Top 5 Things to Consider Before Applying for Life Insurance

If you’re looking for life insurance, here are some tips on what to look for in a policy for yourself. If you need specific advice, talk to an advisor today!

15 Minute read

Originally published: October 24, 2022

Top 5 Things to Consider Before Applying for Life Insurance

Top 5 Things to Consider Before Applying for Life Insurance

If you’re looking for life insurance, here are some tips on what to look for in a policy for yourself. If you need specific advice, talk to an advisor today!

15 Minute read

Originally published: October 24, 2022

Top 5 Things to Consider Before Applying for Life Insurance

Before applying to life insurance, there are a lot of things to consider in order to make sure you are finding the best life insurance plan for yourself. Learn the top five things to consider before applying for life insurance; what underwriting looks for on your application, how much coverage you need, the available types of life insurance, and considering the type of company and their benefits, is crucial in creating the perfect life insurance package for yourself.

What affects your application for life insurance?

It is helpful to consider how the life insurance company decides whether to give you a policy when you apply for life insurance. Does the business see you as a risk? Because being deemed high risk will result in a higher premium or perhaps a life insurance policy denial. That doesn’t mean you won’t be able to buy life insurance; it just means that there are different kinds of plans and levels of coverage you may choose from. 

The process of applying for a life insurance policy can be seen in the photo below – it starts by answering and providing information for the application which goes to the underwriting of the company, the underwriting will then determine to approve or deny your application following their company’s guidelines.

3-Step process of applying for a life insurance policy.

Creating a list of many things that the underwriting of a life insurance company will look at when you apply for a life insurance policy, including: 

All these factors listed above will then be considered into creating a rating for you as a client, rating the amount of risk you are to the company. If you are considered high risk, the options for life insurance for yourself changes – making it more difficult or expensive to find the right life insurance policy for you.

What is considered high risk?

When applying for life insurance, the underwriting of the company receives your application and based on the information you provide, the underwriting will rate you on your amount of risk. It’s important to remember that a life insurance company is a business, and if they believe you have a larger probability of losing money than making money for them, they will view you as high risk and may refuse to give you a policy or raise the cost of your premium. It’s also important to note that the most common type of life insurance is traditional (term and permanent) life insurance as well as is the most likely type to deny you a policy for being labeled high risk.

Below is how your information increases or decreases the risk you are considered to the life insurance company:

Different factors that are considered by a life insurance company when you apply.

The higher your risk, the higher your rates and the chance to be denied life insurance policies is. Take for example, if you are someone who has or survived severe medical conditions, then you have a high chance of being denied from certain term or whole life insurances. But it is important to remember each company has their own guidelines, meaning that if one company denies you for one thing a different company may not deny but instead increase your premium. And there is ALWAYS an insurance plan for you out there, no matter what life throws at you! Ask an advisor for help today to find your perfect life insurance package.

How much coverage do you need?

The coverage amount of a life insurance policy is very crucial, it is the tax-free lump sum benefit your beneficiary will receive in case you die while covered under the policy. And finding out the amount of coverage you need can be challenging at times because you need to think ahead, if you were to pass away in the near future or longer, how much money would be enough to cover costs like debts, living expenses, funeral costs, and more, to support and avoid financial instability for your family.

Calculating the coverage on your own could be tough, there are multiple ways you can figure out your coverage amount perfect for you. For a general guess, you can multiply your yearly income by 10x or 15x, sometimes even 5x depending on how reliant your family is on your income and your financial obligations. Or, if you want a more accurate calculation of the coverage amount you need, you can use something known as the DIME method, standing for: 

  • Debt: Do you have any kind of debt or financial expenses? How much will be left on your family in case you pass away?
  • Income: How much of your income does your family depend on?
  • Mortgage: If you have a mortgage, how much is left?
  • Education: Will your dependent go to school?

By referring to all the factors you need to consider when adding up your total coverage needed in case you pass away leaving your loved ones exposed to financial hardship. Finally, you need to incorporate your own personal assets as well, like if you have very large or different types of savings accounts like a RRSP, RESP, or more for you or your dependents. Then by following the formula above, you are finding the amount of coverage you need by finding the difference between the total additions of DIME and the total amount of assets you already have saved.

If you are looking for deeper information about finding the right coverage for yourself, check out our blog about how much life insurance you need

Life insurance options and Add-ons

There are different kinds of life insurance plans including: traditional, simplified, and no medical or guaranteed issues. Each person is different, the one you should apply to depend on factors like your lifestyle and medical information. Typically for the cost of life insurance, starting at cheapest and increasing is: term, permanent, simplified, no medical and lastly, guaranteed issue for being the most expensive type of life insurance for accepting anyone. So, the lower your risk is considered to be, the lower your premiums will be as well as the likelihood of you being accepted into traditional (term and permanent) life insurance increases. 

For a quick overview of different types of life insurance:

  • Term life insurance is the cheapest type, offering policies between 5 and 30 years long. Usually give a fixed rate for the duration of the policy and can have auto renewal options to avoid additional underwriting process. Maximum coverage is usually below 10 million dollars, varying per company. More information can be found on our blogs about the cost of a 10 year or 20 year term life insurance policy.
    • Good for those who have a financial obligation like a mortgage, dependents, business, or any type of debts, especially if you just started this obligation and are looking for coverage for about the duration of paying off financial obligations.
  • Permanent or whole life insurance is the second cheapest type of life insurance and lasts your whole life. It also usually has a fixed rate or even sometimes it is possible you pay for a certain period of time then don’t need to again. Commonly has a cash value that grows over time. Maximum coverage is usually below 10 million dollars, varying per company.
    • Great if you are looking for some permanent coverage, maybe not much will change in your life affecting the amount of coverage you would need in your policy, or maybe you are interested in investing and growing a cash value.
    • Includes three different types of permanent life insurance: universal life, whole life, and term 100. More information can be found on our blog: Permanent Life Insurance: Universal Life vs Whole Life vs Term 100.
  • Simplified life insurance is great if you were denied term or permanent life insurance. As simplified life insurance weakens the guidelines of the accepting process of life insurance by not requiring a medical examination. You will be asked a varying amount of questions that reflect on your application process.
    • Big difference with simplified life insurance is that it is more expensive than term and permanent life insurance, but it does take a little less time for processing  applications. Maximum coverage can go up to $1,000,000, depending on the company.
  • No medical or guaranteed life insurance is great for those who either don’t want to disclose their entire medical record or have serious health conditions or factors that cause them to be denied from the other life insurance types. As a result, no medical or guaranteed life insurance is health conditions the most expensive life insurance type.
    • Key highlights include no medical questions and no medical exam. Has the fastest approval, sometimes instant. The downfall is the maximum coverage is the least out of all the other types of life insurance, being around $25,000 to $50,000.

For a deeper comparison of the three main types of life insurance policies, read our blog comparing Underwritten vs. Simplified Issue vs. Guaranteed Issue life insurance policies. And see the table below for a comparison of these types of life insurance policies:

Overview of guaranteed, simplified, and fully underwritten policies


There are also different types of insurance (known as optional riders) that allow you to add additional coverage, for example, disability insurance covers you and gives you a portion of your income in the case you become disabled and are no longer able to work, or critical illness insurance provides benefits if you become critically ill.

If you are looking for lots of information on the different kinds of life insurance, try reading our blog about what type of life insurance is right for you.

Finding the right company

Companies can offer not only the best prices, they can offer benefits too! If you know what you need, you then need to find the best company that offers it, but don’t forget to keep an eye out for different benefits each company could offer. For example, Manulife is Canada’s largest life insurance company and they partnered with different large brands in order to present Manulife Vitality, an application asking users to complete various types of tasks promoting users to live a more active and healthier life. They do this by giving the users the chance to win gift cards or to earn rewards like free electronics and discounts up to 50% off to famous brands and subscriptions. Therefore, when looking into a company, look to see if the policy is what you are looking for, as well as if there are any built-in or add-on benefits that can potentially help protect either you or your family more. 

Some examples of different benefits a company could offer include:

  • Rewarding programs like Vitality by Manulife
  • Living benefits
  • Built-in additional insurance like critical illness or disability insurance
  • Discounts to customers of certain products

For more information, try reading our blog about the best life insurance companies and the top life insurance companies. Always know you can get free expert life insurance advice from Protect Your Wealth, contact us today by any way you prefer, we can help you find the best life insurance policy that will satisfy your needs.

Working with an advisor

You deserve to get the best life insurance policy and rate available for you, finding it on your own can be time consuming to try to find and compare a lot of information from different companies, which is why life insurance advisors are here. Read some reasons to work with a life insurance advisor:

Overview of guaranteed, simplified, and fully underwritten policiesReasons to work with a life insurance broker are not only for the time-saving free expert services

Working with a life insurance broker is time-saving because there are a lot of companies that have different:

Using a life insurance broker can help cut down the time to research and understand all the information in order to create the best life insurance package for the best price available from various companies.

Which is why a life insurance advisor can really make a large difference in your life. For example, here at Protect Your Wealth, we are licensed to help you by simultaneously checking quotes from different types of life insurance policies, coverages, as well as different companies and benefits. Where if you did this alone, you would be required to individually contact and provide your information each time to get a life insurance quote from each company and type of plan. Sometimes, getting quotes can be quick and easy but sometimes it can take more time or be more difficult, so having to only provide your information once to get a lot of comparisons from different companies is much easier than repeating the process at each company. Don’t forget, the best part is, we provide life insurance advice for free! Contact us today to help you and your loved ones feel secure with the best life insurance policy with you and your family in mind.

For more information on what a life insurance advisor can do for you, read our blog What is a Life Insurance Broker?

Frequently Asked Questions (FAQs) about Life Insurance

Yes! No matter what you are being denied or are worried about, everyone can have life insurance. The only thing is, the coverage you receive and the price you pay can fluctuate and change depending on your situation. Whether you have medical conditions, enjoy risky activities, work a dangerous occupation, driving or criminal record, or anything you’re worried about being denied for, there is a life insurance policy out there for you!

The amount of coverage you need is based on the amount of financial obligations you have, whether it’s a business, house, or family. You want enough coverage so that in the case that you pass away, your beneficiaries will not be financially burdened following your death – you want to be able to cover some costs such as: funeral costs, debts, business upkeep, child support, education cost, and more.

To learn more about finding the right amount of coverage for life insurance, read our blog How Much Life Insurance Do I Need

Life insurance is worth it depending on what you have and what your needs are. If you were to pass away would there be anybody who could be financially burdened by funeral costs or debt in case you pass away? If you answered yes, then life insurance could be a very good option for you. Life insurance is very commonly used to help save your loved ones from financial burden in case you pass away. Getting a life insurance policy is great for you if you have financial obligations, including but not limited to: being a primary income earner, want education paid off for dependents, have any debts like a mortgage, or much more. While some won’t need life insurance, to others, life insurance can really make a big impact on a family in a time of need. 

For deeper understanding on the purpose of life insurance, read our blog Is Life Insurance Worth It In Canada.

The best life insurance policy depends on many more factors than just your physical health. A great blog to get a deep understanding of the best life insurance policy for you is How to Get the Best Life Insurance Policy and Rates in Canada

Yes! Absolutely you can get life insurance with any health or medical condition, there are certain types of life insurance made just for this, for example, no medical or guaranteed issue life insurance policies, are a great option for you, especially if you have been denied a life insurance policy before. 

Interested in learning more? Read our blog Guide to Life Insurance with a Medical Condition.

The top 5 life insurance companies that we highly recommend are: 

  1. BMO Insurance
  2. Canada Life 
  3. Canada Protection Plan (CPP) 
  4. Empire Life 
  5. Foresters Financial

This doesn’t mean that they are necessarily the best life insurance companies for your situation. Our life insurance brokers can compare rates from various life insurance companies and find the right life insurance company for you! 

First, it is important to understand why you were denied life insurance, then you are able to access your next steps, such as: do you look for a different type of insurance plan or could you need to apply to a different company?

If you are looking for a deeper understanding of reasons why you could be denied life insurance, check out our blog about 6 Reasons Why You Were Denied Life Insurance.

Considering a life insurance policy?

There’s a lot to consider when you are looking for the right life insurance plan for yourself. There are many different types of life insurance policies for varying purposes, so let us help you find a life insurance policy to suit your needs. Since 2007 at Protect Your Wealth, we work with and compare policies and quotes from the best life insurance companies in Canada to ensure the best solution for you and your needs. 

If finding life insurance is something you are interested in, contact Protect Your Wealth today for free advice on finding the right life insurance policy for your needs. We are proudly based out of Hamilton, servicing clients anywhere in Alberta, British Columbia, and Ontario, including areas like Lethbridge, Maple Ridge, London, and Oakville

Talk to an advisor today.

Best Life Insurance Quotes Canada