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It's 2020, and when it comes to life insurance - the options are endless. Whether it's the life insurance you need to protect your family or to cover your mortgage, retirement planning, group benefits for your business, investment services, or some free, personalized financial advice - we customize every insurance solution to meet you and your family's needs.
Why settle for the best rate at ONE carrier, when you can see the cheapest insurance rates from ALL the competing carriers?
Our Independence gives us the freedom to canvas quotes from everyone. Let us do the work so you can save. We'll provide you with the lists and search the market place for you. Our services are free of charge, and our turn around is often 24 hours or less.
Some frequently asked questions and quick tips can be found below:
Many Canadian policyholders have been reaching out to their life insurance advisors during the pandemic to see how COVID is affecting their life, critical illness, or disability insurance policy. The good news is, if you've already been approved and your policy is in force, you need not worry about it affecting your contract in any way. The same cannot be said about new applicants though, so caution should be taken with respect to the application process as certain things have changed in the industry as it struggles to adapt and keep up with shifting procedures and federally mandated social distancing guidelines.
At CLIC Insurance we operate as independent advisors so our first job is to shop your case around in order to obtain a canvas of quotes from competing life insurers. In a typical world this would mean obtaining many different offers and narrowing the list down to a few companies. From there we would apply and go through the underwriting process. Depending on the age, face amount, and term length of the policy, the application process could require anything from a non-medical questionnaire form, to a full paramedical nurse visit.
Insurers are quite conservative in the best of times, so applying for a larger amount of coverage will always trigger more information due to the increased risk to the company. Throw in a global pandemic and a contagious respiratory virus, and things get much more difficult to assess. We've seen carriers outright decline cases that require collection beyond a urine sample. We've seen carriers stop accepting applications due to social distancing measures preventing face to face meetings. Once approved, many carriers will have you sign a special COVID related health form that further vets your current health to see if you may have acquired any symptoms.
Right up to the moment of sealing the life insurance policy contract, we have seen insurers question the current health of every applicant, in much more aggressive ways.
Manage Your Expectations. This is the number one thing brokers should be focused on with new clients, especially those who have not purchased a life insurance policy before. Why are you taking this policy out now? Are you currently employed? If so, how is COVID affecting your job stability? Can life insurance wait?
Individuals seeking to obtain a policy strictly on the fear of COVID are not taking into account that life insurance is a needs based solution. Advisors are held to strict needs based standards, so those shopping for a policy, or wishing to obtain a quote, should consult an advisor first, to see if a policy makes sense to begin with. This might require a re-think of the specifics, since larger policies might not be approved until after COVID related measures are lifted, or as some provinces begin to loosen their social distancing guidelines.
Think Outside the Box. A lot of the quote requests we see are from individuals who already have a policy, but the renewal rates are so expensive they are just looking to find an affordable replacement. The problem with term insurance policies is that the premiums are typically only cheap for the first term duration (10 years, 20 years etc). Beyond that, it gets complicated as the costs skyrocket according to the approved premium schedule. You may be asking yourself why you even signed up for a term policy in the first place!
Replacing a term policy before your renewal takes place requires you to shop around, obtain quotes, and submit a new application to underwriting. But if you need your coverage to last permanently, one quick way to solve this dilemma is to convert your term policy to a permanent plan. This is contingent on a few things, but if it suits your needs and you are eligible, it requires no medical whatsoever. We have been seeing many clients asking to convert their existing term coverage during COVID as it essentially prices them as if they're applying for a brand new permanent plan, without any medical. All of the COVID related underwriting restrictions don't apply to a conversion since it is a policy feature baked into your contract.
Applicants are split up into rate categories depending on their age, sex and smoking status. From there they get further broken down into sub categories - health history, pre-existing conditions, family history, personal lifestyle, occupation risk, travel risk and so on.
Think of if as a funnel. After some form of assessment, or “underwriting” your agent delivers you the insurer’s final decision. (We’ve summarized them all below). If you’d rather not see a nurse, or want to give the least amount of info possible, - please be aware, this comes at a cost to you, the policyholder.
The reason? Non-medical plans or “guaranteed acceptance” plans will charge you up to 600% more, in rated premiums (more on that, below). These plans all have a built-in substandard rating, and some carry limitations in the the way they pay out.
Important Tip: Some non-medical guaranteed acceptance policies have a built-in 2 year exclusion clause. This provision is not to be glossed over - we highly recommend everyone inquire with their advisor the possible limitations or death benefit exclusions built into their non-medical plans.
"What happens if I die from a pre-existing condition, in the first two years?”
Some “guaranteed acceptance” or “non-medical” life insurance plans may only pay out a reduced death benefit, other insurers might only refund your beneficiaries the premiums you paid into the plan (often with an added “daily interest”, or a 3% interest bonus). Hardly worth your investment compared to a traditional policy with a guaranteed tax-free death benefit.
Depending on your needs and your insurability, you may find the guaranteed acceptance route to be your only possible shot at getting approved, but in most scenarios the costs are prohibitive and therefore we always recommend trying the underwritten route first.
Summary: If you’re buying a life insurance policy you’ll want to know the details surrounding the benefit payout. In Canada it should be 100% tax free (further rules apply for corporate owned, and some group plans), by-pass probate, and be creditor protected.
Carefully setting up the right plan is an investment into the safety net your family might need to rely on financially, if something were to happen to you.
If you’d like to chat with a licensed advisor for a free consultation or have questions about your insurability please use our quote form or call us toll free 1-877-830-7000
Standard Class: This is where the typical or “average” healthy applicant lands. You’re in the middle of the risk spectrum, sort of speak.
For instance, you don’t smoke, you may consume alcohol - but stick to the acceptable limits, you have an average occupation, you don’t participate in any dangerous avocations (sky diving instructor, off-shore oil rig worker, pilots, pro scuba divers- unfortunately, are not deemed “low risk” in the eyes of an underwriter), you don’t use drugs (they’ll also want to know when (if ever) you have used them in the past.
The underwriter will also get to know your medical history too - perhaps you’re taking medication for a pre-existing condition? Or had an operation or a medical emergency in the last 5 years, things you’ve been treated for in the past may require them to contact your family doctor for an APS (“Attending Physician’s Statement”).
Cholesterol, blood pressure, or thyroid medication, are some of the more common pre-existing conditions we see on applications. The good news is, in most cases as long as it is controlled and all other factors are deemed normal risk (or within the range that particular insurer’s underwriting protocols), there’s a decent shot at achieving a “Standard Class”, for many this rate is going to be manageable, and can be catered to fit into any need or budget.
Preferred and Elite Class: This is for the standard risk applicant who achieves “better-than-average” risk assessments. Think of it as a discount.
How is your family history (by this they always mean: biological mother, brother, and siblings) in terms of critical illness or hereditary illnesses? How is your personal health history? If you’re the type of applicant that is very physically active, have never smoked, you score better-than-average lab results (blood pressure, urine and/or blood) then you’ve got a shot at one of these discounts.
Life underwriters reward the lowest risk with the lowest rates. The opposite also holds true as we find out in the next two categories…
Rated or Modified offers: In some cases applicants are slightly riskier than we anticipate. It can be a delicate situation to manage for many reasons.
It’s typically due to health risk: Diabetes of either type, high blood pressure or cholesterol (uncontrolled, or recently diagnosed), asthma, sleep apnea, histories of depression, anxiety, heart attack, cancer, obesity, etc.
Substandard ratings can also be triggered from a certain lifestyle history or avocation: frequent and long foreign travel, high risk occupations, alcohol or substance abuse problems. A rating can be triggered from a combination of a few indicators piling up too.
Rated life insurance plans are more expensive and can easily cost double, triple (or more) in premiums, versus the "average risk" or standard class rates. How the rated premium is calculated depends on the insurer, but it's common to see it as an extra percentage over and above the standard class
If you receive a rated offer, you’ll have to decide on accepting the higher premiums, scaling down coverage, or walking away.
As we will point out in our “Declined Decisions”, it may be possible to shop your rated offer to a competing carrier to get a second, or even a third opinion. This extra work comes at zero cost to you, the client, but can end up saving you money should we find a cheaper alternative from a competitor.
NOTE: If you’re going to apply the non-medical route, after receiving a rated offer somewhere else you may be hit with a very limited death benefit payout, certainly in the first two years, if the non-medical carrier accepts you as "previously declined".
Tip: Seeing your family doctor for regular checkups every year will help provide the insurer a snapshot of your current state of health. Underwriters do not like “unknowns”. If you’ve been referred to a specialist or have a pending follow-up exam it’s always best to get these sorted out prior to shopping around and applying for a policy. This will clear up any medical “unknowns” that may be sitting in your medical file, and help prevent your application from being “postponed” or “rated”.
Declined Decisions: These do unfortunately happen, and they can be as a result from any one factor already mentioned above, or a collection of factors.
A good advisor will ask you the right questions up front and help navigate any of the barriers that might present themselves in the application process. Experience plays a role here- each carrier has a specific set of underwriting protocols. They take swaths of general people and funnel them into groups - or pools.
Just because one insurer’s team of underwriters doesn’t deem you eligible for their policy, doesn’t mean you’re completely out of luck. It will certainly narrow the playing field in terms of options - declines and rated offers all get stored in the MIB. So in other words, you can’t remove previous offers from your application history so they may factor into future applications as well.
Tip: Always work with an independent advisor. Ask them to list all the carriers they represent, and have them shop your case to a sampling of the competition. Underwriters can give generalized opinions or pre-lim feedback, based on a competitor’s decision in most cases.
They’ll want to know the “gist of the situation” from your agent, and this is where their skills of presenting and articulating the previous outcome, will come in handy. If you receive one - or two open doors to apply directly from the underwriter, then we move forward and submit a trial application.
The declined case can be expedited or “medically shared” between the insurer that declined you, and the new one(s) you’re applying with. This may save you from having to see another nurse.
But please be patient - these cases can be slower moving from start to finish. We sometimes see 2 - 3 attempts, (sometimes taking months) for the harder-to-approve cases.
After fully reviewing your case file, the underwriter could still decline you if something was overlooked or not within their “range” once they put your application under the microscope. But a lot of this uncertainty can be avoided with an agent who cares and can put in the extra work.
Bottom Line: Although we’ve edited down our quote form here at CLIC, the more accurate we can make the assessment upfront (our one-on-one consultations are always free), the better we can manage your expectations about what the final offer will be. As you can see its not a simple equation!
Cigarettes, E-cigs, chew, patch, gum: anything containing nicotine that is consumed within the last 12 months will mean a smoker class rate (with one exception, noted below). This can be extremely cost prohibitive as they are often double the cost versus a standard class non-smoker. Think about that - 2X.
Life insurers have drawn a hard line on this over years. This means if you’re either a “casual smoker” or someone who may have smoked or used nicotine products even ONCE in the last 12 months, (for instance) - you’re going to be charged a smoker rate until you’re 12 consecutive months tobacco-free.
Marijuana: stances on this have recently changed in the industry. As of 2016, several insurers have come out with a shift in their underwriting policy. Depending on your frequency of use, and assuming you do not use any other drug, or any form or tobacco or nicotine, you could be considered as a “Standard Non-Smoker” class, at a small sampling of insurers in Canada.
If this is something that may apply to your situation, please consult with your advisor to articulate the details so they can determine whether your situation fits at a particular carrier who offers this provision. Otherwise, typically - marijuana use is automatically deemed a smoker rate. And very frequent use could lead you into a rated territory, or even a decline.
Cigars: long standing rule which is consistent at almost every carrier - if you smoke 12 large cigars (or less) per year - which is often worded as “no more than 1 large cigar per month”, then you may be eligible for a “Standard non-smoker” rate.
NOTE: We see a lot of quotes submitted for “non-smoker” rates, however please be advised that a recent nicotine/cigar/marijuana history, will disqualify you for “Preferred” or “Elite” class discounts, at every insurance company in Canada. Be wary of quotes from websites or agents that tempt you in with rock-bottom rate classes, if you were recently a smoker (but still 12 months tobacco-free).
Once the underwriter reviews your usage history - even if you’re 2 years (or more) free of smoking, a standard class rate will be your best available, in most circumstances, until enough distance has passed.
TIP: Ask your agent to locate the carrier’s stance on nicotine usage that occurred more than 12 months ago, if you feel you’re otherwise a good candidate for preferred or elite rates.
Are you currently insured at a high smoker premium, but are now eligible for a policy change? Find out how we can help
Answer: Insurance policies are legally binding contracts between the life insured and the life insurance company. The essence of these complex agreements can be boiled down to one simple policy: honesty.
Life insurance companies are legally obligated to pay a death benefit. That’s their promise insofar as you’re paying your premium every month, and you are open and honest in the application process.
They are however, NOT legally obligated to pay under a few scenarios: suicide, and misstatements or misrepresentations of material fact(s), (in the first two years of the policy), and fraud.
Why the first two years?
There’s one contact feature everyone needs to be familiar with when they’re applying for a life insurance policy: The Contestability Period. This is the timeframe whereby insurers are able to legally decline your death benefit under situations such as suicide, or misrepresentations of material facts.
A suicide that occurs after the second year anniversary would be paid out.
Now let’s take a closer look at “misrepresentation”, and “fraud”.
Misrepresentation of Material Fact: As you’ve read above, there are many different factors that determine your overall risk and eventual eligibility for a life insurance policy. If labs are collected (blood and urinalysis), blood pressure, or any other form of physical test, it is assumed that these will be collected by an independent third party and the results will be accurate and untampered with.
But what about answers to questions regarding health history? Or lifestyle questions?
As you can imagine this opens the door for possible misstatements whether they’re made intentionally by you, or not. This can be a huge nightmare for the insurer as they wade through the maze of applications and information is disseminated and put through into their underwriting protocols.
The language of life insurance applications are designed to leave zero wiggle-room in terms of potentially being misinterpreted (after all, they’ve had hundreds of years of practice)
The onus is your licensed agent to carefully explain, and breakdown the application questions - not only asking them word-for-word how they are written (we are obligated to, legally), but to ensure the language is fully understood by you, the client. Failing to do so, may lead to some very dire circumstances for your beneficiaries!
Case #1 “Dangerous Hobby”
Joe Smith, 45 and father of two is a professional scuba-diving instructor. He is fully certified as an instructor in the highest degree, and quite famous in the local industry. His youtube channel features videos dating back 10 years showcasing his deepest finds, and his marine wild life photos have been published all over the world. He is currently in a career transition - opening up a shop and dealing with the hobbyists rather than getting his feet wet in the ocean. He hasn’t been diving in a year so he decides to apply for life insurance. The application asks if he has ever participated in scuba diving, and whether he intends to do so in the future, to which he emphatically states “No”.
Joe is then approved at a “standard non-smoker” class premium. A year and a half later, (while the policy is still contestable) Joe is killed in a deep sea scuba diving accident. When his wife goes to make the claim, the insurer investigates further, to find his entire history of scuba diving online. They decide to decline the death benefit, as they would have deemed his risk to be too high in the first place, had he properly disclosed this in the application.
Lesson: be careful and thorough when you’re answering the questions in the application, and paramedical nurse visit (if applicable). In this case, even if they deemed Joe’s scuba diving to be high risk, but still insurable (under a “rated premium”), the fact that this information was not brought to the forefront during the application (they clearly asked), and never brought to mention at any point in the underwriting process, the insurer was in their contractual right to decline Joe’s death benefit.
Case #2 “Medicine Dosage Change”
Wendy White is a 67 year old retired teacher. She buys a $10,000 Term to Age 100 plan to cover her funeral expenses. She is currently not taking any medication and was approved at a standard class. Prior to the company issuing the approved contract, Wendy sees her doctor and is prescribed a statin to control her blood pressure, which up until recently (and even in the recent nurse visit for the application) has always been within normal range, for her age.
When her agent delivers the contact, in order to put it into force, Wendy is asked to sign a delivery receipt which asks if there has been any change in her insurability, between applying for the coverage two months ago, and now.
Wendy answers “No”.
*At this point it’s important to note that when they ask about a “change of insurability” what they’re inferring is “Have you been diagnosed with any new condition we don’t yet know about? Have you recently been prescribed a new medication? Taken up Smoking? Changed occupations? Had a nervous breakdown? Been to an emergency room? Declared bankruptcy?
Six months later, Wendy suffers a fatal heart attack. Upon investigation, the insurance company discovers that she failed to answer the policy delivery questions accurately regarding her health. They decline Wendy's death benefit as they deem the risk would have been too much for them to insure at that point in time (they'd of retracted the offer of insurance, and postponed her for a minimum 6 months until her blood pressure was normalized).
Until your policy is delivered, signed, and paid for (first month’s premium binds the contract in addition to any settling requirements needed by the insurer) - any new changes to your insurability need to be run past the underwriter reviewing your case. Had the blood pressure medication been prescribed just a few days later after the plan was in force, Wendy’s benefit would have paid out 100%.
Lesson: Be extra careful and diligent regarding questions that are deemed “material” to your assessment. Talk to your advisor and give them as much info about your condition (or avocation/hobby), so they can document it as part of the application.
Remember - most death benefits that are declined in the first two years, are due to this fundamental clause. Your peace of mind hinges on the insurer’s ability AND obligation to pay. Don’t give them any excuse to back out of it via legal means that are baked into the contract. Get to know them and protect yourself.
Fraud: Once the policy is deemed “incontestable”, an insurer’s only recourse is to fight the beneficiaries in court and legally prove fraud was committed, knowingly, by the now deceased policyholder. What this means is, outside of two years, your policy can still be contested - in court by proving an act of fraud.
If we look back to our example (“Dangerous Hobby”), it could be argued in court that due to Joe Smith’s long documented history of scuba diving, he ought to have answered questions pertaining to his scuba diving history more accurately (and honestly), and failing to do could only mean he was acting dishonestly (or fraudulent) in his declaration.
In other more ambiguous cases, the burden of proof insurers would have to provide in court, has to be sufficient to prove the applicant was committing insurance fraud. Due to the costs of arbitrating their case, even a victory in court could end up costing the insurer more money than if they had just paid out the claim.
Bottom Line: Don’t give an insurance company any reason to dispute or decline your family’s death benefit (full, true, plain, honest disclosure). Understand the questions you’re being asked and always review the offer of insurance with your licensed advisor, before giving the insurance company a penny of your money!
Be wary of life insurance policies sold via bank websites that can be purchased without the assistance of an agent. Ask for help understanding what the contract details are, before diving in. Speak to a licensed agent and ask for help.
In Canada, life insurance companies are required to be members of Assuris. Think of Assuris as the safety net for insurance companies, should they fail or become insolvent. It has happened 4 times in the last 100 years in Canada, so it is not a common event, rather a very rare one.
Life insurance companies are federally regulated in Canada. Assuris has specific rules and varying amounts of protection offered to policyholders, depending on what type of contract they have, and how much their benefit is.
Want to know how much your plan is insured for? Check out this example, straight from the ASSURIS website
Term insurance infamously carries a very high renewal rate. There are a few reasons for this - for starters, your renewal premiums are “guaranteed non-medical” (there’s that phrase again!) They also form part of a schedule baked into your life insurance policy from day one. Once you buy that Term 10 plan, in a decade you’ll receive a renewal notification (via letter) reminding you of the upcoming increase to your premium schedule.
This is when you have to decide what your needs are. If you need to maintain coverage, you’ll have to either re-apply for a brand new replacement, (full medical, possibly with a competitor this time), in hopes of beating out the much higher renewal rate on your existing plan.
Keep in mind at this point - you’re now ten years older. Your medical situation may have changed (for better or worse). A new plan for most people, will mean a huge savings (which is still going to be a higher premium given your new age). The rub is - you have to also medically re-qualify. You have to be insurable.
Your advisor is also required to go through the advantages (and possible disadvantages) of replacing your existing plan, with the new one. In fact, it’s a regulatory requirement on any type life insurance replacement. You will also be required to sign a replacement declaration. This is also important, as it proves you and your advisor have weighed the pros and cons and discussed what your strategy is going to be moving forward.
Trap to avoid: if life insurance is important to you, and your family depends on some level of coverage to be in-force at all time (even for the short term) - ensuring your new plan is approved, issued, and in-force prior to cancelling the old one, is terribly important.
Be careful of the timing though, especially if you pay premiums monthly- the renewal premium will automatically draw from your existing Pre-Auth Chequing plan set up with the existing insurer, and until a singed cancelation letter is submitted by the policy holder, the old insurer will continue auto-draw the high renewal premium.
This could result in a very unwelcome (and inconvenient) few hundred (or worse - thousands) of dollars withdrawn automatically, for a renewed life insurance policy you’re just a few days away from replacing!
“Careful planning and execution should always be deployed, in order to ensure there are no gaps in coverage, and that you’re not paying a penny more than you have to.”
A lot has been made over the years since the CBC Market Place blew the whistle on the mortgage life insurance industry in their 2009 expose In Denial. What they uncovered was what has now become a much maligned phrase in the industry: Post-claim underwriting.
In a side-by-side comparison between mortgage insurance and an individual life insurance policy, you will certainly acquire more value and save money taking out your own plan. Assuming you’re insurable, the rates on a medically underwritten plan will fair out cheaper in almost every side-by-side scenario, contingent on being approved at a standard class, or better.
Mortgage Insurance: the bank or lending institution is your beneficiary, solely in the amount at risk (your mortgage). Plans are designed to decrease in value, as your debt to the lender decreases and the loan is being paid off.
The premium will remain the same, however, which means your dollars are buying less and less coverage as time wears on.
Unlike mortgage insurance, with an individual life insurance policy, the death benefit is paid to your appointed beneficiaries (not the bank) and does not decrease over time. If you pass away, the death benefit spent at beneficiary's discretion. No one else.
In post-claim underwriting, If a death occurs, the underwriter adjudicates the claim and assess the initial application to determine your eligibility.
A typical life insurance policy carries a 2 year contestability clause for misstatements that may have knowingly (or unknowingly/accidentally) been made by you in the application process. Keep in mind, that you’re responsible for filling out all of your own paperwork on the mortgage insurance app.
Bankers or other mortgage-lending agents are not licensed to give you advice for insurance based products and services.
Mortgage Insurance plans can also carry extra exclusions atypical of a standard life insurance policy. Please read the fine print on your applications and always ask to view a sample policy prior to signing a mortgage insurance app.
Tip: If you are under no obligation to sign the mortgage insurance application, we recommend obtaining some independent comparisons first. Chances are, you’ve come to our site for exactly that. There are insurance terms ranging from 10 years all the way up to 40 (and beyond, should you want to look at permanent insurance).
As a good starting point for a basic quote, we recommend lining up the amount of years left on your mortgage, with an appropriate (if not, approximate) length of term life insurance. That way when your mortgage winds up, so will your plan. We can them prepare a few lists of options to give you a feel of the potential premiums you may be facing on an individual plan.
Independent advisors are compensated directly by the insurers they represent and sell policies for. You, the applicant, do not pay us any fees or commissions nor do do you cover any of the costs associated with underwriting (medicals, nurse visits etc). Should you be approved and wish to accept the offer of insurance- your monthly premiums are paid directly to the insurer.
Throughout the life of your policy, our duties to you continue in the form of policy servicing. Address updates, beneficiary changes, and annualized reviews are just some of the common ways we continue to ensure the policy meets your family's needs. If changes need to be made we're always here to help.
Before filling out your personalized life insurance quote, we recommend checking out this last set of tips below
1. Please use a real phone number - life agents are provincially licensed, which means whomever you deal with has to hold a license in your territory (it’s the law). Our propriety software allows us to issue you a quote specific to your territory. If you DO NOT wish to receive a phone call - please let us know in the notes section at the bottom of the form, and we promise to oblige.
2. Please use a real email address. This is the only way we are able to send you the personalized custom quote. These are typically in the form of PDF attachments showing you a list of all your results. If you have strong SPAM settings, we also recommend you check your junk inbox for our subject line “Your Life Insurance Quote…”, or pre-emptively add our domain: “www.cheaplifeinsurance.ca" to your safe sender’s list.
3. Prefer a quick text? We can send you a quick and condensed quote to your smart phone. Please specify in your form in the bottom notes section, and we will summarize it along with an email address you can respond to.
4. Please be Specific: What type of policy you need (please use the notes section for further clarification), how long you need it for, what your budget is, any illnesses you currently take medication for, all of this helps us accurately assess your starting risk class or needs, and from there we generate the most likely spread of market-available rates.
5. Learn about your options. On the following pages we provide additional information that you can take with you in your search for the best rates in Canada. Here’s where to get started