Guide to Life Insurance with a Pre-Existing Condition in Canada

While most Canadians with a pre-existing condition are able to get life insurance in Canada, there are still a few ways you may be impacted. Discover what is considered a pre-existing condition, how these conditions can affect policy eligibility and denial, what types of policies are tailored for Canadians with medical conditions, and more with this comprehensive guide.

In this article:

• What is Considered a Pre-existing Condition
• How Do Pre-existing Conditions Affect Life Insurance in Canada
• Factors Life Insurance Providers Consider
• Types of Life Insurance for Canadians With Pre-existing Conditions
  • Guaranteed Issue Life Insurance
  • Simplified Issue Life Insurance
  • Term Life Insurance
  • Permanent Life Insurance
• Life Insurance Rates for Canadians With Pre-existing Conditions
• Disclosing a Pre-existing Condition to an Insurance Provider
• What to Do if Your Application is Denied
• Case Study Examples
• Frequently Asked Questions (FAQs) About Life Insurance With a Pre-existing Condition

What is Considered a Pre-existing Condition

When applying for life insurance, a pre-existing condition is any medical condition you have symptoms for or have been diagnosed with prior to applying for a life insurance policy. There is a wide variety of medical conditions that life insurance companies consider when receiving an application, and many less severe medical conditions don’t affect eligibility or premium rates.

If you are looking for information on a specific condition, feel free to check out any of our comprehensive guides for some of the most common pre-existing conditions in Canada:

How Do Pre-existing Conditions Affect Life Insurance in Canada

Thankfully, common medical conditions with less severe symptoms typically don’t affect life insurance eligibility. However, more severe medical conditions that significantly affect your health and well-being can make the process of applying for life insurance more difficult. This is because insurance providers consider the risk of each applicant and being in poor health can increase your risk to insure.

Being a high-risk applicant due to a pre-existing medical condition can make it more difficult to be approved for traditionally underwritten policies and can lead to higher premium costs for life insurance. However, even the most difficult-to-insure individuals can get life insurance through guaranteed issue life insurance policies. This specialized type of policy guarantees approval and does not require applicants to undergo a medical exam or medical questions. That being said, these policies tend to be more costly to account for the increased risk to the insurer.

Factors life insurance providers consider

If you have a pre-existing condition, certain factors may be considered by insurance providers that can increase your risk to insure including:

• Overall Health: Insurance providers will consider your overall health status, including any pre-existing conditions you have as well as lifestyle factors such as weight.
• Date of Diagnosis: Having a recent diagnosis can indicate a lack of information on the severity of symptoms and treatment effectiveness.
• Symptoms and Severity: Insurers will consider what symptoms are present and how severely they impact your health and well-being.
• Treatment Plan: Any medications or treatments you are currently receiving to help with your condition will be considered when determining the risk level of your condition.
• Family Health History: Life insurance providers will consider if there is a family history of any hereditary pre-existing conditions that may also affect you.

Here is a quick overview of the different factors that can increase your risk to insure if you have a pre-existing condition:

Individuals with pre-existing conditions who are mildly affected by their symptoms, have participated in treatments or medications, and are otherwise in good health, can often obtain a traditionally underwritten life insurance policy with standard rates. Canadians who are more severely impacted by a medical condition may face higher rates and have more difficulty qualifying for traditional life insurance policies.

Types of Life Insurance for Canadians With Pre-existing Conditions

If you have a less severe pre-existing condition you will likely qualify for all the standard types of life insurance available to Canadians. However, for more difficult-to-insure individuals it may be advisable to look into guaranteed issue and simplified issue life insurance policies. These policies are designed for Canadians who may otherwise have difficulty obtaining life insurance coverage and do not require medical exams.

What type of life insurance is right for you will depend on your coverage needs and financial goals. The types of insurance available to Canadians with pre-existing conditions are outlined below.

Guaranteed Issue Life Insurance

Guaranteed issue life insurance is perfect for Canadians who are more difficult to insure due to medical conditions, criminal history, hazardous occupations, and so on. Unlike traditionally underwritten policies, an attending physician’s statement (APS) or medical examination is not necessary as part of the application process. In addition, guaranteed issue life insurance policies typically don’t require applicants to answer any medical questions to qualify. However, because of the increased risk to the insurer, this type of coverage tends to be more costly and offers less maximum coverage than a fully underwritten policy.

Benefits of Guaranteed Issue Life Insurance

• No medical examination, questions, or APS required
• Shorter waiting periods for approval
• Easier to qualify for than traditional policies
• Simplified and more accessible application process

Simplified Issue Life Insurance

Simplified issue life insurance is another great option for Canadians with pre-existing conditions. This is because, similar to guaranteed issue life insurance, this policy type does not require a medical exam or attending physician statement (APS) to qualify. However, unlike guaranteed issue life insurance, this type of insurance requires applicants to answer limited medical questions to qualify. Because of this, simplified issue life insurance policies typically offer more maximum coverage and lower premium rates than guaranteed issue life insurance. This makes it a great option for those with less severe medical conditions who might still struggle to qualify for traditional life insurance due to their health, occupation, lifestyle, and so on.

Benefits of simplified life insurance 

• No medical examination or APS is required
• Medical questions are limited
• More affordable than guaranteed issue life insurance
• Easier to qualify for than traditional policies

Term Life Insurance

Term life insurance is a type of life insurance that offers coverage during a specified term length, often 10, 20, or 30 years. With term life insurance, you pay premiums monthly or annually so that if you pass away while the policy is still active, your beneficiaries receive a death benefit payout. Often these policies can be renewed for a new term up to a specified age and may also be convertible into permanent insurance. This type of insurance is the most popular in Canada as it allows you to gain coverage during times when you need it most and is also the most affordable option for life insurance. Term life insurance can either be traditionally underwritten or offered as a simplified issue life insurance policy with limited medical questions and no medical exam required.

Benefits of term life insurance

• Typically the most affordable type of life insurance
• Flexible term lengths, coverage amounts, and optional riders
• Term lengths can align with current financial obligations
• Potential to renew terms as needed or convert to permanent life insurance

Permanent Life Insurance

Permanent life insurance is a permanent type of life insurance that covers you for the rest of your life, as opposed to for a specified term. This type of policy also has the potential to accumulate a cash value amount through universal or whole life insurance policies. Due to the permanent nature of this type of policy, premiums tend to be more costly than term life insurance policies. Permanent policies can either be traditionally underwritten, or offered as guaranteed issue or simplified issue life insurance with limited to no medical questions asked and no medical exam required.

Benefits of permanent life insurance

• Lifetime coverage often with level premiums
• Flexible premium payment options
• Potential to accumulate a cash value within the policy
• Can be used when estate planning as a tool to offset capital gains taxes

Life Insurance Rates for Canadians With Pre-existing Conditions

For Canadians with a pre-existing condition interested in simplified issue life insurance, here is a helpful overview of monthly life insurance rates from two different insurers for simplified issue life insurance with $200,000 in coverage quoted for male and female non-smoking Canadians aged 20-70:

Disclosing a Pre-existing Condition to an Insurance Provider

It’s important to be truthful and upfront about any pre-existing conditions you have when you are applying for life insurance in Canada. While it’s fair to worry about increased costs or application denial caused by something out of your control, such as a medical condition, providing inaccurate information about your current health can lead to many issues beyond application denial.

Life insurance providers collect personal and health information directly from applicants and traditionally underwritten policies will require applicants to undergo a medical exam and provide an attending physician’s statement (APS). An APS is a questionnaire that an insurance provider will require your physician to complete that offers a summary of any relevant medical information from your health records that the insurer deems important. Insurance providers can also access databases such as the MIB (Medical Information Bureau) to confirm any medical information they have or have not collected from the applicant.

It is very important to ensure the accuracy of the information you submit to a life insurance provider. If your insurance provider determines that information was inaccurately reported or omitted, they have the right to terminate your policy and refuse to pay out a death benefit to your beneficiaries. In addition to this, if it is determined that you intentionally offered significantly incorrect information it can be considered fraud and affect your ability to obtain life insurance coverage in the future.

What to Do if Your Application is Denied

The main reasons life insurance applications are denied are:

• The applicant unintentionally or intentionally omitted or provided false information.
• The applicant does not meet the specified age requirements for the policy they applied for.
• The applicant applied for more coverage than they are deemed financially able to pay based on annual income, net worth, and credit history.
• Medical exam, attending physician‘s statement, or answers to medical questionnaire flagged the applicant as ineligible.
• Lifestyle factors such as obesity, smoking, hazardous occupations, or dangerous hobbies.
• Current addiction issues such as drug addictions or alcoholism.
• Having a criminal record or issues with your driving history such as a DUI.

If your life insurance application is denied it can make it more difficult to obtain life insurance in the future, so it’s important to ensure that you applying for a policy you are eligible for.

After an application has been denied, there are three steps you will need to take before applying again:

1. Discover the reason for your application’s rejection

After your application has been denied, the first step you should take is to contact the life insurance provider to inquire about the reason for the denial. Determining why you were denied will help you better understand what steps to take moving forward. If your application was denied due to lifestyle, health, financial reasons, etc. then you will likely need to reassess the type of life insurance you are eligible for and submit an application for a different policy.

2. Discuss your options with a licensed life insurance agent or broker

If your application was denied for reasons beyond your control, the next step you should take is to reach out and discuss your options with a licensed insurance agent or broker. While an insurance agent works directly for a specific life insurance provider and a life insurance broker represents consumers and can help you determine which policy is best from a variety of providers, either will be able to explain which policies best suit your needs from the insurance provider(s) they represent.

By speaking with an agent or broker you can get expert insight into your specific situation, receive advice on which policies you will likely qualify for, and get help with the application process to decrease the risk of another application denial. This can also be done at no cost to you, as life insurance brokers are paid a commission from the life insurance provider you decide to get a policy through.

If you are interested in discussing your situation with an expert financial advisor, you can always contact us online or give us a call at 1-877-654-6119 so that we can help you discover which policies best represent your insurance needs and help prevent any future application denials.

3. Apply for a policy that better represents you

After speaking with a life insurance agent or broker you should better understand the types of policies that represent your life insurance needs that you are eligible for. Using this new knowledge, you can apply for a policy you are more certain you will qualify for based on your age, medical history, lifestyle factors, and so on.

Case Study Examples

Here are two helpful case studies outlining the process followed by these fictional Canadians with pre-existing conditions, interested in life insurance.

Case Study #1: Jeremy

Jeremy is a 59 year old man with two sons he wants to provide for, even after he’s gone. However, he was recently diagnosed with coronary artery disease and since he also smokes, he worries he won’t be eligible for life insurance.

Here is what Jeremy considers when determining his coverage needs:

• Based on the financial support he currently offers his adult children, Jeremy decides to leave each of his sons $20,000 so they can continue to be supported even without his income. This comes to a total of $40,000.
• Jeremy also has a granddaughter through one of his sons and he decides he would like to set aside some money for her tuition. Based on tuition costs where he lives, he decides to set aside $20,000 for her as well.
• Jeremy also anticipates his funeral expenses to cost around $10,000.

With all this in mind, Jeremy would need $70,000 of life insurance coverage to achieve his financial goals.

Since Jeramy was recently diagnosed with coronary artery disease, he would like to start living a healthier lifestyle by exercising more and quitting smoking. However, he is currently in poor health and worries he won’t be able to qualify for a life insurance policy.

After discussing his situation with a life insurance broker, Jeremy gets a simplified issue life insurance plan with a term length of 10 years and a coverage amount of $70,000. Since the policy can be renewed or converted into permanent life insurance before age 70, Jeremy can work on his health and re-evaluate his needs when his current term ends.

Case Study #2: Valerie

Valerie is a 35 year old asthmatic woman with a young daughter who recently purchased her first house with her husband. She’s interested in purchasing life insurance so that if anything were to happen, her husband wouldn’t be left to pay the mortgage and childcare costs alone.

Here is what Valerie considers when determining her coverage needs:

• The total mortgage amount is $650,000 and she and her husband plan to pay it off in 15 years.
• Their daughter is still young and will likely be financially dependent on them for at least 15 more years, so Valerie wants to set aside $50,000 for expected childcare and education costs.
• Valerie’s savings are enough to pay for potential funeral expenses and other expected end-of-life costs.

With all this in mind, Valerie would need $700,000 of life insurance coverage to cover the expected expenses in the event of her death.

Now that she understands her coverage needs, Valerie is nervous that having a pre-existing condition may affect her premium rates or eligibility negatively since she has had asthma her whole life and regularly takes an inhaler to treat it. She discusses her situation with an expert life insurance broker and determines that since her asthma does not severely impact her, is being treated, and was diagnosed as a child it is unlikely it will affect her ability to obtain affordable life insurance. Shortly after applying, Valerie is approved for a traditionally underwritten term life insurance policy with a 15 year term and $700,000 in coverage.

Frequently Asked Questions (FAQs) About Life Insurance With a Pre-existing Condition

Find the right policy for you

Purchasing life insurance as a Canadian with a pre-existing condition is possible, but can be challenging since it is hard to know which policies you are eligible for. If you would like help understanding what policy options are available, you could always reach out to one of our expert financial advisors here at Protect Your Wealth.

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. We provide expert life insurance solutions, including no medical life insurance, critical illness insurance, term life insurance, and permanent life insurance to build the best package to give you and your family the protection you need, at no cost to you!

Contact us online or call us at 1-877-654-6119 to talk to an advisor today. We’re proudly based out of Hamilton, and service clients anywhere in Ontario, British Columbia, Manitoba, and Alberta including areas such as Stoney Creek, Surrey, Springfield, and Grande Prairie.