Most people are eligible for life insurance, but some will have more options for providers and policies than others. Talking to a life insurance advisor can be very useful when looking around for the right plan. An advisor can give you information about your eligibility and help you navigate the life insurance marketplace. In this article, we’ll take a deep dive into how insurance companies decide whom to insure.
What determines life insurance eligibility?
Whether you’ll be approved for coverage depends on each company’s procedures, particularly the criteria they use to evaluate your eligibility and set your premiums. The most common criteria are your health status, lifestyle factors, and occupation.
These criteria are used to calculate your life expectancy based on data for people with the same health, lifestyle, and occupational factors. Of course, this isn’t a prediction: it’s a tool the insurance company uses to determine how much financial risk they assume by insuring you.
The impact of your health on your eligibility depends on the insurance company and their assessment procedures and standards. There is no one-size-fits-all with life insurance: each provider evaluates applicants on a case-by-case basis.
People in good health have more options for life insurance and are more likely to be approved. For some products and providers you will need to undergo a medical exam and provide the details of your medical history and the medical histories of your first-degree biological relatives.
However, you don’t have to be in perfect health to secure coverage: to determine your eligibility; an insurance provider will want to know what conditions you have, how serious they are, and what steps you are taking to manage your illness . If your condition doesn’t disrupt your daily functioning and you’re doing all the right things to control it, it may not hurt your chances of getting coverage, although the premiums will be higher in some cases. Your provider may ask for additional medical tests before they give you a quote.
If you previously had a major illness from which you’ve since recovered, you may be able to get coverage. Your eligibility may depend on how long it’s been since you were declared disease-free, and again, more testing may be required.
If you have a serious condition such as heart disease or cancer, it may be more difficult for you to get approved, but No-Medical Life Insurance is an option you can consider. To apply for this type of insurance, you don’t need to have a medical exam, have blood drawn, give fluid samples, or fill out long questionnaires.
Your habits and interests can affect your ability to get coverage. The ones that typically have the greatest impact are:
- Nicotine use, including chewing tobacco and using smoking cessation products like nicotine patches
- Consuming alcohol in excess
- Using drugs recreationally on a regular basis
- Reckless driving
- Dangerous hobbies such as spelunking or race car driving
Of these, nicotine use generally has the greatest impact on insurance rates. An insurance company will almost always ask about your smoking and tobacco use habits. If you’re thinking about quitting, ask a few insurance providers if this will help with your application: some may take this into consideration, but others may require a waiting period.
Your job can affect your eligibility and your premiums in two ways:
- Directly if the job itself is dangerous. The assessment of how hazardous a job is often based on the number of deaths as a proportion of the number of people in that line of work.
- The professions considered the most hazardous are generally:
- Jobs in natural resources such as mining, logging, fishing, and working on an oil rig.
- Jobs in the aviation industry such as pilot or airplane mechanic.
- Emergency services work such as policing and firefighting.
- Construction work, including steelwork, roofing, and construction site management.
- Indirectly, in the form of stress and burnout. The impact of these jobs might be seen in conditions that result from stress.
- Some jobs also have a cumulative negative effect. Mining, for example, may result in lung disease via the buildup of particulates in the lungs over time.
Wondering if your hazardous job comes with life insurance already? Many employers do provide life insurance as part of their benefits packages. Still, today more and more people do day labour, part-time work, or contract work, where life insurance is not normally provided. It’s a good idea to check on how much coverage you have through your employer and what you might need to fill the gap.
A Important Note: Be honest and complete when you apply for life insurance. If you smoke only at social events, you are likely still considered a smoker, and your application should reflect that. If you don’t tell the truth when filling out a questionnaire, you risk that your coverage will be voided when a claim is submitted. Not only will you likely lose your premiums, but you’ll be leaving your family without financial protection if you pass away.
Applying for life insurance can be challenging, time-consuming, and sometimes intimidating, but don’t despair! Do your research and find an insurance provider you can work with.
If you’re hard to insure due to medical or lifestyle factors, consider a policy from Canada Protection Plan. All our policies are No-Medical, meaning you won’t have to undergo a medical exam or testing. Approval is also faster with our plans because the process isn’t delayed by waiting for test results and assessments to come in.