Page 34 - iA Excellence -Field Underwriting Guide - Updated on July 2019

Financial underwriting

Financial underwriting is one of the most complex and least-understood aspects in the field. In a contract
of disability insurance (except for our Universal Loan Insurance), there is a direct relationship between the
benefit amount applied for and the applicant’s earned income. Therefore, it is very important to establish
the earned income correctly.

When assessing the risk for disability insurance, iA Excellence needs to keep in mind that insureds should
not earn more when disabled than they would if they were working full-time. Otherwise there would be no
incentive for the insured to return to work.

Earned income

Earned income is the primary basis for determining the maximum monthly benefit an applicant could apply for.

For underwriting purposes, income is earned if it stops or reduces significantly when the applicant becomes
disabled.

Determining the eligible monthly income
BASIC CRITERIA
For a salaried applicant, the eligible monthly income is based on the annual salary, plus bonus if any, before
taxes.
For business owners, our Superior Program and Acci-Jet Program offer applicants a choice between basing
their available monthly benefit on their gross income or their net income, based on their share in the
business. However, in order for applicants to choose their gross income, their business must show two
past years of profits.

This comparative calculation can help an applicant choose between gross or net income:

Net income Gross income
Net business $ Gross business $
revenues revenue
+ –
Salaries
Insured's salary $ (except the $
insured's salary)
= =

Total (1) $ Total $

X 50% =
New total $
x
% of share % (2) $

The annual income is the greater of (1) and (2) $

PLEASE NOTE : The calculation of the gross or net income
34 must be based on the applicant’s share in the business.

For exclusive use by Financial Advisors