As a matter of fact, when most people consider Term Life Insurance, they think this is the easiest way: apply and qualify for coverage. One thing is for sure: it is never that easy to purchase Term Life Insurance.
There are so many restrictions that will prevent anyone from acquiring Term Insurance in Canada, from health conditions to lifestyle choices. Knowing these restrictions will better prepare them and help them look into alternatives if they are not eligible.
Who may not qualify for the Term Life Insurance Plan in Canada, and why is going to be explored in this blog? This may include age, health, occupation, and other contributing factors. The most common reasons behind the barrier of acquiring a Term Life Insurance Plan and what you can do when you experience challenges are going to be broken down.
The Struggle of Not Qualifying for Term Life Insurance
Yet for many Canadian citizens, Term Life Insurance is the protection they ensure is in place over their family’s financial future. For others, unwanted rejection due to various pre-existing conditions or reasons has made it a reality they face every day. Nobody wants to get a refusal because people are impatient to protect their loved ones. Getting rejected from a term life plan can feel like hitting a roadblock at times, but if you know why this might be the case, you can go hunting for other options.
Let’s dive into the reasons why some cannot buy Term Life Insurance and look at some of the factors that will determine your eligibility for coverage in Canada.
Age Restrictions
Probably one of the most common reasons that someone would not qualify for a Term Life Insurance Plan is their age. Most providers set their upper age limits, usually ranging between 60 and 75, although this greatly depends on the insurer and the policy. If you are within that age range, then your application for Term Insurance will probably be declined.
Why is age so crucial? The older one gets, the more probable he or she is to develop medical problems. For the insurers, the older applicant is much more of a risk to them than the younger applicant. For example, a 40-year-old is considerably less likely to suffer from serious medical conditions than a 70-year-old. This increased possibility of dying during the term of the policy makes it unlikely for insurance companies to issue relatively cheap term life or even deny the applicants altogether.
However, some carriers may provide terms for older individuals, and these will likely be short terms. You can compare Term Life Insurance Quotes Online to determine whether any carriers offer terms for people in the upper age brackets.
Pre-existing Medical Conditions
Another critical factor that determines qualification is pre-existing medical conditions. If you are diagnosed with a severe or chronic illness which disqualifies you from eligibility, you may not qualify for Term Life Insurance. Some of the common conditions that usually merit rejection include:
- Heart disease
- Cancer
- Diabetes (especially if not well-managed)
- Severe respiratory issues
- Stroke or neurological conditions
The possibility of a claim determines the decisions insurance companies make. People with a history of severe disease become too big a risk. This does not necessarily mean pre-existing conditions are going to get a person rejected, but more serious conditions are likely to lead to a denial.
On the other hand, Term Life Insurance may be provided for someone who is not severely afflicted. Again, however, the premium rates are a bit expensive. Through online research, you can gather quotes from different Term Life Insurance policies and possibly get one that is reasonably cheap, given your health problem.
High-Risk Occupations
Some professions are riskier than others. The chances of getting Term Life Insurance when you are in a high-risk profession become lower. Some of them include but are not limited to:
- Firefighters
- Construction workers
- Oil rig workers
- Pilots
- Commercial fishermen
Such occupations have an increased risk of danger and, therefore, increase the risk of death or injury. Insurance companies, as a consequence, may either exclude coverage or charge a much higher amount to people doing such jobs.
Some hazardous occupations might benefit from a Term Life Insurance broker as they deal with more insurance companies than most other agents. A broker can work through the options and find an insurance company willing to take on coverage for hazardous occupations.
Lifestyle Choices
Lifestyle habits, for example, smoking or doing reckless activities, can also affect one’s ability to get Term Life Insurance coverage. A smoker will, of course, pay more in terms of premiums, yet in other instances, according to one’s health, even a smoker may not be allowed to take up the policy.
Other interests also come into the picture: Participation in extremely extreme sports, skydiving being an example, scuba diving, or rock climbing for that matter, too, shall play a part in defining the durability of Term Life Insurance. Here, insurers take into consideration the statistical chances of these activities leading to a serious injury, possibly fatal, and thus may lead to a claim.
If you have a lifestyle that includes these kinds of activities, you need to reveal them when you apply for Term Insurance. Failure to mention risky hobbies will mean that a claim will be denied, even when you would otherwise be covered. Again, your Term Life Insurance Brokers can guide you to the right policies for your lifestyle while also offering coverage.
Substance Abuse and Addiction
A history of substance abuse or addiction may also put you in a vulnerable position while attempting to get Term Life Insurance. Insurers have been reluctant to cover the lives of those who are said to still be suffering from addiction when linked with substances, drugs, alcohol, or even others since these matters often heighten the chances of an early death.
Even if someone has overcome addiction, his health history still holds a potential for review by the insurers, and he can be covered only after several years of sobriety. If the applicant has ever used substances in his lifetime, it is prudent to seek Term Life Insurance Brokers who may put him in touch with insurers who have fewer rules.
Mental Health Issues
While mental health awareness has greatly improved over the past few decades, most insurance companies consider specific mental health conditions as more significant factors. For instance, a person with major depression, anxiety disorder, or bipolar disorder might come across greater challenges when seeking Term Life Insurance.
This does not mean that every patient with a mental disorder will be refused, but the intensity, treatment history, and stability of such a disorder will be considered. The applicant with well-managed mental health disorders may still be accepted, but a history of severe attacks, hospitalizations, or suicide attempts may not have a good outcome.
If you are concerned with your mental health, you may also try to compare Term Life Insurance quotes among the providers you find online and see which of them is more lenient regarding mental health issues.
Criminal Record
Another ground on which a person might be barred from purchasing a Term Life Insurance policy is a criminal record. Insurance companies are not that keen on applicants whose backgrounds indicate that they have serious criminal records, especially if the crimes involve violence or other actions that are marked as high risk. These may not even be minor infractions, but depending on how recent they are, they may affect a person’s eligibility for the policy.
Every insurance company has specific policies concerning criminal records, so what might be declined by one company could be offered by another. It’s always a good idea to ask for quotes from several companies and Term Life Insurance agents to determine which is likely to offer coverage.
Temporary or Unstable Residency Status
Residency status in Canada might also affect terms and conditions for the purchase of Term Life Insurance. Most insurance organizations require applicants to be Canadian citizens or permanent residents; individuals with temporary work permits, student visas, or other statuses that are not permanent might find it harder to obtain a Term Life Insurance Plan.
This is easy for the simple reason that insurance companies want to ensure that the applicant has long-term ties to Canada, not only in the course of processing an application but also that any claims can be handled properly. Insurers would find it hard to offer coverage if the residency status is unstable.
Financial Instability
While much rarer, economic instability can also affect your ability to obtain Term Life Insurance. There are certain insurance companies who will look into your financial history, so they might view a customer with a bankruptcy or bad credit history as having a high risk of defaulting payment on the policy or other related reasons.
The rationale here is that life insurance is often viewed as a form of asset protection, and individuals who are perceived to be in serious financial distress may be viewed as a lapping risk or even an abusive risk. Financial trouble doesn’t often result in outright denial but rather may play a role in an insurer’s decision.
Alternatives to Term Life Insurance
For individuals who cannot buy Term Life Insurance due to any of the reasons mentioned, there are still other options available. Some of these alternatives include:
- Guaranteed issue life insurance ─ This type of insurance does not require medical exams or detailed health questions. It is ideal for those with pre-existing conditions or those who are older. However, it comes with higher premiums and lower coverage amounts.
- Simplified issue life insurance ─ With this policy, you won’t need to undergo a medical exam, but you’ll need to answer some health-related questions. It’s a good option for individuals who might not qualify for traditional Term Life Insurance but still want some level of coverage.
- Permanent life insurance ─ Although more expensive, permanent life insurance may offer more flexible underwriting guidelines than term policies. It’s a long-term solution that covers individuals for life rather than just for a specific term.
The End
Term Life Insurance can be a good choice for those who want inexpensive, easy protection. For example, the business applies considerable restriction criteria that will not let everyone into a Term Life Insurance Plan in Canada.
Perhaps age, pre-existing health issues, hazardous work, or some lifestyle problems could be potential issues when trying to qualify for a Term Life Insurance policy. Knowing your limits may help you find a different kind of protection or work through Term Life Insurance Brokers who can help you find policies that may meet your needs in a better way.
The fact is, seeking life insurance requires honesty and openness; you would like to come forward with whatever information you need for your case not to be denied later on. Whether it’s Term Insurance or alternatives in the form of life coverage, options are always available to secure the financial future of your loved ones.
