If you’ve never applied for life insurance before and are considering it now, you should know the steps that are taken from the moment you start the life insurance application process to the day you receive your policy. This post should give you a general idea of what to expect when applying for life insurance. Due to the business practices of different insurance companies in Canada, your experience may be different from the steps outlined below.
Keep in mind that the whole life insurance application process can take as short as a couple of days to as long as a few months. The discrepancy depends on the complexity of your case, including your health and personal background. If an insurance company decides that your health is substandard and they need more information before coming to a conclusion, its underwriter can gather this information from your family physician. How quickly the underwriter can obtain this information from your family physician will affect how quickly you receive your policy.
Before you begin
Before you continue, you should make sure you’ve done your due diligence. This includes determining how much life insurance you need and the type of life insurance most suitable for you. If you don’t know where to start, consider having a qualified insurance advisor help you with these decisions. It’s part of his/her job to figure out your life insurance needs and the most suitable product for you, so don’t be afraid to reach out for help at this point. Even if you choose to do this yourself, you’ll eventually need the help of the insurance advisor to help you shop around for the best rates.
The life insurance application form
Once you’ve settled on an insurance company which will provide you with the product with the best value, it’s time to fill in the application form. More and more carriers in Canada – such as Empire Life and Assumption Life – are starting to develop an electronic sales platform, but the majority are still stuck with a paper form. Besides the convenience for an electronic sales platform of submitting the application immediately, there isn’t much of a difference between the two formats.
A third format is the telephone interview. Your advisor completes an application with you and fills out the identification section. The rest of the personal, medical and financial information will be completed by a third party vendor hired by the insurance company over the telephone. On average, the telephone interview lasts about 30 minutes. This is a private and convenient alternative to the traditional life insurance application process.
Here are the types of information you’ll be asked:
- Identification – includes name, SIN number, address and date of birth.
- Product information – includes amount of coverage, riders and beneficiaries.
- Personal information – includes insurance history, participation in hazardous activities and any upcoming trips.
- Financial information – includes occupation, annual income and net worth.
- Health information – includes recent treatment by any doctor or hospital, the reason and result of the treatment, current medication, height and weight, family and personal history of illness.
It’s important to answer truthfully to every question asked. If the insurance company later finds out they were misled within 2 years of issuing the policy, they have a right to deny the claim. This 2 year term can be extended indefinitely if it is proven that you fraudulently misrepresented material information in order to obtain insurance. For example, it is considered fraud if you present yourself as a non-smoker even though you’re a pack a day smoker. It’s unwise to try to save some premium dollars this way, when in the end your beneficiaries will be the ones suffering.
Gathering of more information
Once the insurance company receives your application, they may require more information in order to properly underwrite you. One of the most common ways to assess your health is to order a paramedical. A nurse will make an appointment to visit you to take your blood pressure, urine sample and blood sample. All of this is at the cost of the insurance company.
Another way frequently used to find out more information about your health is the Attending Physician Statement (APS). This is a report from your family doctor or walk-in clinic treating you. It contains information about your medical history and is often ordered by the insurance company to obtain more information about a medical condition provided on the application. As mentioned above, it’s usually the most time consuming step in the life insurance application process as treating patients take priority over sending an APS.
The final step in the life insurance application process is the underwriting decision. The most common underwriting decision is approval at standard rating, although other results exist. The policy will be mailed to your advisor along with a form declaring that your health has not changed since the beginning of the application process. Your advisor will explain the provisions and terms of the policy. You should note the important dates, including the renewal date, term expiration date, conversion period and policy expiration date. If you haven’t paid for the policy yet or if you didn’t set up a pre-authorized chequing plan, now is the time to cut a cheque to the carrier.
You now have life insurance coverage and your only obligation to keep the policy in force is to continue to pay the premiums when they become due. Every few years, you should check to see if there have been any significant changes in your life that warrants a reconsideration in coverage amount, such as a new child or new job. For now though, you can relax and sleep easy at night knowing you’ve provided for your family in case something should happen to you.
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