For many Canadians, especially seniors, life insurance is a necessity. However, not all insurance companies offer policies that will cover those diagnosed with a serious illness, previously hospitalized, and/or previously declined for life insurance. Often, seniors in Canada are denied traditional insurance coverage due to their age, or an age-related illness. So what can you do if you have been declined for an insurance policy? If you have had trouble being approved for life insurance, or are a senior who has previously been turned down for life insurance in Canada, there are options available for you! So, let’s discuss what you can do after you have been been turned down for life insurance.
Determine the reason your life insurance application was declined or postponed
The first thing you need to do when your life insurance application has been declined, or is being postponed, is to find out what the issue is. Due to confidentiality clauses in Canada, your insurance company is most likely unable to communicate the reason declining you to your insurance broker. However, this information can be mailed directly to your doctor. To do this, you must provide written authorization to your insurance company. Once the reason for why you were declined is determined, you can verify whether or not your insurance company made its decision in error.
The medical exam you had to complete for your application may have uncovered a serious condition that was unknown to you. But, if you are a senior that is in generally good health, your application may have been declined due an abnormal test result. If you believe this is the case, provide the insurer with other test results to show that you’re healthy senior.
No medical life insurance as an option
As the name suggests, No Medical Life does not require you to complete a medical examination. There is no blood work, no needles or urine samples required to apply for this policy.
If you are a senior with health conditions living in Canada and have been declined life insurance, this could be a great option. However, No Medical Life insurance has both disadvantages and advantages.
Non-medical life insurance comes in two forms. The first is guaranteed issue coverage, which is available without a medical exam and does not require you to answer any health questions. The second option is simplified issue coverage, which is available without a medical exam but you will have to answer three to twelve health questions. Simplified issue plans offer coverage, lower premiums, and higher face amounts than guaranteed issue life insurance plans.
In the case of a non-accidental death within the first two years of your policy, guaranteed issue’s death benefits equal the amount of your premium plus 3 per cent interest; while, simplified plans provide coverage from day one.
Note that simplified issue plans have a longer series of health questions. One of these questions asks if the insured has been declined for insurance in the last two years. If you are a Canadian senior that has been declined in the last two years, guaranteed issue may be the best route to pursue.
Watch out for direct carriers
You may think buying direct offers a better deal, but that is not always the case. The benefit of a preliminary inquiry can help you avoid a potential decline. Even being declined once can make it much harder to get approval from another carrier, and, for seniors, approval can already be difficult even if you have never been declined before.
Getting declined could limit your options
If you are declined life insurance, you can potentially qualify for a plan with an immediate payout, but your options may be far more limited. Canadian seniors should take advantage of preliminary inquiries, and avoid applying for a fully underwritten plan if there is a high possibility you may be declined. Applying for simplified issue plan first can provide a backup if you are declined for a fully underwritten plan. If you are approved for fully underwritten coverage, simply cancel the simplified issue plan. This requires more work, but it will only protect you in the long run.