One question we hear more often today would be “is Guaranteed Life Insurance worth it?”. Where most people are looking for a yes or no answer, unfortunately, it’s not that simple. The correct answer to that question would be in some cases it is. Let’s take a look at which cases it would be worth it.

First, what is the need for insurance?

There must be a need for life insurance, this is something insurance companies look for. And you can be declined by the insurance company to apply for coverage that would make you “over-insured”, because most Canadians are underinsured, this topic is one that is often missed. But the good news is determining the need for life insurance is easier than you might think.

Here is a shortlist of some common needs for life insurance

• To cover funeral cost 
• Cover medical bills 
• Pay off mortgages debts 
• Pay off student loans
• Pay off car loans 
• Pay off other debts 
• To pay for child education 
• To cover capital gains 
• To replace the income of a loved one 

As mentioned earlier, it is a shortlist and there are additional reasons to buy Life Insurance, but there must be a need for it.

Next look at your health condition. This may be the best factor for determining if life insurance is worth it. For people who are in good health and looking for life insurance applying for medically underwritten coverage will be a more affordable option. In short, if you are in good health and applying for guaranteed coverage, applying for guaranteed life insurance is not worth it because you will end up overpaying.

But what if you are not in good health? Even if your conditions are under control, if you take multiple forms of medication, have high blood pressure, have high cholesterol or have recently had a health scare, traditional life insurance might not be an option.

If at the same time, there is a need for life insurance, then guaranteed life insurance would be worth it. Where you might have to overpay for traditional life insurance or if you are worried about being declined, guaranteed life insurance is the solution for you.

For the purposes of this post, we haven’t gone into depth on guaranteed life insurance. To know more about guaranteed life insurance, read our post CLICK HERE

To summarize guaranteed life insurance has its place but it’s not for every situation. Guaranteed life insurance was designed to be affordable for people who can not purchase traditional life insurance. However, you will end up paying more for guaranteed life insurance as compared to traditionally medically underwritten coverage.

First, what is Guaranteed Life Insurance (GLI)?

Guaranteed Life Insurance in Canada can be either temporary or permanent. “Temporary” is typically used to pay short-term liabilities, such as your mortgage. “Permanent”  is there to help pay your final expenses. Both forms of life insurance are guaranteed, meaning there is no medical test, you are guaranteed to be approved. 

How much coverage can you purchase with GLI?

Most insurance policies offer between $5,000 and $25,000 of the death benefit. However, there are a number of companies that offer guaranteed life insurance products that exceed $1,000,000 of coverage. This gives you a wide range of companies to work with. 

How much does GLI cost?

With insurance in Canada, the more information you provide to an insurance company, typically speaking, the lower the cost of your insurance. Guaranteed Life Insurance will cost slightly more than a policy that was medically underwritten.

The reason insurance companies charge a little more for this type of coverage is there is a greater amount of risk for the insurance company to payout. This is also why if you are in good health, you should first consider other forms of life insurance first, as you will save some money. 

Who typically buys this type of insurance?

• People over the age of 50 who feel they have waited too long to purchase life insurance 
• People with medical conditions that would otherwise be turned down for coverage 
• People who are on medication that could make it hard to purchase medically underwritten coverage
• People who are looking to cover final expenses, funerals, debts, medical bills, etc 
• People who believe they will not be able to get coverage any other way

Which company is the best when it comes to GLI?

There is almost never one company that is best. Companies change their policy so often that a company that might be a good fit for you today, may not be the best fit for you next week. This is why it is always good to work with a brokerage that can help you find and place the best policy for you and your loved ones. 

This article is intended to be brief and give you a little insight into the different companies that offer guaranteed life insurance products by review only a few key differences between some of the companies. As always, products and conditions are subject to change, it’s best to consult with an expert before purchasing any form of coverage.

RBC Insurance

Must be under the age of 75 to apply. With RBC guaranteed issue policy they only allow purchasing coverage of up to $40,000 in benefits. This will be fine for people who are looking to cover the funeral costs, medical bills, and unwanted debts. But not suitable for people who need a larger amount of protection.

Canada Protection Plan (CPP)

Canada Protection Plan is one of the leaders in guaranteed life insurance. They have both Term and Whole Life options available as guaranteed coverage.

Term policies offered are Term 10, 20, 25, and 30 years. This coverage is ideal for covering short term liabilities, like your mortgage or other debts. With this coverage, there is no medical test, and simplified issue meaning you can apply over the phone. Their term plans are renewable to age 80 if those limited liabilities take longer to pay off than expected. If you need protection past age 80 their permanent life insurance is a better fit.

Permanent whole life with CPP offers an easy application process with again, no medical tests. They have both a whole life plan and a T100 which is a low-cost way to afford permanent coverage.

Humania  

Humania has a wide range of guaranteed term products. Their Term length only offers 3 solutions, term 10, 20, and 100. The application process can be done over the phone with no medical tests. Both their term 10 and 20 plans are renewable up until age 80.

Assumption Life 

Assumption Life offers a wide variety of no medical guaranteed issue plans. They only have term 10 and term 20 available, however, they have multiple types of no medical term policies. Depending on your pre-existing health conditions and the amount of coverage you need Assumption life offers a wider variety of ways to get it.

Assumption Life also has multiple permanent Life insurance products. Their product par plus is the whole life insurance product that offers a dividend paid to you, which can either help increase your income or increase the cash value that accumulates in the policy. Very few guaranteed issue life insurance companies offer a product like this. Although you must be under the age of 75 to apply.

If I am over the age of 50, can I still get Life Insurance?

The short answer to this question is, yes. Age alone isn’t enough to decide whether or not you can still purchase life insurance. There are increasingly more options for people over the age of 50, lets break down some of the options you have so you can better understand which is right for you.

The first thing you’ll want to consider is your health:

• Do you smoke?
• Do you take any prescription medication?
• Have you be tested or diagnosed with any condones in the last 12 months?

Regardless of how you answer those questions, there are still affordable life insurance options for you. If you answered no, to all of those questions lets look at your options.

Healthy over the age of 50

Traditional life insurance still might be the best way to go. When we refer to traditional life insurance, we normally mean medically underwritten. If you have nothing hide and are being honest about your health status, traditional life insurance will be the most affordable option for you.

The reason for this is because you give the insurance company more information on who they are insuring. This gives them a better picture and in turn, you have to pay less for life insurance.

But what happens if you (like most Canadians over 50) take some medication or smoke on a regular basis?

Well, good news, there are still affordable options but depending on your specific situation, your options might be limited. You see, if you are over the age of 50 and take medication for something like high cholesterol, you might still be able to qualify for traditional life insurance.

Medication alone isn’t enough to determine which options are best for you. What we always recommend is to work with a broker, someone who can help navigate your specific needs and find the best policy for you, obviously at a price you deem to be affordable.

So what are the options if I take multiple medications or have been diagnosed with some health concerns in the past several years?

Guaranteed issue life insurance is what you’ll want to look at. Guaranteed issue life insurance is exactly that, you can’t be turned down for any reason. With the type of coverage, there are normally two factors you’ll need to know. First, that coverage is normally capped.

This is highly based on the company you work with, but many companies limit your coverage to $25,000. At least to start, this is the main reason to review your insurance, for people who have been in good or controlled conditions for several years might qualify for more coverage or a better rate. So look at the $25,000 as a stepping stone, to better coverage later on.

The second thing you’ll need to know is some companies may offer a waiting period. Think of this as a two year period where if you were to pass away, your beneficiary would collect 100% of the premiums you paid into the policy not the full $25,000 of coverage. After the 2 year period, the full amount would be paid as a death benefit.

Why do some companies have a waiting period on guaranteed issue life insurance?

Financially it would be viable for the insurance company if they didn’t have a waiting period. Think about it, everyone who was on their death bed would purchase life insurance for a few hundred dollars, and then their beneficiaries would receive tens if not hundreds of thousands of dollars in benefits. An insurance company simply wouldn’t be able to survive.

In short, if you are over the age of 50, you still have many options. The goal should be to find the right one for your needs.

What is guaranteed Life Insurance?

Guaranteed Issue Life Insurance or Guaranteed Acceptance Life Insurance is a type of life insurance that does not require you to answer any health questions, undergo a medical exam, or allow an insurance company to review your medical records. Sometimes a guaranteed issue is also referred to as no questions life insurance.

These policies are typically sold with $5,000 – $25,000 of the death benefit, although more can be applied for. This becomes an extremely affordable way to make sure your loved ones are taken care of, and your last memory for them isn’t a final expense bill. You see we all leave final expenses

• Funeral cost
• Medical bills
• Other debts

With Guaranteed Issue Policies you can cover those final costs regardless of your health.

What’s the catch? Is guaranteed issue life insurance too good to be true?

Well, that would depend on the company you work with. Here’s what you need to understand. For coverages that do not ask any medical questions normally, there is a waiting period.

This waiting period (typically 2 years with most companies) states that if you were to pass away in the first 2 years of owning the policy your beneficiaries would only receive the amount you paid into the policy, not the full death benefit.

Why do insurance companies have a 2 year waiting period on guaranteed issue policies?

If you think from the insurance companies’ point of view, everyone could wait until they were on their death bed and then pay a small amount for their beneficiaries to relieve tens if not hundreds of thousands.

Because they can’t do this, they make a 2-year waiting period, where they pay a dollar for dollar what you put into the policy to your beneficiaries. That way they are left with something.

What does a guaranteed issue policy cost?

This will depend on your age and the coverage amount. One thing that is worth noting if you are in good health, you should apply for traditional life insurance as opposed to guaranteed issue life insurance, why? Simple it will cost you slightly less to get a life insurance policy that is medically underwritten.

The reason for that is the insurance company gets a better picture of who they are insuring, because of that it ends up being slightly cheaper.

What company is best when it comes to guaranteed issue life insurance?

That’s a tough question to answer, considering it will change over time. As of right now, CPP, Assumption life, and RBC all have great guaranteed issue policies.

However it always comes down to you, your health status, your age, and how much coverage you would need. It’s always best to work with a representative that can help shop the market and find you the best plan.

That’s why here at TIP Services we have non-commissioned staff standing by waiting to help answer your questions. If you would like help finding the best plan for you CLICK HERE to get a FREE quote.