Insurance websites offer numerous articles about ways to reduce your life insurance costs, but there is a particular category of people who cannot use many of these tips since the only policies they qualify for are life insurance no medical or guaranteed issue.
These type of insurance have both positive and negative aspects. On the positive side, they come without medical tests and, in some cases, without any medical questions. On the negative side, you pay more for the coverage and the amount of coverage you can get is limited (typically under $500,000).
Today we will take a closer look at this type of insurance and focus on ways to reduce its costs.
So How Much Can this Type of Insurance Cost?
Here are a few examples of life insurance no medical:
- Male age 34, non-smoker with history of Crohn’s disease, diagnosed at age three and has stage II colon cancer.
Policy: Annual rate – $2,210 for a Term 10 policy, coverage of $1,000,000 with colon cancer and gastro-intestinal tract exclusions.
- Female age 36, non-smoker, history of ovarian cancer, stage II, diagnosed three years ago, treated with surgery and chemotherapy with completion of treatment two years ago.
Policy: Annual rate – $870 for a Term 10 policy with coverage of $500,000 with an ovarian cancer exclusion.
Given the fact that life insurance no medical (also called guaranteed) policies are not cheap, we collected 20 ideas for how to reduce costs for these types of policies.
Ways to Reduce Your Life Insurance No Medical rates
1. Demonstrate stability: Pre-conditions are drawbacks for insurers, but the more time between your last medical incident, such as a heart attack, and your application for no medical insurance, the better. When you demonstrate that your health is stable, you get a better rate.
2. Drop unnecessary riders: Insurance policies are customizable with riders, but you don’t need them all. Read and select them carefully. For example, no medical life insurance policies still often offer extra riders like an accidental death benefit, which is not a good value.
3. Smoking impacts your health and insurance rates: Give up those cigarettes at least a year before you apply for a no medical policy. If you don’t, you’ll pay about double what a non-smoker pays. If you think you can get away with the occasional cigar, think again! Insurance companies give you the smokers rate for anything more than one cigar per month.
4. Don’t drink excessively: Here is another reason to reduce your alcohol intake. Drinkers who consume three or four alcoholic beverages per day see an increase of up to 50 per cent on their premiums over their peers that drink less.
5. Backdating your policy: This is a very little-known yet perfectly legal trick that your insurance broker can help you out with. Did you know you can backdate your policy to an earlier age, and cheaper rate bracket? The trade-off is that you’ll pay some premiums starting from the backdated date, but this is a great way to save on future premiums.
6. Do the math: When you buy your policy matters. If you are 50 at the end of December, you’ll be considered as 49 if you buy the policy in the first six months of the year. Any later than that and your age is rounded up to 50. Since age affects your policy, buy when you can get that number rounded down.
7. Insurance type matters: Different insurance products have different prices. If cash flow is a concern, opt for a term policy. It’s the most affordable. Both term and whole life policies are available for no medical simplified issue plans. Even for guaranteed issue plans, there are term and whole life policies.
8. Policy length matters: If you have a long-term policy, the rate will be higher since the odds of something happening to you as you age are greater. For example, a Term 10 policy (a policy that would cover you for 10 years) will be cheaper than Term 20 (a policy that would cover you for 20 years).
9. Check your coverage amount: You can be under insured – but you can be over insured too! Check your coverage to make sure you are only paying for what you need. Will a $50,000 policy protect your family if you die? A policy with $50,000 coverage will cost less than the same policy that has $100,000 coverage. Some no medical life insurance policies can offer as much as $500,000 in coverage (e.g. insurance policy from Canadian Protection Plan) but, typically, there are many questions that should be truthfully answered with “no” while disclosing all the necessary facts.
10. Ladies, you rock: This isn’t so much a tip as it is a fact! Ladies, you pay about 25 per cent less for insurance than men! Note that insurers only consider your birth gender, not gender identity.
11. Dare to compare: Many insurers price no medical life insurance differently. Do your homework (or let an insurance broker to do it for you) to understand what price options are available for your needs.
12. Insurance brokers can often get better rates: A broker has access to all the products on the market, and therefore can find a policy that fits both your lifestyle and your budget. Because their career depends on knowing all the many facets of insurance, they can often get you a better price or a larger discount than you can on your own. Since they are paid a commission on the products they sell, their services are free for you to use. Why do the research when there are brokers ready and willing to do it for you? This tip saves you time and money!
13. Avoid insurance agents: An agent is not the same a broker. An agent can only sell the products of the one company he or she represents. Therefore, if there is a better deal out there, you won’t know about it. A broker isn’t tied to just one agency, so a broker is your best bet
14. Deal with companies specializing in no medical insurance: Some insurers specialize in life insurance no medical and associated risks (diabetes, cancer, high blood pressure, etc.). Make sure that you work with these companies (either on your own or through your broker). The best way to find out about these companies and their offers is to talk to an insurance broker who has extensive experience with no medical insurance. InsurEye’s partner, LSM Insurance, has been offering Canadians tailored no medical life insurance protection for many years.
15. Choose aggregators who work with many companies: If you decide to use an online insurance aggregation service, make sure that this provider works with many companies and not with a few ones. Our platform, for example, partners with insurance brokers providing access to over 20 Canadian life insurance companies.
16. Alumni: Some post-secondary institutions offer alumni discounts on insurance. Check to see if yours is one of them.
17. Annual vs. monthly payments: Can you afford a lump sum payment? Can you save up the amount bit-by-bit each month so you can make one payment for your insurance next year? If so, you’ll save money. A lump sum saves your insurer administration fees, so those savings are passed on to you.
18. Look at consumer reviews: The InsurEye Consumer Experience Tool is an independent and free platform for consumer insurance reviews. By reading independent, honest reviews of other’s experiences, you know which insurers will work best for you – and which ones won’t.
19. Do an annual review: Life changes fast, doesn’t it? This means your insurance needs change too. Do an annual review to make sure you are maximizing your discounts and keeping up with the level of insurance you need to protect yourself and your family.
20. Employee / Union members: Are you a member of a large corporation or union? Check your benefit package to see if insurance discounts are part of the plan.
We thank Lorne Marr from LSM Insurance, one of the few insurance brokerages working with nearly all of Canada’s life insurance providers and specializing in life insurance no medical. To connect with Lorne and his team of experts for no medical life insurance/guaranteed issue insurance, for a free quote or an assessment of your situation, please complete and submit the form on the left or get a quote right here.