Getting life insurance is not always a straightforward process, and there are several hidden drawbacks in the process. Today we will discuss what these drawbacks are, and how you can avoid them.
The process of purchasing a standard life insurance policy can be broken into six parts:
- Initial research: You look at your options to get insurance, including looking through insurance websites, finding an insurance broker or connecting with an insurance agent.
- Getting a quote: This means entering data into online forms or providing data to an insurance agent or broker to get the first estimation of insurance rates. This step includes checking several different options in terms of coverage and insurance policies.
- Answering insurance questions (application): Once you are happy with the insurance quote, you would typically move forward and complete a detailed questionnaire form. It includes a number of questions about you, your health, and many other facts insurers need to collect.
- Having a medical exam: A nurse or another licensed medical worker visits your house to conduct a medical check, such as measuring your blood pressure, taking your fluids, checking your weight, etc.
- Underwriting your policy: With all the data collected in steps 3 and 4, an insurer conducts a final calculation/assessment (also called underwriting), and then informs you if your policy application is approved or denied.
- Issue the insurance policy: This step is a formality – basically sending you the insurance policy.
The complexity of this process, and the ability to qualify for traditional life insurance, explains why more and more Canadians decide to go for guaranteed issue no medical life insurance, which is also called life insurance without a medical exam and without any medical questions.
So What is No Medical Life Insurance Without a Medical Exam and Questions?
If you look again at the process listed above, it is easy to see that steps 3 and 4 are the most complex ones. Additionally, information collected in these steps can significantly impact your insurance rates, or event result a denial to issue a policy.
No medical life insurance without a medical exam and questions is also called guaranteed issue no medical life insurance. It’s much faster to get and it allows you to skip steps 3 and 4 of the application process.
Obviously, everything comes at a cost; this type of insurance is the most expensive one since an insurer basically agrees to issue you a policy without checking your health or smoking status. This greatly increases the risk to the insurer, which is why they will charge you more for the policy.
Other drawbacks of guaranteed issue no medical insurance include:
- LIMITED COVERAGE: You cannot get a policy with coverage of more than $25,000.
- 2-YEARS WAITING PERIOD: If you pass away in the initial two years, an insurance claim will be refused.
Why Do Many Canadians Decide to Go for This Type of Insurance?
There are several reasons why Canadians choose this insurance despite its high costs:
- EASE OF APPLICATION for this product is attractive for some people, especially seniors. A straight-forward life insurance policy without tests and a medical questionnaire is good enough for anyone searching for a final expenses insurance policy with limited coverage.
- BEING TOO OLD to qualify for other products. Some insurance products have age limits that make it impossible to apply for if you are too old. The fact that as we age, we have more medical conditions than when we were young, does not help either.
- SERIOUS MEDICAL PRE CONDITIONS often prevent people from applying for “better” types of insurance. Pre conditions include advanced stages of various diseases such as HIV, and other health-related issues such as extreme obesity paired with a history of serious heart attacks.
- BEING SCARED OF MEDICAL EXAMS is another reason why some Canadians decide in favour of guaranteed issue insurance. Avoiding medical test is a good enough reason for some people to pay an extra fee.
As you can see, there are many reasons why Canadians choose guaranteed issue no medical life insurance. We suggest you work with an insurance broker who has experience in situations similar to yours, especially if you have a health precondition. A broker may find a less expensive insurance policy for you with an insurer that works with applicants that have pre conditions. Your broker will help you work through all the steps of the insurance process so you can choose a policy wisely.