LTD 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 an 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 require to the employee to respond to number of medical questions, and if approved, the employee would then move to the $2,000 level of coverage.

The problem begins when the employee is declined the excess ($500 of coverage) and held at $1,500.

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 of $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 for any party.


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

Benefits Canada has now picked up the story HERE

We now have almost 79.5% of in the industry in alignment (with another 10% pending change). I’d call that a win.


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 return?


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 - (pending)
BBD (Empire) - 3
Camden - 3 (follows their market partners)
Canada Life (GWL) - 3 (now all case sizes)
The Chamber Plan - 3 
Chubb - 
Cooperators -  3                   
Desjardins - 3
Empire - 3              
Encon (SSQ) - 3 (some late app./1- life u/w limitations)
Equitable - 3 
Fenchurch - 3              
Industrial Alliance  - 
Group Health - 
Lloyds - 3
Manulife - 3
Medavie Blue Cross - (pending)
Pacific Blue Cross - (pending)
RBC - 3
RWAM -  1 (if an amendment is being processed increasing NEM’s, any employee who was previously declined, closed, 
or is pending would be held at their current amount of coverage and would not be eligible to increase to the new NEM.)
SSQ - 3  
Sun - 3 (confirmed for SunAdvantage)
If your providers' response is not included, please share their response. Last updated 6/1/20

2013 – Great West Life

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.


September. 15, 2014 – Manulife

Manulife announces that they were changing and aligning their practice 


February 4th, 2020 – Sun Life

Sun Life announces that they were changing and aligning their practice 


February 28, 2020 – EMPIRE LIFE
Our core underwriting team has met regarding our handling of NEM increases for those previously declined.
Our current process for No Evidence Limit (NEL) increases is to hold those who were previously declined coverage, but allowing those who did not, proceed with (NPW) evidence to increase to the new NEL or their eligible amount, whichever is lower.
Effective immediately (Feb 28, 2020), our procedures are being updated to:
For in-force customers for No Evidence Limit increases we will allow those who were NPW’d or previously declined excess coverage to increase to the new NEL or their eligible amount, whichever is lower.
In our core business, we are not going back to review any groups, where we increased NELs and we held plan members, due to being declined excess, at their current volume.  This is being handled on a go-forward basis only, starting today.
Thanks for helping us stay current!

May 29, 2020 – RBC

Great to see RBC come to the table and put our clients first.


June 18, 2020 – Co-operators

Great to see Co-op add their name and put our clients first.


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

Benefits Canada has now picked up the story HERE

We now have almost 75% of in the industry in alignment (with another 10% pending change). I’d call that a win.


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.

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.


This project was an initiative of Dave Patriarche, the founder of CGIB. CGIB is an association dedicated to advisor education and not an advocacy group. The results posted here are for general public reference only and should not be construed as a CGIB initiative, or that it has been supported by CGIB members in any way..