Older Canadians without life insurance may think they don’t have much chance of obtaining coverage due to their age and pre-existing health conditions. But luckily, there are options available that will allow you to protect your loved ones from expenses incurred upon your death … and maybe even leave them a bit of a nest egg.
Many do not realize that not all life insurance policies require a medical exam. Just about everyone has some sort of minor (or major) health issue, and life insurance is available for most.
Simplified issue insurance
Although simplified issue insurance does not require a medical test, you will need to answer health and lifestyle questions (and be expected to be honest) in order to gain coverage.
Simplified issue insurance is a type of life insurance policy that offers a simplified and streamlined application process compared to traditional life insurance policies. While it is not as straightforward as guaranteed issue insurance, simplified issue insurance still requires minimal underwriting and is generally more accessible to people who may have some health concerns.
The key characteristics of simplified issue insurance include:
Reduced underwriting: Instead of an intensive medical examination and a detailed health questionnaire, you will be asked to (honestly) answer a few basic health-related questions that are designed to assess your general health and risk factors.
Faster approval: Simplified issue policies are approved more quickly than traditional policies, with applicants often obtaining coverage within a matter of days.
Coverage amounts: Total payouts for simplified issue insurance are usually limited to $150,000.
Premiums: While simplified issue insurance generally has lower premiums than guaranteed issue policies, it may have slightly higher premiums compared to fully underwritten policies. Premiums are based on the information you provided in your application.
Simplified issue insurance is a good choice for people who want quick and easy access to life insurance coverage without the extensive underwriting process required for traditional policies. However, if you have been declined for other life insurance policies within the past two years, you will not be eligible for simplified issue insurance, unfortunately.
Guaranteed issue insurance
Guaranteed issue insurance is just that … guaranteed. It is designed to provide coverage without the need for a medical examination or a health questionnaire, and is guaranteed even if you have been declined for life insurance in the past two years.
Here are some key features of guaranteed issue life insurance:
No medical underwriting: You will not need to undergo a medical examination or answer any health-related questions for guaranteed issue insurance. These policies are accessible to those who may have serious health issues or a history of being declined for other life insurance policies.
Guaranteed acceptance: As long as you meet the age requirements specified by the insurance company (usually between 50 and 85 years old), you are guaranteed acceptance for this type of policy.
Limited coverage amounts: Guaranteed issue life insurance coverage is often limited to $25,000.
Higher premiums: Because the insurance company takes on more risk by accepting applicants without considering their health, guaranteed issue life insurance tends to have higher premiums compared to other types of life insurance. Premiums are often fixed and do not increase with age.
Waiting period: Many guaranteed issue policies come with a waiting period, typically one to two years, during which the full death benefit is not paid out if the insured individual dies. If the insured person passes away during this waiting period, the beneficiary may receive only a return of premiums paid or a percentage of the death benefit.
Reasons why a life insurance policy may not pay out
Most rejected claims are due to material misrepresentation, which is defined as “a promise, false statement, or omission of facts that would cause another party to act differently if the whole truth were known.” A common material misrepresentation is failure to disclose a major medical issue. Other reasons why life insurance will not pay out include death by suicide within the first two policy years, illegal drug overdose, death while participating in an illegal or an excluded activity, and death after the policy lapsed.
Common reasons to be denied a life insurance policy
With the exception of guaranteed issue and simplified issue insurance, fully underwritten policies may be denied to those with any of the following ailments or lifestyles:
- Terminal illness with a limited life expectancy
- Advanced cancer
- HIV/AIDS (specialized life insurance products for HIV-positive individuals may be available from specific insurers)
- Kidney failure
- Heart disease, depending on the severity and type
- A history of strokes
- Neurological disorders
- A history of substance abuse
- High-risk occupations or hobbies, such as skydiving or deep-sea diving
Trust Lane’s for all of your Alberta insurance needs
At Lane’s, you will be partnered with an insurance specialist who will be your personal contact for all things life insurance. Even though we may not be your provider, we are always your source for good information. Contact us at our Calgary, Banff, Edmonton and greater Alberta offices today.