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Life insurance application process in Canada



The application process for life insurance in Canada is relatively straightforward. Most life insurance companies will require you to answer a verbal medical questionnaire as a proof of good health. Once your application is approved you are covered. You will pay premiums on a monthly or yearly basis to keep your policy in force.

Step I: You’ll need to decide what kind of life insurance you want. There are two main types: term life insurance and permanent life insurance. Term life insurance is a policy that covers you for a specific period of time, like 10, 20 or 30 years. Permanent life insurance, on the other hand, covers you for your entire life.

Step II: Once you’ve decided which type of life insurance you want, the next step is to figure out how much coverage you need. This will depend on factors like your age, health, lifestyle, financial obligations and personal circumstances. Some factors to consider include whether you have young children or ageing parents who rely on you financially, and your overall financial situation.

Step III: Once you’ve determined how much coverage you need, the next step is to start shopping around for policies to compare rates and find the best policy for your needs.

Step IV: The last step is to fill out an application and go through the underwriting process. This is where the life insurance company will assess your risk and decide whether or not to approve your policy.

Determining your life insurance policy and coverage needs

The first area to tackle when you are ready to buy life insurance is what type of policy you want and how much coverage you need. First, you will have a choice to make between term life insurance and permanent coverage insurance. Then, you will need to determine the amount of coverage you need. Take into account your current financial situation. What debts do you have? How much money would your family need to maintain their standard of living if you were no longer there? Make a list of your assets as well – including things like savings accounts, investments, and property. There are a couple ways to calculate your coverage amount.

Multiply your income by 10

One way is to multiply your yearly income by 10. This will give you a coverage amount that will replace your lost income and help your family maintain their current lifestyle.

DIME method

Another formula is the DIME Method. DIME stands for Debts, Income, Mortgage, and Education. First, you calculate how much money your family would need if you were to die tomorrow. Calculate your debts including student loans, outstanding credit card balance, car loan, and personal loans. Next, calculate your current annual income and multiply it by the number of years until retirement. This will give you an idea of how much money your family would need to replace your income if you were to die today. You need to consider your monthly expenses and make sure that your coverage amount would be enough to cover these costs for your family in the event of your death. Mortgage payments are also an important factor to consider when determining your coverage amount. If you have a mortgage, your life insurance policy should cover the remaining balance so that your family is not burdened with this debt in the event of your death. Finally, you need to calculate your child’s education costs such as tuition fees.

One more important factor when determining the amount of coverage is to consider is how long you need the coverage for – typically, people choose a term length that corresponds with the number of years until their mortgage is paid off or their children are out of the house.

Once you have decided on the correct amount of life insurance needed, it is time to start the application process.

How do I apply for life insurance?

Applying for life insurance is simple. You have two main choices when applying for life insurance;

  • Apply online directly to an insurance company of your choice
  • Speak to a licensed insurance agent who can help you choose from the many options you will
  • face when selecting a policy.

What to expect when applying for life insurance?

When you apply for life insurance in Canada, there are some steps that are universal and some steps that are optional as part of the application process. There will always be an application and a health questionnaire that has to be completed to apply for life insurance. Depending on the type of life insurance you are buying, there may also be a medical examination.

What they will ask you on a life insurance application?

When you apply for insurance, the life insurance carrier will have a predetermined set of questions they will ask applicants.

The core questions will address your health and medical history. Here are some examples of the topics for questions you may encounter about personal health:

  • current diseases or diagnosed health conditions
  • current medications you are taking
  • past surgeries within the last ten years
  • tobacco use
  • weight and height: The company will also want to know about any significant weight gain or weight loss recently.
  • names and addresses of the current medical professional whose care you are under.

There will also be a few medical questions about your family’s medical history. The insurance company will want to know if there is any history of disease or premature death in the family.

Other medical questions may include a history of cancer, diabetes, high blood pressure, and strokes. In addition, any other medical conditions that may be considered hereditary and pose a risk to the insurance company must also be disclosed.

In addition to medical information, the insurance company will ask about your lifestyle history. Dangerous hobbies such as flying private aircraft and scuba diving put applicants at a higher risk level, which means the company will charge a higher premium.

Your occupation and income will also be of interest to the insurance company. Some occupations are also high risk and can require the insurance company to charge more to insure you. They also need to know if you have adequate income to handle the premiums you will be paying monthly.

What happens when you apply?

When you apply for insurance, you have to formally complete the application. You will need to provide personal identifying information as well as the coverage amount you are seeking to buy. You will give the insurance company authorization to process your request and check your medical record. Once you complete your application and provide supporting documentation, it will be sent to underwriting for review. The underwriter will approve or deny coverage. In most cases, coverage is approved even if an offer for different coverage than the original sought is made.

When a medical is required?

Each carrier has its policies to determine when a medical exam is required. Most companies consider your health as a strong indicator of whether or not a medical exam is needed. Age is also a big factor. Many permanent insurance policies, such as whole life for people over a certain age, almost always require a medical exam. Generally, if you are healthy, you may not need one at all. However, if you have any health conditions or take medication, you will likely need to have a medical exam. The medical exam will help the insurance company to assess your risk factors and determine what premium they will charge you. If you are required to have a medical exam, it is generally simple and quick. During a medical exam, the examiner or professional health practitioner will ask about your health history and family health history. They will also take your blood pressure, height, and weight. You may also need to provide a blood and urine sample. After the exam, the insurance company will use the information they gathered to determine your premium. If everything looks good, you should not have any problems getting approved for life insurance.

Privacy of personal information

Insurance companies prioritize keeping the applicant’s and the insured’s personal information private and secure. Health practitioners, employees, agents and contractors who deal with the insurance company are required to adhere to the company’s strict standards.

Medical Information Bureau

Applicants with medical conditions that impact insurability will have their information submitted to the Medical Information Bureau (MIB). The MIB is a repository of medical information and other pertinent factors such as a poor driving record or participating in dangerous hobbies and occupations. Insurance companies use the information to determine if further information is needed before insurance policies are issued.

How long does a life insurance application take?

Completing a life insurance application can take as little as 20 minutes. However, processing the application request can take a few days to a few weeks depending on the type of insurance, the death benefit amount, and the applicant’s current health.

What happens after the life insurance company issues your policy?

Once your insurance application is approved and the policy issued, you are officially insured. Your coverage will be in force if you keep making your required premium payments.

What happens if your application is denied?

If you are denied coverage, there may be steps you can take to remedy the situation and still get covered. First, you need to have a conversation with your insurance agent to evaluate why your insurance application was denied. For example, if coverage is denied based on your medical condition, you can apply for a different type of insurance product, such as simplified or guaranteed issue insurance, which will not require a medical exam.

Frequently asked questions

What are the various steps in the life insurance process?
When applying for life insurance in Canada, these are the steps necessary:

  • Decide on the type of policy you need
  • Determine the amount of death benefit that will suit your needs
  • Get quotes from reputable insurance companies
  • Make sure the premiums are within your budgetApply for insurance

How long does it take to apply for life insurance?
Applying for life insurance is relatively simple and fast due to technology. If you work with an efficient insurance agent, your application can be completed in as little as 20 minutes. However, processing the application request can take a few days to a few weeks depending on the type of insurance, the death benefit amount, and your current health.

What is the process of applying for insurance called?
Underwriting is the process of reviewing the application for insurance and supporting information. Underwriters will use the information obtained to determine the insurance company’s risk level and the monthly premiums the insured will pay for coverage.

For what reasons will life insurance not pay a claim?
A life insurance company will not pay the claim if the premium has lapsed and the policy is not active. Insurance payment can also be denied due to misrepresentation of the facts during the application. Any undisclosed medical conditions that were purposely committed are reasons to deny coverage. If the insurance policy has a waiting period that has not expired and the insured dies, the claim will not be paid.

What do you need to consider when buying life insurance?
Three of the most important considerations when buying life insurance are:

  • For how long will you need coverage?
    Depending on the stage of your life, your needs will vary. If you are recently married and are looking to start a family, you will have different needs than someone who is retired and just wants to use life insurance to cover final expenses.
  • How much coverage do you need?
    This will also depend on your objectives and stage of life. A young family with three children with you as the primary wage earner will need more coverage than a mature family with no dependent children.
  • The financial objective you are trying to accomplish
    If you want maximum coverage at the lowest cost, term life insurance will be your answer. If you are looking for a policy that will offer a savings component, a whole life insurance policy may do it for you.

Talk with experienced insurance agents who sell life insurance products from various companies to fully understand what you need to consider.

Is life insurance active immediately?
In Canada, some life insurance companies issue coverage that is effective immediately. For the most part, you will find that a waiting period is part of the terms of the policy. The waiting period is way insurers protect themselves against fraud.

What happens if someone dies shortly after getting life insurance?
Insurance companies are more inclined to conduct an in-depth investigation before paying the death benefit if the insured dies shortly after the policy is issued. The insurer will also look at the cause of death and review the initial application to look for anything that would indicate there was misrepresentation of the facts, which may result in the claim being denied. Suppose the policy did not include a waiting period before paying out a death benefit. Once the insurance agency is done with their due diligence and everything checks out, the death benefit will be paid to the beneficiary.

Does life insurance look at medical records?
Yes, in Canada, life insurance companies may require a report from the Medical Information Bureau as well as medical records directly from attending physicians. This happens if the applicant has a medical condition that requires further information before the company decides whether to insure the applicant or not.

Do life insurance companies check medical records after death?
Yes, in some cases, insurers will request medical records if they suspect the insured died of causes that may not have been disclosed in the application. Insurance companies want to make sure they only pay out on legitimate cases to minimize fraud losses.