No medical life insurance policies are all the rage in Canada right now. In this article, we’ll take a look at why so many people are opting for the convenience of a no medical policy.

But before we can get into the why, it’s important to establish what a no medical life insurance policy is, and how it differs from the other policies that are out there.

No Medical Life Insurance

No medical life insurance falls into two categories:

  • Guaranteed issue policies offer life insurance with no medical exam or health questionnaire. They aren’t restrictive, so anyone can get a guaranteed issue policy, even if you’ve been declined insurance in the past two years. However, the coverage limit is typically lower than other policy types (around $25,000) and there may be payout restrictions during the first two years of coverage.
  • Simplified issue policies require no medical exam, but they will require a health questionnaire that may vary in length between two and 25+ questions. If you can get a simplified issue policy, it’s usually a better bet, since the more health-related questions you answer, the lower your premium tends to be. Further, simplified issue life insurance policies have a higher payout than guaranteed issue policies (around $150,000) and there are fewer restrictions; however, coverage is not guaranteed, and you may be denied coverage if you’ve been denied life insurance in the past two years.

Whether you opt for a guaranteed issue or simplified issue policy, you will still be able to choose between term policies, where the costs start low and increase with each term renewal as you age, and permanent policies, where the premiums start higher but never increase.

Why should you consider a no medical life insurance policy?

If you have certain health conditions or career and lifestyle traits that qualify you as hard-to-insure, if you have a phobia that prevents you from being able to get a medical, or if you have been denied life insurance in the past, then no medical life insurance policies may be the best choice for you. However, there are still a few things to watch out for when you are selecting your policy.

  1. Don’t write off your insurance options without talking to an insurance professional.

    There are companies out there that will still offer plans that aren’t fully underwritten to those who are obese (i.e.: Assumption Life’s Golden Protection plan doesn’t require a height and weight chart, and Edge Benefits Final Expenses offers options to extend coverage and reduce premium costs with a questionnaire), as well as to those who suffer from other serious conditions like depression, diabetes, and heart disease. There are other fully underwritten policies that don’t require medical tests, but they aren’t the same as simplified issue policies, and the premium and payout differences can be significant.

    Talk to an insurance broker who specializes in the hard-to-insure, or take advantage of preliminary life insurance inquiries to make sure you are getting the best possible coverage and rate, given your health and lifestyle specifications.

  2. Make sure you read the fine print on the policy before you sign off on it.

    Make sure you are aware of any restrictions, like two-year waiting periods that limit your payout to a return of premiums paid.

    An experienced broker will be able to go over all of the small print with you to make sure you understand the details—and if you do need to seek clarification on any point, make sure you get the answer in writing and store it with the details of your policy to protect yourself from future contestation.

  3. Don’t overlook the opportunities that can save you money.

    Even the small savings can add up over time, and there are often a lot of options that can help those savings add up. For instance, if you opt to make one annual payment instead of making monthly payments, you could end up saving thousands of dollars over the life of your policy. You can also opt to combine coverage among carriers to maximize your coverage and minimize your premiums. A lot of policies also offer discounts for insuring both spouses in a multi-life policy. There may also be unnecessary elements to your policy that you can opt out of, like the accidental death benefit and add-ons, which add a lot of cost without increasing the policy’s value.

    Another cost-saver involves opting for the questionnaire. The more questions you can answer, the lower your premium and the higher the coverage. Plus, even if you have a serious health condition, you can still save on your premium by revealing that you are a non-smoker. If you are unsure of how to answer a question, ask your doctor. A correct answer to a question you are unsure about can save you a lot more money than guessing can.

    Finally, opt for a plan with a guaranteed premium to prevent your rates from increasing every five years.

  4. Make sure you are working with an experienced independent broker.

    The best way to save money and ensure you are getting the best coverage regardless of the type of plan is to opt for an experienced broker who understands the hard-to-insure market. They have the knowledge and dedication to get you the best plan, and they are up-to-date on all of the carriers and their ever-updating products.

    Direct carriers don’t offer the benefit of broad policy comparison and preliminary inquiry, which may leave you paying more than you have to for coverage that isn’t right for you—or worse, with a potential decline. While a recent decline no longer disqualifies you for coverage that pays out immediately, it still severely limits your options, which can limit your coverage and cost you a lot more in premiums.

    You’d be better off getting a simplified issue plan in place as a backup that you can cancel if you do get approved for a fully underwritten policy. However, your best bet is to consult with a professional life insurance broker who has experience in coverage for the hard-to-insure.

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