NEM Increase Project

An explanation of the issue:

As small employers grow in number of staff, they become eligible for increases to the Non-Evidence Maximum (NEM) levels for Life and LTD coverage.  An NEM is the amount of coverage an insurer will offer without any medical questions (evidence) being asked for.  As an example, a small group with 5 staff might have a $1,500 LTD NEM.  If an employee earned $36,000/year, or $3,000 a month, they might be eligible for a ? LTD benefit that would pay a $2,000 monthly benefit (in the event of total disability).  In this example, the first $1,500 of benefit would be provided with no questions asked. The next $500 worth (to get to the $2,000 total) would need to have the employee respond to number of medical questions, and if approved, the employee would be approved and move to the $2,000 level of eligibility.

The problem begins when the employee is declined the excess ($500 of coverage).

Now let’s assume that the group grows through the year from 5 to 10 staff, and is now eligible (due to that growth) for an increase in the NEM to $2,500.  The advisor requests the NEM increase, and it is implemented at the renewal.  This means that the next employee hired (at the same earnings) would be provided the $2,000 benefit with no questions asked (as under the $2,500 limit). 

The problem is that many insurers would leave that previously declined employee at the older, lower level of coverage ($1,500).  As a result, the employee is disadvantaged based solely on their date of hire.  I don’t think that this employee inequality is good.

I’ve done a quick video on LinkedIn if you’d like to watch HERE


Here is the interesting part.  Most insurers would actually move the employee to the new NEM, if any of the following situations occurred.

  1. The group moved to another insurer with a higher NEM.  The old insurer could then take the case back (a year later) and would grandfather the coverage and add the employee(s) at the new higher NEM level
  2. The employee left the company and then was re-hired (after 6+ months). The insurer would then take the re-hired employee(s) back at the new higher NEM level
  3. The benefit (such as LTD) was dropped and was then reinstated at a later date.  The insurer would then accept the employee(s) at the new higher NEM level

In all these scenarios the employee(s) would be moved to the higher NEM. So why not, when the advisor and their client remain loyal to the insurer, are they not in reverse.


We posed the following question to insurers…

A employer has a group plan in place with life &/or LTD coverage. The employee count increases through the year, and as a result they are entitled to an increase in the NEM level(s). At renewal, the advisor (with client consent), makes a request that the plan be amended to the new higher increased NEM.   Do you…. 

1.  Increase any employee(s) to the new NEM that have not already applied for the excess LTD above the NEM?
2.  Increase any employee(s) to the new NEM that have not already applied for the excess LTD above the NEM, AND also increase those that are in the process of medical underwriting?
3.  Increase any employee(s) to the new NEM that have not already applied for the excess LTD above the NEM, AND also increase those that are in the process of medical underwriting? AND increase those that were previously declined?
4.  NOT offer to increase the NEM, if there is anyone that was previously declined?
5. Handle these situations in a different way? If so, please provide details.

The survey responses are as follows…

Alberta Blue Cross - 
BBD (Empire) - 2
Camden - 
Canada Life (GWL) - 3 (now all case sizes)
The Chamber Plan - 3 
Chubb - 
Cooperators -                      
Desjardins - 3
Empire -   2 (to be confirmed)                
Encon (SSQ) - 3 (some late app./1- life u/w limitations)
Equitable - 5 (We consider this an amendment to our policy. When requested to review,
 we consider the specifics and underwrite the request of the policyholder and Advisor.)
Fenchurch -  3              
Industrial Alliance  - 
Group Health - 
Lloyds - 3
Manulife - 3 (to be confirmed)
Medavie Blue Cross -  
Pacific Blue Cross -     
RBC - 
RWAM (La Capitale) -     
SSQ -      
Sun - 3 (confirmed for SunAdvantage)
If your providers' response is not included, please share their response. Last updated 1/15/20

Great West Life/Canada Life was the industry leader in this area.  They began the practice of increasing declined employees (held at an NEM) on their small groups (under 35 lives) to the new, higher NEM as far back as early 2013.


Manulife announced that they were changing and aligning their practice Sept. 15th, 2014


Sun Life announced that they were changing and aligning their practice Feb. 4th, 2020


We applaud the many insurers for taking the time to respond to the survey and who work with us to ensure both advisors, our clients and their employees are treated fairly and equitably.

It’s joint initiatives like this that help bring the industry together rather than creating reasons to be divisive.

We look forward to working together on other initiatives in the near future.