10 Must-Know Red Flags Your Insurer Looks for When You Apply for Life Insurance

Posted on June 26, 2019 and updated June 26, 2019 in Life Insurance Canada News 7 min read

This publication is based on a past Chantal Marr’s interview with Sheryl Smolkin for Toronto Star.  As you might know, there are three ways to get life insurance. The first is traditional life insurance, which requires a medical exam and a lengthy application. The second is designed for applicants that may not pass a medical, or that want to avoid an exam and/or want a short and easy application. It’s called simplified issue insurance. The third type, guaranteed issue, is for people with severe health issues that will not qualify for traditional or simplified insurance.

The more details your carrier knows about you, the cheaper your premium, and even if your health is not the best, you may still qualify for traditional (which is the most affordable) insurance. To compensate for accepting the added risk, the carrier may give your policy a rating (slightly higher premium) or exclude a pre-existing condition from coverage. Today we will look at 10 things carriers look for on your application and discuss if each item warrants a traditional, simplified, or guaranteed application.

What are Red Flags on Your Insurance Application?

Red flag #1: Your Weight

More than 60 per cent of Canadians are overweight, raising their chances of preventable weight-related illnesses like Type 2 diabetes and some forms of heart disease. Apply for a traditional policy if you are overweight but consider a simplified issue policy if you fall into the morbidly or super morbidly obese category.

Red flag #2: Your Blood Pressure

High blood pressure is often related to unhealthy lifestyle habits, such as inactivity. Therefore, your carrier considers this a long-term risk. If your blood pressure is high now, they see you as a person that is not taking the steps needed for a healthy future. If you have no other health conditions, go ahead and apply for traditional coverage. You’ll likely receive a rating. However, work hard to lower your blood pressure and once you show a sustained drop, talk to your broker about lowering your life insurance costs. If your blood pressure is abnormally high and requires medication, apply for simplified issue coverage – but be sure to work hard to lower your blood pressure for your health, and to receive a more favourable premium later on.

Red flag #3: Your General Health

It’s true – the healthier you are the lower your life insurance premiums. Regardless of if your health is poor due to lifestyle choices or unavoidable diseases such as cancer, you are at a high risk of being denied traditional insurance. Those in poor health should go for a simplified application. However, if you have cancer that has not been in remission for two-five years, uncontrolled diabetes, or any other illness that compromises your longevity, apply directly for guaranteed issue insurance.

Red flag #4: Your Travel Habits

Travelling is fun! Travelling to unsafe zones or engaging in dangerous vacation activities like mountain climbing, however, is risky. If you ignore government travel advisories (see here the official list of warnings for each country) and partake in dangerous travel activities, your risky behaviour means you should apply for a simplified policy (for places and plans with moderate risk) or a guaranteed policy (for places you should avoid and high-risk activities). Many simplified issue policies (and of course guaranteed issue policies) do not have travel questions but cost more than traditional ones.

Red flag #5: Your Drinking Habits

Excessive drinking is hard on your body and can lead to reckless behaviour. It’s best to keep below two drinks per day for women and three drinks per day for men. If you struggle to control your alcohol intake, go for a simplified issue policy.

Red flag #6: Your Drug Use

Of course, cocaine, methamphetamines, opioids, etc. means a hard and fast denial and puts you on the track of only qualifying for guaranteed issue insurance, but what about recreational cannabis? Surprise! Many insurers no longer consider some forms of cannabis usage to be an issue.  Depending on how much cannabis you use and how you partake of it, you may still easily quality for traditional insurance.

If you enjoy cannabis, check out our Insurance Info Hub section “Life Insurance and Marijuana” and speak with an experienced life insurance broker. Brokers shop the market for you and can access applications in advance to know which carriers ask questions about cannabis usage, along with the nature of the questions. Depending on your usage a broker can tell you if you’ll qualify for traditional, or simplified coverage.

Red flag #7: Your Lifestyle Activities

Even the fittest people on the planet can have trouble getting life insurance, and this is because super fit people tend to enjoy things like heli-skiing, rock and ice climbing, and deep sea diving! Risky activities, no matter how good they are for your health, are huge red flags for underwriters. If your life is exciting and lived on the edge, you’ll need to compensate with a simplified issue policy.

Red flag #8: Your Job

Sometimes the risk isn’t in your hobbies, but in your job. First responders, pilots, military personnel, etc., have a lot of risk built into their job descriptions. Before you seek insurance, first check with your association (if you are a member of one) or your employer to see if you have special coverage through work or an association group plan. If not, do not attempt to find coverage on your own.  Contact a broker that has access to 15+ plans. Such a broker can find coverage that meets your needs.

Red flag #9: Your Driving Record

This is another thing that can point to reckless behaviour. The ramifications of having too many speeding tickets or a DUI on your record can mean a rating on traditional insurance. If you lost your licence or must get your vehicle insurance through a high-risk insurer, consider applying for a simplified issue policy.

Red flag #10: Your Previous Denial

One of the reasons its so important to use a broker for your life insurance is because they will match you with the policy that best suits your needs. An agent can only sell the products of his or her company. With less choice you may have to apply for a policy where you have a high chance of being denied – and a previous denial can make it hard for you to get a policy in the future. If you are at risk of a denial, or you have a denial or two on your record already, your broker may suggest a simplified policy.

A Broker is Your Best Bet for Finding the Coverage You Need

We hope you’ve found useful these 10 things carriers look for when reviewing your application. Remember, life insurance can be complicated, but your broker makes it easy for you. It’s free for you to use a broker; you only pay for the policy (brokers are compensated by the carriers). So instead of applying with your fingers crossed, use an experienced life insurance broker who will assess your health and lifestyle and match you with the best policy for your needs.

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