Wondering How Companies Can Offer No-Medical Insurance?
One of the questions that people tend to ask a lot is: No medical life insurance – how is this possible? Insurance is a risk-adverse business, so how are companies able to offer coverage without knowing the risks that a particular policy might have? Simply, because there are many people with long-term health issues that are in need of coverage, companies created plans that are designed to meet the needs of those applying while still minimizing the company’s risk.
According to this article, approximately five percent of insurance policies are rejected every year, about eighty percent of which are medical related. So, that means about four percent of traditional policies are declined due to medical reasons every year. That adds up to a fair amount of people without coverage. No medical life insurance is possible because of two specific types of life insurance coverage that insurance companies can offer: guaranteed issue and simplified issue life insurance.
Guaranteed issue is just that: insurance that anyone who applies for it is guaranteed to get it. This type of coverage is available without a medical or a medical questionnaire, and for many who feel they might be declined for health reasons, it is the one they generally go for. The only downside with guaranteed issue is that the premiums tend to be quite a bit higher and the death benefit is lower than a standard policy.
Simplified issue plans are where there is no medical, but a short questionnaire (about 12-14 questions long), the premiums are lower than guaranteed issue and the death benefits are higher. Additionally, coverage starts on day one. That’s the other catch with guaranteed issue, by the way. It has a two-year waiting period. So, if a person passes away before the waiting period is over, the death benefit cannot be collect, this is how insurance companies are able to lower their risks and keep plan costs down.
In Canada, there are six main companies that offer no medical life insurance: Industrial Alliance, Canada Protection Plan, Assumption Life, La Capitale, Equitable Life and Humania Assurance. Each one offers different terms and face values, and what might be covered under one’s simplified issue plan may not be covered under another.
Therefore, it is important to talk to a broker and determine which one is right for you before applying. A broker will be able to help you determine whether a simplified issue plan or a guaranteed issue will be better for your needs and can work on your behalf with the insurance companies. It is better to work with a broker and take the time to find the right insurance plan before an application gets put in because once an application is rejected, it can become harder to find coverage with a rejection on record.
If you have a condition or illness and are not sure whether or not you would be declined for coverage, contact us. We have access to many different insurance companies as well as the knowledge and determination to find you the best coverage for your needs.
For more information, visit www.NoMedicalLifeInsurance.ca or call 1-866-899-4849.
NoMedicalLifeInsurance.ca is an initiative of independent insurance expert Tamara Humphries and LSM Insurance.