How No Medical Life Insurance Works: Who Needs It & How Much It Costs

No medical life insurance is a great alternative for Canadians that don't qualify for or want fully medically underwritten coverage for whatever reason. The reasons one seeks this type of coverage can include not qualifying for traditionally underwritten policies, a need for quick coverage that doesn't require medical underwriting, an aversion to needles or blood work, and more. Our insurance expert, D.R. Mowat-Shiels, explains the ins and outs of how no medical life insurance works in Canada. So, Dermot, one thing I see people searching for on the site quite a bit is why do insurance companies require so much information about your medical history? What is it that they do with this information? Why is it so essential to an insurance company? Yeah, I get asked that question all the time. The reason why insurance companies need to know a bit about your medical history and your pre-existing conditions, if there is any, it helps them to understand the risk they're insuring. So, if somebody has a pre-existing condition, it could be a quite serious one or it could be something that's, you know, quite mild, moderate, like the most commonly taken medication could be high blood pressure or cholesterol. Once they're under good control, it's quite an easy sort of circumstance to underwrite. But on the flip side to that, if somebody has a more serious pre-existing condition or had had serious health complications in the past, it may make them uninsurable or it may mean that they might get a high rating. So, that's the reason why they're looking at your medical history, to help them understand the risk that they're taking on and insuring and seeing, you know, if that's going to issue you with a standard rating or a possible rating on your policy. Generally speaking, there's no way to avoid the insurance company asking about your health. But if somebody is uncomfortable with maybe doing a medical where a nurse calls to their home to take maybe a blood sample or urine sample or just to take their vitals, there is ways to avoid doing that. With the traditional policies, depending on your age, coverage amount, or if you disclose any pre-existing conditions during the application process, that may prompt the medical. But if you're looking to avoid doing a medical, there is of course no medical policies. No medical policies are great for avoiding doing a medical, but they only entail you having to answer a questionnaire during the application process. Price-wise, I imagine there might be a difference between no medical and medical, or like fully medically underwritten life insurance? Yeah, of course. No medical policies are generally more expensive. The older you are, similar to traditional life insurance, the more expensive they are. But the rate tends to be, you know, in some circumstances it could be double whatever coverage you're applying for. For traditional life insurance, if you're to apply for the same coverage with no medical, you could generally expect possibly double the premium. Or in some younger clients, there may not be that much difference at all. But generally speaking, they are more expensive. Yeah. So besides the medical questions and lab work and that kind of medical underwriting, are there any other reasons why someone might choose a no medical or simplified life insurance policy? Yeah. So when somebody applies for a traditional policy, and if they have a pre-existing condition, it can often come back with a rating or a high rating. So if a person knows they'll qualify for a traditional policy, but it comes back with a rating, one way around that would be to apply for a no medical policy. Because if you are going to get a high rating with the traditional life policies, it can often just be as cheap just to go to a no medical policy that will be lower in premium. Another reason as well why a client may go for a no medical policy over a traditional policy, depending on the pre-existing condition, the insurance company may ask for an attending physician statements. And depending on the doctor's office, they can sometimes take a really long time. From my experience, I've had clients wait five or six months for these attending physician statements. And sometimes there can be a lot of back and forth with the insurance company and the doctor's office. So again, it may just come down to how quick somebody wants a policy to get issued, because the attending physician statement can sometimes take weeks, months, a very long time to receive. So if somebody wants coverage in the immediate or the short term, a no medical policy, which could be a little bit more money, but might not be that much money to the particular client, they might just say, let's just go for a no medical policy straight off the bat. Is there anything that would prevent you from getting a no medical life insurance policy? No, everybody with no medical policies, there's different questions that are asked throughout each section on the questionnaire. From my experience dealing with a couple of companies that specialize in no medical, there tends to be a couple of sections. There could be section one, two, three, and four. And as you answer no in each section, you move into the next section and so on. And that will determine how much coverage you get and how long you can get that coverage for. But if someone was to answer yes in section one, they'd pretty much stop and that would be the coverage that they would apply for. So everyone qualifies for some form of no medical insurance. It just means that they may not qualify for a large coverage amount. They may only be able to get a lower coverage amount. And of course, it may mean that they're not covered from day one due to their pre-existing condition. So they may have like a deferral period, which basically means in a nutshell, that for the first year or for the first couple of years, they will have no coverage other than for accidental deaths, depending on the insurance company.