RBC and BMO have almost identical guaranteed issue plans.
BMO Insurance and RBC Insurance are battling it out with independent brokers for a share of Canada’s guaranteed issue marketplace.
These policies, generally used to fund final expenses, are an after thought to many brokers, but Insurance companies are starting to see the value in offering these plans.
Both BMO Insurance and RBC Insurance offer their plans direct and below is a comparison. The coverages are almost identical, but there are truly some slight nuances that separate them.
BMO Insurance RBC Insurance
Plan Name? Guaranteed Life Plus Guaranteed Acceptance Life
Issue Ages? 40-75 50-75
Coverage Bands? Yes, six coverage bands based on premiums:
$20, $30, $75, $100 and $120 a month for $3,500, $5000, $10,000, $15,000, $20,000 and $25,000 in coverage.
Accidental Death Built-In Top Up? Yes, five times the basic face amount.
Two-Year Waiting Period on No Accidental Deaths? Yes
Discount for Non-Smokers? Yes
Are there Health Questions? No, just a smoking declaration question.
Premiums for a 60-year-old, male non-smoker? $15,000 – $80.28 a month $13,050 – $75 a month
Broker sold Guaranteed Issue plans include The Edge and Bingham Group Services Guaranteed Issue Plan, underwritten by Foresters.
Hard to insure applicants should always first see if they qualify for simplified issue life Insurance plans, which have lower premiums, higher face amounts and can provide coverage from day one.
Simplified Issue plans have no medical tests and a short series of health questions. Some plans have as few as two questions.
Per the example given above, “Premiums for a 60-year-old, male non-smoker? $15,000 – $80.28 a month $13,050 – $75 a month”, these bank-direct policies are ok if the person is certain or at least nearly certain to die within less than 15 years. Otherwise, the return on investment turns negative, and the premium principal exceeds the amount claimable.
If investment return is factored in, the “break-even” period is shortened accordingly.
These “bank-direct” offerings are extremely expensive and uncompetitive, and should be considered only as a very last resort, after all other venues have been explored.
Agreed Ami. Guaranteed Issue are the most expensive and least desirable type of life insurance. In many instances even seemingly unhealthy people qualify for Simplified Issue policies which have a short series of health questions and premiums are often 1/2 that of Guaranteed Issue plans and the coverage can start from day one.
One thing to be aware of. We sometimes suggest applying for say CPP Simplified term first, then apply for a medically underwritten plan. If we get a better deal, cancel the CPP plan.
However be aware that the MIB in the first 6 months of a new inquiry, i.e. CPPs, will advise the first insurer of any subsequent activity. With the medically underwritten plan, a lot more information about the insured is collected. If the second application raises information that would have caused CPP to decline, they can and will rescind their policy. Pay attention to the banner at the top of the application which says they can consider other information not asked as part of the application.
Good point Richard. That’s an important consideration.