Understanding Deferred Death Benefits

Photo by Lori Greig

There are a lot of deferred death benefit options with no medical tests or questions.

A deferred death benefit life insurance policy is one which limits the payout for the first few policy years on non-accidental deaths. Usually, the deferment period is two years, although some plans extend the deferral period for up to four years.

All guaranteed issue policies come with a deferred death benefit. The reason for this is guaranteed issue policies have no health questions and have no medical tests, so the insurance company has to build-in a potential safeguard against applicants who have serious health issues.

Some simplified issue policies also come with a deferred death benefit. Simplified issue policies have no medical tests, but have a short series of health questions. Popular simplified issue policies are Canada Protection Plan‘s Deferred Life and Deferred Term Policy and Assumption Life‘s Golden Protection Deferred Plan.

These policies both pay out a return-of-premium plus interest, if the insured passes away by a non-accidental death in the first two policy years. This is the same deferred option found in many guaranteed issue policies. However, the premiums are lower on these policies and the available face amounts are higher.

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