Tips for Applying for Life Insurance Coverage in Canada
Determine needs precisely. Provide comprehensive health history. Compare quotes from multiple insurers. Expect 4-8 week approval timeline. An advisor provides guidance.
Read more: https://bestinsuranceonline.ca/applying-for-life-insurance-in-canada/
Applying for Life Insurance in Canada: Steps to Prepare and What to Expect
Purchasing life insurance is an essential part of financial planning for most Canadian families. However, the application process can seem daunting for the uninitiated. This comprehensive guide will walk you through the key steps and requirements when applying for life insurance coverage in Canada.
We’ll explore calculating your needs, the medical underwriting process, what to expect with forms and exams, approval timelines, and tips for securing the best rates. Follow along for deep insights that demystify the intricacies of obtaining optimal life insurance.
Determining Your Coverage Needs
The first step is gaining absolute clarity on why you need life insurance protection and how much coverage is appropriate for your obligations and goals. Consider the following:
Income Replacement Needs
Calculate how much of your income would be required annually for your spouse and dependents to maintain their current lifestyle if you passed away prematurely. Account for their earnings potential as well.
Outstanding Debts
Make a list of all debts that you would want paid off upon your death, including mortgage balances owed, vehicle loans, lines of credit, credit cards, and student loans.
Final Expenses
Your life insurance payout can cover immediate final costs like funeral fees, burial plots, headstones, probate, estate taxes, and other expenses so your family avoids draining their savings.
Special Needs Dependents
If you have any family members with special needs requiring lifetime financial support, determine the costs to provide care after you’re gone so this can be accounted for in the death benefit.
Spousal Insurance Needs
Review your spouse’s life insurance coverage and income earning ability if you were no longer in the picture. Ensure your benefit amount closes any income gaps.
Experts recommend 10-15x your gross annual earnings as a reasonable level of life insurance. However, a qualified advisor can assess your obligations and help tailor the right policy types and amounts.
Life Insurance Coverage Among Canadians
Here are statistics reflecting the current extent of life insurance held by Canadian households:
- 32% have term life insurance policies
- 22% hold permanent life insurance coverage
- 40% of households have some form of life insurance protection
- The average individual life insurance policy amount is $233,000
This data indicates many families are likely under-protected given average income replacement needs. An expert guide makes sure you secure adequate tailored coverage.
Undergoing Life Insurance Medical Underwriting
Once you’ve determined appropriate coverage amounts, the next step is applying for a policy and undergoing medical underwriting screening. Here's what to expect:
Basic Health Exam
- Measurement of height, weight, blood pressure, pulse rate and discussion of medical history.
Blood and Urine Testing
- Assessing cholesterol, blood sugar, kidney function, nicotine use and other health indicators.
Additional Screenings
- Electrocardiograms, chest x-rays, or blood marker tests for applicants over 50 or with health conditions.
Your examiner will inquire about your health background, family history, lifestyle, medications, and more. Be prepared to provide details on any medical issues.
Typical Medical Exam Fees
Below are the average costs for life insurance medical exams across different age ranges:
- Ages 18-35: $125
- Ages 36-50: $150
- Ages 51-60: $200
- Over age 60: $300
In some cases, simplified underwriting with reduced exams or lab tests is offered. This provides lower policy amounts at higher premium costs.
Completing the Detailed Life Insurance Application
The application itself requests extensive personal, lifestyle, and medical details:
Personal Information
- Full legal name, contact details, birthdate, SIN, occupation, income, etc.
Lifestyle Information
- Height, weight, alcohol use, tobacco use, recreational drug use, high-risk hobbies.
Medical Information
- Medical conditions (past and present), hospitalizations, surgeries, medications, family history, physician details.
Set aside at least 60-90 minutes to provide thorough and accurate responses. Double check records so all information is correct – mistakes found later can invalidate your policy. Underwriters rely on applications for risk assessment.
How Life Insurance Underwriters Evaluate Your Application
Once your detailed application is submitted and medical screening complete, underwriters enter a rigorous evaluation process:
- They carefully examine your application, lab results, examiner’s report, and physician records. This identifies any medical issues or risk factors.
- Additional records will be requested from doctors who have treated you over the past 5-10 years. This provides greater insight into health history.
- Based on your medical background, underwriters categorize your risk profile as standard or high risk. This determines eligibility and pricing.
- After comprehensive analysis, you will receive one of three underwriting outcomes:
- Approved at standard rates
- Declined for coverage
- Approved at rated premiums (higher cost due to health risks)
In 2020, about 15% of applicants were declined by at least one Canadian life insurance company. If you are declined, don’t give up. Your advisor can help find alternative options.
Approval Timelines for Life Insurance Applications
From start to finish, expect the life insurance application process to take approximately 4-8 weeks for approval under normal circumstances:
- Completing initial application: 30-60 minutes
- Scheduling medical exam: 1-2 weeks
- Finishing exam: Up to 1 hour
- Underwriting review and analysis: 2-4 weeks
- Supplemental records assessment: 1-2 weeks
- Final decision: Within 1 week of underwriter approval
This timeline assumes you have minimal health issues or risk factors. More complex medical histories can extend underwriting to 2-3 months. Factors lengthening the process include:
- Major pre-existing conditions
- Multiple prescription medications
- Recent hospitalizations or surgeries
- Abnormal lab test results
- Difficulty gathering physician records
An experienced insurance advisor leverages relationships with various underwriters to help accelerate decisions. But patience is key, as insurers must conduct proper due diligence before issuing policies.
Strategies to Secure the Lowest Life Insurance Rates
While underwriting determines overall eligibility, certain strategies can help you qualify for the lowest possible life insurance premiums:
- Compare quotes from a large number of insurers – Rates for identical coverage vary widely amongst companies.
- Choose term life insurance – Pure protection policies have significantly lower premiums than permanent insurance.
- Take advantage of group plans through work or associations – Group life insurance features more simplified underwriting.
- Improve your health – Quitting smoking, losing weight, and keeping blood pressure and cholesterol low may garner you “preferred” pricing.
- Review your credit report – Insurers check credit, so fixing any errors can mean better rates.
- Pay annually or enroll in auto-pay – Some insurers give discounts for annual premiums or automated payments.
The expertise of an independent life insurance broker pays dividends in getting you the optimal policy at the most competitive pricing.
Should You Work With a Life Insurance Advisor?
Given the intricacies of sourcing suitable policies and navigating underwriting, partnering with an experienced advisor simplifies applying for coverage:
- They gather quotes from dozens of companies to find you the best value based on your needs.
- Advisors assist completing all required forms, scheduling medical exams, and submitting your full application to insurers.
- Seasoned advisors develop relationships with underwriters that help accelerate approval decisions.
- Their expertise empowers negotiating the optimal premiums and policy terms on your behalf.
- As independent brokers, their recommendations consider your specific situation rather than what pays them the highest commissions.
For most individuals, having an expert manage the end-to-end life insurance application process reduces headaches and ensures a smoother journey to solid protection.
Key Takeaways on Applying for Life Insurance
While applying for coverage is complex, being prepared at each step sets you up for success:
- Take time to accurately calculate life insurance needs around income, debts, final costs and other obligations.
- Term life insurance offers economical pure protection for temporary income replacement or debt coverage needs.
- Expect to complete extensive medical questionnaires and examinations during underwriting screening.
- Underwriters thoroughly assess your health history and risk factors to determine eligibility and pricing.
- Timelines range from 4-8 weeks for approval under normal circumstances. Complex health histories can extend this.
- An experienced life insurance advisor provides invaluable guidance securing optimal coverage at the best rates.
For peace of mind, secure sufficient life insurance tailored to your family’s needs with support from a licensed professional. The right coverage offers your loved ones indispensable financial security.
#BestInsuranceOnline #BIOCanada #ApplyingforLifeInsuranceinCanada
