No doctors to see
with simplified issue.
Photo by Montage Communications
One of the most trying things about obtaining life insurance are the medical tests involved. Simplified issue policies have no medical tests and only a few health questions.The number of questions depends on the company and plan. The following are some additional simplified issued life insurance facts:
1. The policy may have a deferred benefit or an immediate death benefit.
Simplified Issue policies that have fewer health questions, generally come with a deferred benefit, meaning the death benefit will be limited to a return-of-premium plus interest in the first two policy years. Simplified Issue plans that have more questions are usually available with an immediate death benefit.
2. Coverage can be available on a term or permanent basis. Term policies have premiums level for a stated term and the coverage either expires, or the premiums increase, after that term. Permanent policies have level premiums and coverage for life.
3. The coverage on a permanent simplified issue policy is available on a Life Pay or Limited Pay basis. Life Pay policies have premiums payable for life. Limited Pay policies can be paid-up in a limited number of years, the most common type of Limited Pay is paid-up in 20 years - meaning no more payments are made after 20 years, but you are still covered after the 20th year.
4. The death benefit is generally tax-free.
5. The policy owner can choose their own beneficiary. The beneficiary must have an insurable interest, like a spouse, child, or business associate.
6. Simplified issues policies h higher face amounts and lower premiums than guaranteed issue plans.
For more details on no medical life insurance in Canada, please contact us a 1-866-899-4849 or visit our No Medical Life Insurance Quote Page.
In what circumstances are death benefits not tax- free?
Thanks for the good question.
The general rule of thumb is that tax needs to be paid at some point. So if the life insurance premiums are being paid with after tax dollars, then the death benefit will be tax-free.
On the other hand, if a company were to purchase key-person life insurance and writes-off the premiums as an expense, part of the death benefit could be taxed if and when its eventually paid to shareholders.
Hopefully that makes sense, feel free to let us know if would like clarification on a specific case. Thanks