Although the process of getting Life Insurance in Canada can get more complicated when you have a chronic illness, it does not necessarily hinder you from being accepted.
When you have a chronic illness, it is understandable that you will aspire to apply for Life Insurance. This can give you the peace of mind that your family can be taken care of after you have passed away. It will be less cumbersome for your beneficiaries to arrange funeral services, resolve debts and pay the daily expenses. However, many prospective policyholders wonder if it is possible to obtain coverage when you are a high-risk candidate?
The answer is yes, fortunately. Although the process of getting Life Insurance in Canada can get more complicated, your chronic illnesses do not necessarily hinder you from getting accepted.
What is a chronic illness, and how does it affect Life Insurance?
A chronic condition usually lasts for at least a year and can influence your ability to perform daily tasks, such as walking and dressing. Chronic illnesses can be very severe and require continuous medical attention. They include but are not limited to heart disease, cancer, stroke, high blood pressure, obesity, asthma, HIV/ AIDS.
Many of these conditions are insurable. Some common ones are arthritis, diabetes, asthma, high cholesterol, or mental conditions like depression. For instance, if your diabetes is well controlled, you are qualified to get several different insurance plans.
When you apply for a Life Insurance policy, the provider takes into consideration several factors to decide your eligibility:
- Your age
- Where you live
- The type of chronic condition
- The severity of the illness
- The date of your diagnosis
- How well managed your disease is
- Your overall health status
What are the different types of Life Insurance for people with chronic conditions?
Life Insurance in Canada varies depending on each unique case. Some chronic illnesses are more severe than others, which can affect the type of policies you are eligible for. Overall, there are three types of Life Insurance for people with chronic conditions:
- Traditional Life Insurance: this, of course, includes both Term Life Insurance and Whole Life Insurance. Traditional policies are feasible in the case that your illness is managed and not terminal. However, this can require medical checks, which affects your premiums.
- Simplified issue Life Insurance: if your condition is minor and you are healthy, this can be an excellent option for you. If your condition is under control, you will be accepted. You need to provide information about your medical history and fill in a health questionnaire to receive your quote. There is no medical exam needed.
- Guaranteed issue Life Insurance: If you prefer to forgo both medical checks and health questionnaires, you should consider this type of policy. Most people who apply for this usually get accepted. However, there is a catch since guaranteed issue Life Insurance is more expensive than other types. So, be prepared to pay a higher premium if you have a chronic illness that otherwise prevents you from obtaining coverage.
Do I have any other options if I cannot get traditional Life Insurance policies?
Should your illness be life-threatening, it is exceedingly challenging to get offered a standard Life Insurance policy. Therefore, we suggest you look into Final Expense Life Insurance, also known as Burial Insurance.
This policy is designed for people aged over 50 years old and does not require any medical examinations or underwriting. It resolves your final expenditures, including end-of-life bills, medical costs, and even any outstanding debts. In other words, after you die, your beneficiaries can use the payout in any way they see fit.
How does my illness impact my Life Insurance rate?
The underwriting process will consider all information about your personal, financial, and medical situation to figure out the degree of risks associated with your unique case. Underwriters then decide the likelihood of death compared to the average person with the same age and demographics using details about your health and lifestyle.
After that, you will be classified into different tiers, namely:
- Preferred Plus
- Preferred
- Standard Plus
- Standard
- Preferred/Standard Smoker
The first category – Preferred Plus, will be offered the cheapest rate, and the further you go down the tier, premiums will get increasingly expensive.
If your illness is complicated, there is a category called “substandard” with premium fluctuations depending on your health. If you consider this too unstable, you can compare the rate with the “guaranteed issue” and see which is the more affordable option.
Reminders on how to get accepted for Life Insurance coverage when you have a chronic illness
The key is to find a policy that meets your unique needs and budgets when weighing different options. We have some tips and tricks to help ease this process and ensure you get what you want.
- Always work with a specialized insurance broker/representative: you should find agents specialized in high-risk coverage. They are more familiar with clients in the same situations as you and will be more likely to introduce you to specific insurance companies in Canada. Besides, you will also be reminded of some limitations when applying for such coverage.
- Consider guaranteed issue Life Insurance if you can afford it: this undoubtedly grants you the policy, and you can skip all medical exams and health questionnaires.
- Be open, honest, and upfront about your medical conditions: Do not simplify or sugar-coat your illness to get better quotes. Your provider can cancel your coverage without a refund, and you will lose all future payouts to your family.
- Keep managing your illness: If your situation improves (e.g., you are in remission), you can request new medical checks for lower premiums.
- If the previous one denies you coverage, try another insurance provider: Not all companies treat sickness the same. Some will be willing to accept your application affordably even if you have pre-existing conditions.
- Wait if possible: If your condition is only temporary and curable, some insurance providers in Canada can give you decent rates once you can prove that you are as healthy as ordinary people.
The bottom line
It is certainly possible for those with chronic illnesses to obtain Life Insurance coverage. But make sure you consider several factors and different policy types to get the most suitable one for your situation.
Frequently Asked Questions
Is it necessary for me to disclose my chronic illness to the insurance provider?
The answer is yes. You must be open, honest, and transparent about your medical situation to the insurer. When you fill out the form, you should make sure to include all available information about your complete medical history, such as when you were diagnosed, what the symptoms are, how severe your condition is, etc.
Failing to do so will result in your application being accepted. Worse, it will be considered fraud which affects your ability to get coverage.
What are Life Insurance riders for chronically ill policyholders?
Riders are usually recommended when you wish to add some extra protection to your current policy. They give you the option to customize your coverage to match it with your unique circumstance.
For people with chronic illnesses, it is suggested that they use accelerated death benefits riders (or living benefits riders). Even if you are still alive, you can still benefit from these riders.
Other types that you can consider:
* Chronic illness rider: when your health deteriorates, and you can no longer perform daily living activities (e.g., dressing or walking), this rider enables you to use a part of your death benefit for further assistance.
* Waiver of premium rider: this can waive your premiums while the conditions persist but only before you get diagnosed with a chronic illness
* Long-term care (LTC) rider: you can pay for expenses related to a nursing home or medical care with your death benefit if necessary.
Of course, the cost of riders varies from provider to provider. So, remember always to shop around, ask for quotes from several companies or consult your insurance broker to get the most suitable and affordable rider for your needs. Insurance Direct Canada is one of the most trusted insurance brokers in Canada, for your information. You can head to their website and make direct contact or leave us a message and we will help you.
What should I do if an insurance company denies my application because of my chronic illness?
We know that obtaining coverage when you have a chronic illness can be a daunting process, and you can get rejected. However, keep in mind that several companies on the market are more flexible than others.
So even if you got denied by one carrier, it does not necessarily mean that you cannot shop around for other providers.
Another option, as we have mentioned in the article, another option is to consider a simplified Life Insurance or guaranteed issue Life Insurance plan. Your chance of getting coverage will increase (with higher premiums, of course).
What is the Life Insurance option for me if I have cancer?
As mentioned in the article, it is still possible to get insurance coverage even if you have cancer. The underwriters will review the type of cancer you have, its seriousness, and how well controlled your condition currently is when you apply for coverage.
If you are in remission, you can even get more affordable pricing. If you have been in remission and out of treatments for 2 to 5 years, it is even possible to get accepted for traditional Life Insurance plans.
For prospective policyholders who are terminally ill cancer patients, finding suitable coverage is not a simple task. This applicant is usually qualified for guaranteed issue Life Insurance only, but this can be significantly more expensive. Additionally, you might even face some limits in terms of your payouts for some of the first months or worse, years of your plan. Thus, if you are in this situation, make sure you get advice from licensed Life Insurance consultants.
[…] example, your application is declined because of heart disease. If you feel comfortable precluding payouts for any heart-related complications after your death, […]
[…] (except for Alzheimer’s or the other dementia)– drug or alcohol addiction– illness or injury caused by an act of war– attempted suicide or intentionally self-inflicted […]