If you’re of a certain vintage in Canada you probably remember an ad on television. A mother and father sitting around, seemingly waiting for the phone to ring, and when it does they are astounded to hear that it’s their son. ‘It’s Patrick, he took out life insurance.’ They go on to lament that it’s too late for them to get any life insurance and they are assured by their son that this isn’t the case because he didn’t even have to answer any questions to get his policy. Coverage is guaranteed. It goes by many names but non-medical life insurance, no medical life insurance or med-free life insurance are options that are available to Canadians. You need to understand how it works first though.
The first thing is that med-free life insurance will always cost you more than a regular policy would. Think of it this way, if you are an insurer, why is this person not willing to answer medical questions? The answer almost always is that there is something in that information that would result in an extra premium being requested or coverage not being offered at all. A common analogy that I use is that you can’t wait until your kitchen is on fire to get fire insurance. When it comes to life insurance, you can wait until you’ve gotten bad news from the doctor, you just need to be willing to pay extra for waiting.
The second thing to examine is if the guaranteed policy has any waiting periods applied to it. Many of these policies will have a ‘limited benefit period’. The time line varies but if your coverage has a limited benefit period of two years that means that if you die within two years from the policy date then premiums are refunded but the death benefit does not pay out. You may receive a small amount of interest on the premium dollars but basically if you die during the limited period your beneficiary receives back what you paid into the policy, not the death benefit amount.
Guaranteed issue life insurance plays an important role in coverage for people. In some situations it is the only coverage that someone can get and can still be really valuable for covering final expenses and other obligations. As always, make sure that you know what you are getting into when you apply for the coverage and you will avoid any surprises down the road.
You can find more detailed information regarding med free life insurance on our website by clicking here.