Red Flags on Your Life Insurance Application
May 7, 2020
If you have one or more of the following concerns on your application, you may want to consider a simplified or guaranteed life insurance application rather than traditional. Some of them do not disqualify you from a traditional policy, but the carrier may choose to enforce higher premiums or exclude a pre-existing condition from your coverage.
3 in 5 Canadians are overweight, raising their chances of preventable weight-related illnesses like Type 2 diabetes and some forms of heart disease. If you fall into the morbidly obese category, you may want to consider a simplified policy. A simplified policy covers smaller amounts, but goes into less detail on the medical questionnaire than a traditional policy.
High blood pressure is considered a long-term risk. If your blood pressure is high now, carriers may see you as a person who is not taking steps toward a healthy future. If you have no other health conditions, you can still apply for traditional coverage, but be sure to work toward lowering your blood pressure for your health – you may receive a more favorable premium later on.
The healthier you are, the lower your insurance premiums. Regardless of if your health is poor due to circumstances within or outside of your control, you may still be denied traditional insurance. Those in poor health should apply for simplified insurance, and those with long-term illnesses (cancer that has not been in remission for more than 2 to 5 years, uncontrolled diabetes, other illnesses that compromise your longevity) should apply for guaranteed issue insurance.
If you plan to travel to a region that your insurer views as unsafe or unstable, they can decline your application. You can either choose to have your trip excluded from the coverage or start your policy after you return.
Excessive drinking can raise your premiums, and more than 2 or 3 drinks per day may cause your coverage to be denied, depending on the carrier. If you struggle to control your alcohol intake, consider applying for a simplified policy.
Use of illegal drugs such as cocaine, methamphetamines, or heroin mean an immediate denial and only qualifying for guaranteed issue insurance. Many insurers do not consider recreational cannabis to be an issue, depending on the frequency of use – talk to your financial advisor about how frequency and method of intake may affect underwriting.
Participating in outdoor recreational activities such as rock climbing and skydiving may be great for your physical health, but are huge concerns for underwriters. Keeping this in mind, you may want to compensate for thrill-seeking with a simplified policy. You can also ask our advisors about options for accidental death coverage.
Underwriters may take your occupation into consideration when determining your rating; a rating is a percentage over the typical premium amount for the same coverage on an individual without any health or risk concerns. The higher the risk to insure an individual, the higher their rating and premiums. First responders, pilots, military personnel, etc. have a lot of risk built into their careers. Before seeking insurance, be sure to check with your employer to see if you have special coverage through a work or association plan.
Your Driving Record
Reckless behaviour on your driving record (too many speeding tickets, a DUI) can mean a rating on traditional insurance. If you have lost your license or get your vehicle insurance through a high-risk carrier, consider applying for a simplified issue policy. If you keep up a good driving record for long enough, you could re-apply to see about lowering your premiums in the future. Some vehicle insurance providers have programs which track your safe driving trips to lower those premiums as well.
A Previous Denial
One of the reasons it is always best to work with a broker for your life insurance is that they can best match you with the policy that suits your needs. An agent can only sell the products of their company, but brokers have access to all Canadian products. With fewer choices you may have to apply for a policy with a high chance of denial, and this denial can make it harder to get a policy in the future.
Our advice? Make an appointment with one of our financial advisors – we can help match you with the best insurance options for your needs, and help get you on track for your savings goals. While we will try to get any client coverage with the main Canadian carriers, we also have simplified and guaranteed insurance options available to those who otherwise wouldn’t get coverage.