from:

• multiplesclerosis

• Alzheimer’sDisease,Parkinson’sDisease

• primaryorsecondarymelanoma

• certaintypesofcancersuchasthyroidcancer,coloncancer or breast cancer, only to name a few


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The following case study will help illustrate the importance of current health in underwriting critical illness insurance:

An elevated cholesterol/hdl ratio increases the risk of having a coronary or vascular event. This means a higher probability of having a heart attack or a stroke.

Sex AgeSmoking

statusGeneral health Lab findings Underwriting decision

Male 47 NS Good Cholesterol/HDLratioof8.5Critical illness decision: Rated at 125%

Life decision: Standard

The following case study will help illustrate the importance of family history in underwriting critical illness insurance:

The reason for the critical illness rating is because there is a risk that the client will be diagnosed with diabetes at the same age. This means the client has an increased risk of having blindness, kidney failure or contracting a heart condition as a result of the diabetes, which are conditions covered under the critical illness plan.

Sex AgeSmoking

statusGeneral health Family history Underwriting decision

Male 35 NS GoodMother diagnosed with diabetes at age 45 and sister diagnosed with diabetes at age 39.

Critical illness decision: Rated at 125%


The CI will have an exclusion for multiple sclerosis and blindness since an optic neuritis could be one of the first symptoms of having a diagnosis of multiple sclerosis or blindness.

Sex AgeSmoking

statusGeneral health Medical history Underwriting decision

Female 28 NS GoodHadanepisodeofopticneuritisfiveyearsago;investigationwasnormal

Critical illness decision: Exclusion for multiple sclerosis and total blindness


The following case study will help illustrate the importance of medical history in underwriting critical illness insurance.


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This section of the Guide will help you understand everything you need to know about our underwriting process. We will explain the journey your client’s application will take from the time you submit it to when the policy is issued, as well as provide details about our underwriting programs and tips on preparing your clients for the process. With a better understanding of the process, you will be able to ensure your policies are delivered quickly and smoothly, and that your client remains engaged throughout.

The process: Your client’s application journey

10. The application journey

Distributor office mails application to theTransamerica office.

Application arrives at Transamerica’s New Business department, which then:

• verifies that the information is complete• inputs the application on the Transamerica computer system and gives the file to the underwriter

The underwriter reviews and determines whether to issue coverage right away or to request additional information or reports to determine whether applicant is an acceptable risk.

New Business department issues policy contract and mails it to the distributor's office for delivery to the policyowner. Advisor commission is paid.

An AES e-mail notification is sent requesting additional information, reports or other requirements.

The distributor sends additional information, reports or requirements.

Issue coverageAdditional report required

MIB search isconducted.

Applicant with the assistance of the advisor, completes the life insurance application.

Advisor orders anymedical requirementsas per the UnderwritingRequirements Chart.

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What is MIB Group, Inc.?MIB Group, Inc. (formally known as the Medical Information Bureau) is a non-profit organization that protects insurers, applicants and policyholders from insurance fraud and misrepresentation. MIB Group, Inc. collects applicant data within a central database. When your client applies for a life insurance product, a search is done on that applicant through this database. Because of this valuable service, we are able to keep our rates low and approve more cases faster. The information found is treated as confidential information and is only available to the underwriter assessing the application. As with all private, personal information, your client may access the information through MIB Group, Inc. and correct any inaccuracies.

What information does the MIB have?

When an application is made to an MIB member company, any information that is of significance concerning the client’s health, lifestyle or financial situation or that may affect his or her longevity is submitted to, and stored in, the MIB database.

Stored data includes information regarding medical conditions, medical tests, lifestyle information, financial information and/or activity index. There is also non-medical information about such things as potentially hazardous hobbies, or the results of a motor vehicle report showing a poor driving history.

All information is encrypted using a code system to ensure that the data remain confidential and protected.

If you’re interested in learning more about the MIB

Group, Inc., please refer to the MIB Group, Inc.

website at www.mib.com.

For more details about the MIB Group, Inc., please

review the “Notices” section of the application.

The paramedical: What your client can expect For those clients who require a paramedical and/or medical exam, a health care professional from one of our approved service providers will arrange a time and place for the exam that is convenient for your client. The health care professional will ask your client questions related to medical history, take height and weight measurements, as well as blood pressure readings, and will request either a urine or blood specimen, or both, based on the underwriting requirements chart.

Where is the exam performed?

At your client’s convenience, the health professional will come to your client’s home or workplace, or your client can arrange to visit the provider’s office.

It is important to provide your clients with information on what to expect and how to prepare for the exam.

• Letthemknowwhatisgoingtohappen,howlongitwill take and who will be coming to meet with them.

• Advisethemtowearshortsleevesoraloose-fittingtop at the time of the exam. There is no disrobing required.

• Advisethemtodrinkaglassofwateronehourbeforethe exam and to avoid caffeine before the exam.

• yourclientsshouldavoidanyvigorousorstrenuousexercise prior to the exam. Clients should also avoid food intake within four hours of the exam. If they are currently on medications, experiencing any health problems, menstruating or on a high-protein diet, please have them notify the nurse.

• yourclientshouldhaveapictureIDavailableatthetime of the exam.

• Advisethemtolimitsaltandhigh-cholesterolfoods 24 hours prior to the exam.

• yourclientshouldhaveallimportantinformationonhand for the exam, including:

– names, addresses and numbers of any doctors or clinics visited in the last five years

– names and dosages of current medications

THEAPPLICATIONJOURNEy

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Estimated examination time

• 10to20minutesforblooddrawandurine

• 20to30minutesforparamedicalexamination,blooddraw and urine

• 30to45minutesforparamedicalexamination,blooddraw,urineandEKG

Client relations tip: Set your client’s expectations for the amount of time involved and the evidence that will be required.

Good to know: Generally speaking, percentage and permanent extra premiums can only be reviewed after two years and new medical evidence will be required. The change of the rating is subject to the new evidence received and the assessment by the underwriter at that time.

Good to know: For the rating of any of the lives to be reviewed on a joint life policy, new medical evidence is required on all lives insured. The rating reconsideration may be declined if any of the lives insured are no longer in the same risk class as when the policy was originally issued.

Interested in shorting the turnaround time of your applications requiring paramedicals?Using the new ePara® could save up to nine days on standard turnaround times.

In March 2012 Transamerica began an ePara® pilotconductedbyHooper-HolmesCanadaintheGreater Toronto Area. In fact, we were one of the first in the industry to utilize this new technology. So far the results have been incredible. With this new technology we are now able to offer your clients a time savings of up to 35%. (Our standard 26 days for turnaround time from the time an application is received to the time it is mailed was reduced to 17 days.)

How it works: ePara is a digitized paramedical app that resides on a tablet device to give our health professionals an efficient tool to complete paramedicals electronically. It is the same paramedical visit your clients are used to but instead of a paper format the information will be captured electronically!

Here’s a quick overview of the benefits to you and your clients: • improvedturnaroundtime

• paramedicalreceivedbyTransamericaelectronically – same day

• potentiallyfasterpolicyissue

• ensuresaccuracyandcompletenessofallparamedicals

• eliminatespaperworkormisplaceddocuments

• enhancedsecurityfeatures

• noinformationresidesonthedeviceafterithasbeen transmitted

• environmentallyfriendly

You can expect to see the ePara being rolled out to morelargerCanadiancitiessuchasVancouverandMontreal soon!

THEAPPLICATIONJOURNEy

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11. Getting your clients’ applications processed fasterIn this section of the guide, we will discuss the keys to faster processing of your clients’ applications. In addition to pointers that will help you submit more “in good order” applications, you will also learn about the importance of cover letters.

The biggest cause of processing delays is “not in good order” applications. This means applications that are incomplete, that have inconsistent or incorrect information or that just don’t have enough information. Remember the following pointers to ensure that your clients’ applications are processed without delays and to help Transamerica provide your clients with the best possible offer.

1. Complete the application!

Remember to answer every applicable question on the application, and review your client’s application once completed to ensure nothing has been missed. Any missing information will require us to issue an amendment that your client will need to sign. Common omissions that are result in delays include the type of insurance, the face amount, the relationship of the owner to the proposed life insured(s), the distribution code and advisor information.

2. Remember W5!

For any questions on the application to which your client answers “yes,” ensure that you include a detailed explanationthatcoversthe5Ws(and1H):what, when, why, where, who and how. Answering these questions completely is essential to helping your client qualify for our non-medical underwriting program. Without these details, the underwriter may need to order additional underwriting requirements.

3. Watch for inconsistent or incorrect information.

Errors and inconsistencies that we often find on applications include those related to:

• Theclient’sage(theillustrationsoftwarecanhelpyoudetermine the correct age for the premium)

• Theclient’sbirthdate(notetherequestedformatforthe date)

• Thebreakdownoftheproceedsofinsurance,listedasshare % on the application. (The total percentage for the shares must add up to 100%. If there is a primary and contingent owner, the shares for each should add up to 100%.)

• Theillustration(Alwayscheckthattheinformationonthe application matches that of the illustration!)

4. Include questionnaires where needed.

If your client responds “yes” to certain questions on the Life Insurance Application, you will be prompted to submit an additional underwriting questionnaire. These questionnaires are used to provide the detailed information required by the underwriter for case assessment. When submitting an underwriting questionnaire, check to ensure the proposed insured has duly completed, signed and dated the questionnaire. We have many types of questionnaires, including Diabetic, Aviation, Blood Pressure, Respiratory, Smoking/ Tobacco,MotorVehicleRacing,AlcoholUsage,DrugUsage, Seizure, Chest Pain, Parachuting/Skydiving, BackPain,ScubaDiving,Headache,NervousDisorder,Mountaineering, Gastrointestinal, Foreign Travel, Arthritis, Occupation and Driving.

For a printable tip sheet of common mistakes made on applications, check out our “Tips to speed up processing of applications” on Transamerica’s website (www.transamerica.ca).

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For more information...To learn more about insurance plans from Transamerica, check out our many other training and educational tools. With webinars,eLearningcourses,andateamofsalesdirectors,we’rewithyoueverystepoftheway!VisitTransamerica’swebsite at www.transamerica.ca, or contact your sales director to learn more.

British Columbia Western Canada Central & Eastern Canada

1-866-669-6117 1-866-298-2312 1-888-245-5501

Tip: Take the time and the space to complete the available questionnaires and to provide detailed information about your client. Providing the underwriter with these details can help to decrease processing delays and ensure your client is getting the best deal.

Tip: Transamerica uses the proposed insured’s age nearest to his or her birthday when determining underwriting requirements. Therefore, if a person is age 55 and four months, age 55 is used for underwritingpurposes.However,ifapersonis age 55 and seven months, they are considered age 56 for underwriting purposes.

GETTING YOUR CLIENTS’ APPLICATIONS PROCESSED FASTER

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Notes:

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Notes:

WFG-LP1218 3/14

Transamerica Life Canada is a leader in the Canadian marketplace, providing a broad range of individual life

insurance and protection products and services, all designed to help Canadians protect against financial

risk and transform their tomorrows. Distribution is through a number of channels, resulting in a national

network of thousands of independent advisors. For over 100 years, Transamerica Life Canada has been

delivering on its promises and intends to continue that strength and stability to be able to keep making

the things that make tomorrow better.

Transamerica Life Canada is an Aegon company. As an international insurance, pensions and asset

management company based in The Hague, Aegon has businesses in over twenty markets in the

Americas, Europe and Asia. Aegon companies employ over 23,000 people and have millions of

customers across the globe.

Giving back to the community in different ways is a part of who we are at Transamerica Life Canada.

Each year, we allocate funds to our in the spirit of hope charitable giving program which donates to

numerous non-profit organizations that serve health, community and well-being causes across the country.

500 - 5000 Yonge StreetToronto, Ontario M2N 7J8

www.transamerica.ca

™ prosperity universal life and prosperity term are trademarks of Transamerica Life Canada.® Transamerica and the pyramid design are registered trademarks of Transamerica Corporation. Transamerica Life Canada is licensed to use such marks. All other trademarks are those of their respective owners.

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