Most of us have seen the advertisements on TV, or heard them on the radio: life insurance with no medical tests and no health questions. How can this be possible?
Insurance companies are able to offer this type of coverage and are still able to make a profit because of the following three caveats:
1. The premium cost is significantly higher than traditional life insurance policies and simplified issue life insurance policies, which have no medical tests, but do have a short series of health questions.
For example, the following is a price comparison between BMO Guaranteed Life Plus, which is sold direct via BMO website and its call center and Assumption Life’s Golden Protection Simple Issue plan, which is sold via its broker network:
A face amount of $14,400 for a non-smoking male near the age of 65 costs $100 a month.
A face amount of $7,100 costs a smoking male near the age of 65 $100 a month.
A face amount of $14,400 for a non-smoking male near the age of 65 costs $84.06 a month.
A face amount of $7,100 costs a smoking male near the age of 65 $67.22 a month.
*Premium costs and plan details are as of January 2013
2. Most of these policies come with face amounts of 25,000 or less.
3. Most guaranteed issue plans have a graded death benefit. This means the insurance company will not pay out the full amount if the insured dies by a non-accidental death in the first two policy years.
4. Most guaranteed issue providers will limit the death benefit for non-accidental death to a return-of-premium, plus interest.
Life Insurance and High Blood Pressure: Background Getting Life Insurance with High Blood Pressure What is a Rated Policy? Can…
Life Insurance and Cancer: Introduction Does Life Insurance Cover Cancer? Can You Get Life Insurance with Cancer? Different Types of…
Life Insurance and Diabetes: Introduction Can You Get Life Insurance with Diabetes? Different Types of Life Insurance Explained Standard Life…
Life Insurance and Depression: Background Can you Get Life Insurance with Depression? Does Life Insurance Cover Depression? What Type of…
Life Insurance during and after the pandemic Life insurance has always been a part of life for many Canadians, either…
The latest COVID-19 developments The coronavirus (COVID-19) pandemic continues to spread around the world at an alarming rate. In April,…