Lucky applicants for life insurance can be insured within 48 hours and at the premium quoted – but 2 in 3 applicants are faced with delays plus the prospect of having their premium increased. The reason is behind the delay is their medical history. Diabetes, cancer, high blood pressure and other medical issues you have experienced or have a family history of can increase your insurance risk.
So who are the lucky ones? Basically, you’ll have to be as fit as a flea with no family history of serious illness, under 45, in an office type job and probably applying for less than $1,000,000 in coverage. For everyone else there is going to be some hassle.
When an insurer provides an initial quote for life insurance, all they know is your age, sex and smoking status. They use these details to make an initial prediction of how long you are likely to live and on that basis they give you an initial quotation. They call it their “Standard Terms”.

Applying for life insurance

If you want to apply for coverage you’ll have a multi-page application to complete. This isn’t as daunting as it may seem, as most insurance brokers take your details over the phone and send you a copy of the completed application for you to check over. But the questions are extensive and if you miss out anything that later turns out to be significant, your insurance may well be invalidated.
The insurers use your application details to look out for anything that signals current or future concerns about your health or life style. Besides the obvious questions that reveal health problems, they also evaluate your weight, alcohol and nicotine intake, and any potentially inherited health problems. So if your father died of a heart attack or mother died from breast cancer, they’ll be concerned.

Then there’s your life style.

If you’re in a type of job where accidents do happen, construction jobs are a good example, or you are involved in any form of dangerous sport or flying, your premium is in line for loading. They’ll even want to know whether you regularly travel to countries that are known to represent health risks for visitors or have a Canadian travel advisory.
Insurers freely admit that the number of questions they ask is increasing. They claim it’s to reduce the number of claims they refuse. While that may be partly true, the trend has also coincided with an increase in the proportion of applicants who are seeing their premiums rated. Some years ago it was nearer 40% – today’s for some insurers the level is virtually 66%.

How much extra might your medical history cost?

That’s a bit like how long is a piece of string. But to give you a feel, a woman aged 40 receiving medical treatment for hypo thyroid was recently faced with a 50% rating on an initial quotation of $25.01 for $250,000 20 year term increasing her premium to$34.96. A woman whose mother had breast cancer similarly faced a 50% rating. Seriously overweight people can also expect ratings of 50% to 250% or even declined.

Faced with a rating what can you do?

It’s important to appreciate that the insurance companies giving the cheapest initial quote are also likely to have particularly strict medical criteria. That’s how they keep their quoted prices low. So if you’re faced with a rating, the best advice is shop around, Try one of the more expensive providers who are sometimes a bit more lenient.
While this may sound overly complicated, remember that over the years, an extra $10 a month on a 25 year policy represents $3,000 of your hard earned money. If you don’t have the experience or time to do this, and after few of us do, speak to an online life insurance broker.
Competition is high on the Internet and online brokers will normally reduce your premium by quoting preferred health ratings. Their systems are also well versed in finding alternative providers to alleviate loading problems. So keep things simple. Let your keyboard fingers do the walking and let the online broker do all the hard work!

AndrewWBradley.ca Financial Services