Guaranteed Life Insurance Guide: Intro

Welcome to your guaranteed issue life insurance guide. This page will give you a good understanding of guaranteed issue life insurance (also called guaranteed issue life insurance or guaranteed acceptance life insurance), will inform you of savings opportunities, and also provide a number of additional useful tips based on our publications. Guaranteed issue life insurance is a type of no medical life insurance. This policy requires neither a medical exam, nor a health-questionnaire to answer. It is available for you even if you were declined for a traditional policy during the last two years. Typically, the coverage (face value) will be limited to $25,000 – $50,000 and there are limitations in terms of payouts if the insured dies within the first two years of the policy’s activation. It is important to know that if a policyholder passes away during this two year period the claim will not pay out; only the premiums will be returned to a beneficiary.  

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How is Guaranteed Life Insurance Different From all Other Products?

Here is an overview showing how guaranteed life insurance compares to other life insurance products.
 Traditional, medically underwritten Life Insurance WITH medical examTraditional, medically underwritten Life Insurance WITHOUT medical examNo Medical, Simplified Life Insurance (or Simplified Issue)No Medical Guaranteed life Insurance (or Guaranteed Issue)
Long questionnaireYesYesNoNo
Short QuestionnaireNoNoYesNo
In-person medical examYesNoNoNo
Possibility of you being declinedYesYesYesNo
Coverage amountVery highHighMediumLow
CostsVery lowVery lowMediumHigh
Important to knowRequires an in-person medical exam where a nurse would visit youTypically, available only for particular agents / customer segments which represent low riskHas some coverage limits but these have been significantly increased during the pandemicComes with 2 year deferral period where if a policy holder passes away during the first 2 years, no claim will be paid (only return of premiums)
In summary, guaranteed issue life insurance is a type of policy that anyone can get any time for any reason. There are no medical exams or questionnaires required for the application. However, since the insurer assumes all the risk, it costs more than an underwritten or simplified policy, and it has a lower coverage cap. Most policies only return the premiums and do not pay the claim if the life insured passes within the first two years of the policy (some make an exception for passing due to an accident, but not for illness). This is to dissuade the terminally ill with a less-than-two-year life expectancy from purchasing a policy.  

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What Does Guaranteed Life Insurance Cost?

When compared to all other insurance types, guaranteed life insurance is the easiest one to get, but it comes at a cost. Guaranteed issue life insurance is the most expensive one for the same amount of coverage. To give you an idea of insurance costs, we compared various types of life insurance for a 40-year old male, non-smoker. This policy has a coverage of $50,000. Please note that this is just a sample insurance quote – your personal situation may be different.  No medical guaranteed life insurance premiums are shown here in dark blue and it is clear that these premiums are higher than premiums for simplified issue life insurance (shown in light blue) or premiums for a traditional life insurance product with medical underwriting (shown in grey).
 

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When Should You Consider Guaranteed Life Insurance?

Despite its drawbacks, there are times when a guaranteed life insurance policy is the best option.
  1. You have been declined for life Insurance: Being declined for life insurance (something experienced by 5 per cent of Canadian applicants annually) can affect your ability to qualify for traditional or simplified insurance later on. If you have been denied, guaranteed issue may be a better option.
  2. You have a serious health issue(s): Parkinson’s disease, cancer, heart problems – these can impede your ability to get a good rate on insurance. Your health is not a factor in qualifying for guaranteed issue insurance.
  3. Risky lifestyle: If you routinely engage in dangerous sports like alpine skiing, or if you use drugs or abuse alcohol, this will affect your application for a traditional policy. The guaranteed issue application does not ask questions about your lifestyle.
  4. Risky job: Member of a bomb squad? A fire fighter? A logger? If your job prevents you from getting an underwritten policy, consider guaranteed issue instead.
  5. You don’t like doctors: If you have no time to complete the medical or you simply don’t like doctors, you don’t need to procrastinate on your life insurance. Simply choose no medical and skip the doctor’s visit.
 

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How Can You Save on Life Insurance?

  • Consider simplified and traditional insurance first: Traditional and simplified cost less than guaranteed insurance. A minor health condition may get you a rating on a traditional plan, but will still be cheaper overall than guaranteed issue.
  • Use independent brokers to compare options: A broker knows what questions are on the application and therefore can match you with the best possible choice for acceptance. They compare the rates and available riders and match you with the best plan at the best price for your needs.
  • Ask doctors when you are in doubt: Filling out an application on your own and not sure how to answer one of the medical questions? Ask your doctor. Based on your file, they can tell you how to best answer the question.
  • Non-smokers pay less than smokers: Smoking costs you in many ways – especially when it comes to life insurance. Smokers will always pay more. In fact, some pay nearly double the rates of non smokers.
  • Be sure about the timing of your past health issues: Sometimes a health issue that has been resolved or is in remission won’t matter for your application. For example, a heart attack that you fully recovered from more than seven years ago may not trigger a rating on a traditional policy. A broker will know how the insurer treats past medical issues.
  • Know what coverage you need: The insurer assumes all the risk for a guaranteed issue policy, so the coverage cap is low. If you need more than $50,000 of coverage, talk to a broker about your other options. You may be better served with a simplified policy or a traditional policy with a rating.
  • Diabetics are insurable:Not all insurers exclude diabetics. Some do not consider it a medical condition at all, and others will consider it if it is properly managed and under control.
  • Age rounding is important: The first six months before your birthday are considered your current age when it comes to insurance applications. The last six months is your attained age, meaning the insurer will round up. Age is a factor in your premium so apply in the months while your age is still rounded down.
  • Other tips:Contacting an experienced, licensed broker (see the button below) means seeing all your options and getting the best rate. Broker services are free and come without any obligation to buy a policy.
 

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Which Companies are Front Runners for Guaranteed Life Insurance?

Based on our interviews with insurance professionals, we identified the following companies as being focused more on the hard-to-ensure/guaranteed insurance market – luckily our insurance brokers work with all of them and you can access our brokers with a call or email:
  • Canada Protection Plan
  • SSQ Insurance (now Beneva)
  • Specialty Life Insurance
  • Industrial Alliance Excellence
  • Empire Life
Many other companies offer guaranteed life insurance plans, including all the largest players like Manulife, Sun Life, and Canada Life, but they do not necessarily see these plans as the core of their businesses.

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