When it comes to No Medical life Insurance, most consumers are in the dark about which plan is best.
In fact, even most insurance brokers have a very limited understanding of the nuances of the No Medical life insurance market right along with their clients. Right now, two large Canadian insurance companies are taking advantage of this knowledge gap.
Thousands of Canadians have bought guaranteed issue life insurance policies — life insurance plans that include no medical tests and no health questions — when they could’ve qualified for either a traditional life insurance policy or a simplified issue life insurance policy.
Traditional life insurance policies are fully underwritten, meaning the insured must complete a full health and lifestyle questionnaire and/or a series of medical tests. The type of medical test will usually depend on the insured’s date of birth and the amount of life insurance coverage. The higher the policy amount and the older the applicant the more rigorous the medical test.
Simplified issue life insurance policies require no medical tests and include a short series of questions. An applicant can be very unhealthy (consider a 350-pound diabetic) and still qualify for an immediate-pay simplified issue plan. Simplified Issue plans are less expensive than Guaranteed Issue Life Insurance but more expensive than traditional life insurance policies. The more questions asked on a Guaranteed Issue policy the lower the premium. Canada Protection Plan for example a popular Simplified Issue provider whose policies are underwritten by Foresters Life Insurance Company have several Simplified Issue policies available under their No Medical Life Insurance umbrella. If the insured can answer no to a series of questions they can move on to the next section of question and can qualify for progressively lower premiums and higher coverage.
But Canadian consumers taking a guaranteed issue policy when they qualify for better life insurance are overpaying for the coverage — and worse, they could be putting their family a risk.
Guaranteed issue policies have a waiting period on the death benefit of usually two years on a non-accidental death. In layman’s terms, your beneficiary will only get a refund of the premium if you die within the first two policy years — unless you die by accident. Most Guaranteed Issue policies are sold direct by the insurance company. The Edge now underwritten by Co-operators does offer a $25,000 broker sold plan and Bingham Group Services also underwritten by Foresters Life Insurance Company has a Guaranteed Issue Mortgage Insurance plan covering mortgages up to $500,000.
Compare that to traditional life insurance policies, which pay out on an immediate basis. And as we mentioned above, many people who don’t qualify for traditional policies can easily qualify for simplified issue policies if need be. These people will also receive their payout without a waiting period.
I do not believe any of the no medical plans are good. They are all very expensive for what you receive!
I don’t totally agree. Let’s look at 64 year old insulin diabetic whi is a 100 pounds overweight and a heart attack 3 years ago. He/she would be a decline for traditional life insurance. They could qualify for $50,000 of Assumption Golden Protection and if they have not been declined in the last 2 years for coverage from day one. The premiums are about 2 times the standard rate of most Term 100 plans.
i do agree. People have wrong belief that non medical insurance is good.
They are good for final expenses at a 100% rated price.
Some people like it, for me its rip off.
Thanks for the note. The point of the article is that it is important that the insured picks the right no medical plan. Too many people are opting for a Guaranteed Issue plan when they can qualify for a Simplified Issue plan.
Just wanted to clarify your statement that a 350 lb diabetic would not qualify and in fact would be a decline for a Simplified Life plan as they still have to answer a series of pre-qualifying questions.
Hi Mascha,
Several carriers in including Assumption Life and Canada Protection plan have Simplified Issue plans without a build related question.
The consumer has 3 options: (1) If healthy, apply for either an underwritten life policy or a simplified issue policy. (2) If not medically insurable, but not declined for coverage in past 2 years, then an Assumption Life Golden Protection plan will provide immediate life coverage, but obviously at a higher premium. (3) If not medically insurable & declined for coverage in the past 2 years, then Guaranteed Issue is your only option. – Yes, there is a 2 year waiting period for non-accidental death and if you die of natural causes your premiums are returned with 5% (with Edge), tax free. But, in scenario # 3, a G.I. policy is the only option. >> Picking the right plan can be difficult for many consumers. i.e. TV ads promote: Coverage for pennies/dollars a day. The consumer thinks ‘Good Deal’ , then call and apply, not realizing they have purchased a Guaranteed Issue plan. Whereas while if they had called a licensed insurance broker, they would have been provided with the information to make an informed decision and been made aware of their options.
You make some excellent points
Thanks you make a good point about the consumer thinking that buying direct is a good deal. When in reality they are often much better off using a broker.
How can an insurance sell a policy with a waiting period. What is the guys / family suppose to do if he dies and the policy pays squat
Thanks for the note. The insurance company is able to mitigate some of the risk of certain Guaranteed Issue and Simplified policies by use a deferred benefit for high risk applicants.
Many Simplified Issue plan offer an immediate pay coverage. One key is to look at a Simplified Issue plan before you are declined. If you are declined in the last two years you will disqualify yourself for an immediate pay plan.
How do I know if I going to be declined until I apply?
Lenny, you could request for your advisor to submit a preliminary inquiry. This will not result in a firm offer but will your broker / agent a good idea.
Can a Simplified Issue plan be used to cover a mortgage. I am 43 and my husnamd is 57 both non smoker and our mortgage s ….
Hi Karen, You can choose who you wish to name the beneficiary as – Simplified Issue plans can be Term or Permanent. Term policies start off lower in cost but the coverage expires at the end of the Term or goes up in cost. Permanent plans are initially higher in cost but are generally level premiums for life.
So which plan is better to cover my mortgage?
Its hard to say which plan is better. It depends on your needs and budget. Term Insurance is often used to cover a mortgage because it is a temporary need.
Overall, is Term better in temporary need situations all the time? Isn’t it just better to get permanent life insurance, pay a bit more but be covered for life?
Hi SP. If the insured only needs the coverage for a Temporary period of time than Permanent insurance is not needed. If they want the coverage for their lifetime than a Permanent policy may be a better fit. A combination of Permanent and Term insurance may also make sense.
The Canada Protection Plan seems to be the best deal for people overweight. Can I still get insurance with another company if I have there plan is there a maximum of some sort
Thanks Earle. Canada Protection Plan does have very competitive plans in the hard to insure market. Your age, gender, smoking status etc will determine if there plan is best and you can have plans with more than one company.
Does Metlife still sell No Medical plans in Canada?
Thanks Harold. Unfortunately Met Life no longer sells life insurance in Canada. We would be happy to assist further.
I had my stroke first stroke 6 and my last one 4 years ago the second one was a mini. Does it matter if I had more than one. I was looking at one plan which asks if I had one in the two years but did not mention having 2 strokes
It depends on the wording of the question. You’re right many simplified issue applications only ask if you had a stroke within the last … years and do not ask about multiple strokes. So if you can answer no to the questions you qualify. Please contact us and we are happy to investigate this further for you.
Does Golden Protection go above $50,000 if you combine it with Golden Protection Plus
Hi Jack, The maximum issue for Golden Protection and Golden Protection Plus even when combined is $50,000. Thanks
How do I get more details on Humania new no medical plan and does it come in a Term 100 plan. How does it match with Canada Protectioin plan Term 100. Thanks for your time and help
You can get more details by contacting us at 1-866-899-4849 or Humania directly. They do sell a no medical Term 100 plan. They do offer up to $300,000 of No Medical Term 10 or Term 20 coverage.
My husband was declined for life insurance what are some of my options. We are in Toronto
Hi Paula, Depending on the reason for the decline you should qualify for a Simplified Issue Life Insurance policy where there are No Medical Tests and a Short Series of Health Questions. The Investment wrote a very good article featuring local Toronto broker Jack Bendahan which further highlights some of these options https://lsminsurance.ca/life-insurance-canada/2013/07/lsm-broker-jack-bendahan-quoted-in-investment-executive-on-how-to-avoid-declines
Can I sell teh BMO Easy one plan with my BMO code and is there a waiting period on this plan. Where can I find the application. Thank you
The BMO Easy One plan is only sold direct. This plan unlike the Guaranteed Life Plus has no waiting period but does have health questions.