Getting traditional life insurance can feel out of reach if you are managing health issues or getting older. If you have been declined elsewhere or simply want to skip the underwriting process, guaranteed issue life insurance could be a viable solution. This guide explains how this product works in the Canadian market and whether it is the right choice for your family.
What is Guaranteed Issue Life Insurance?
Guaranteed issue life insurance, also known as guaranteed acceptance life insurance, is a policy that does not require a medical exam or any health questions to qualify. Since this policy bypasses the traditional underwriting process, you are automatically approved as long as you meet the age requirements.
In Canada, guaranteed issue insurance is most often sold as permanent coverage with smaller benefit amounts. If you need term insurance, you will usually be looking at underwritten or simplified-issue term products rather than true guaranteed-issue coverage.
In exchange for guaranteed approval, these policies have three defining characteristics:
- Higher premiums: The cost is higher than for a medically underwritten policy.
- Lower coverage amounts: Death benefits typically cap at $25,000, though some insurers offer up to $50,000 (Canada Protection Plan).
- A waiting period: The full death benefit is not payable for non-accidental death within the first two years.
While more expensive and limited, guaranteed issue life insurance is the only viable option for some applicants.
The Waiting Period Explained
This is the most critical feature to understand. Many guaranteed-issue plans include a graded-death-benefit period (commonly the first 2 policy years). The rules differ by plan and insurer, howver it typically works as follows:
- If death occurs by accident at any time, the full death benefit is paid to your beneficiaries.
- If death occurs from illness or natural causes within the first two years of the policy, the insurer will not pay the death benefit. Instead, they will refund all the premiums you paid, plus interest (the interest rate varies by company).
- After the two-year waiting period, the full death benefit is paid for death from any cause.
Is Guaranteed Issue Life Insurance Right for You?
This type of insurance is a niche product designed for specific circumstances. Consider a guaranteed issue policy if:
- You have been declined for other insurance: If a pre-existing or serious health condition (like cancer, heart disease, or diabetes) has led to a denial of traditional or simplified issue coverage, this is your safety net.
- You are a senior seeking final expense coverage: For those over 65, traditional insurance can be prohibitively expensive. A guaranteed issue policy provides an affordable way to secure funds for funeral costs, medical bills, and other end-of-life expenses.
- You want to avoid medical exams and questions entirely: If you have a strong aversion to needles, medical tests, or disclosing your health history, this policy offers a path to coverage with zero medical involvement.
Note that this product is not a good option for healthy people. They would be significantly overpaying for this type of policy compared to other available options.
Alternatives to Guaranteed Issue: Don’t Overlook Simplified Issue
Before you apply for a guaranteed issue policy, check whether you qualify for a better alternative. In many cases, the best alternative is Simplified Issue Life Insurance.
Simplified life insurance also has no medical exam, but it does require you to answer some health-related questions. These are typically “yes” or “no” questions like:
- Have you been diagnosed with HIV/AIDS?
- In the last 2 years, have you been treated for cancer?
- Are you currently residing in a long-term care facility?
If you can honestly answer “no” to all the questions, you can likely qualify. The benefits are significant:
- Lower premiums: It is much cheaper than guaranteed issue.
- Higher coverage: You can often get coverage up to $500,000 or more.
- No waiting period (usually): Most simplified issue policies provide full coverage from day one.
Always try to apply for a simplified issue policy first. Only consider guaranteed issue if you are declined for simplified issue coverage. Other alternatives for healthier individuals include fully underwritten Term Life or Whole Life insurance. These types of life insurance require a medical exam and review of your health background. But if approved, you get higher coverage at a lower cost.
Cost of Guaranteed Issue Life Insurance
Premiums for guaranteed issue life insurance depend on your age, gender, smoking status, and the amount of coverage you choose. Rates increase with age, so it is wise to lock in a policy sooner rather than later.
For example, the annual premium for a $25,000 guaranteed issue whole life insurance policy from Assumption (age 70, female, non-smoker) is $1,617.50.
Here are some sample monthly costs in Canada for a $25,000 guaranteed issue life insurance policy:
| Age | Male Non-Smoker | Female Non-Smoker |
|---|---|---|
| 50 | $75 | $50 |
| 60 | $125 | $90 |
| 70 | $300 | $150 |
After turning 65, expenses tend to increase considerably. Nonetheless, the rates can differ considerably based on the factors mentioned above.
How to Buy Guaranteed Issue Life Insurance
Step 1: Determine Your Needs
Calculate the amount of coverage you need for final expenses, outstanding debts, or to leave a small legacy. Most people choose the maximum amount they can comfortably afford.
Step 2: Compare Quotes
The best way to find the lowest rate is to work with an independent insurance broker or use an online comparison tool. They can pull quotes from multiple insurers at once. You can also apply directly on an insurer’s website or by calling them.
Step 3: Complete the Application
The application is simple since no medical questions or exams are required. Once approved, you will begin paying your monthly or annual premiums to keep the policy active.
Comparing Guaranteed Life Insurance Providers in Canada
When you are in the market for guaranteed issue life insurance, it’s important to carefully compare the policies offered by a variety of insurance providers to ensure you find the best coverage for your needs. Some key differences may include:
- Monthly premium rates
- Maximum coverage amounts
- Length of waiting periods
- Policy exclusions
Here are some of the top life insurance companies offering guaranteed issue life insurance in Canada:
- Canada Protection Plan: A leader in no-medical insurance. CPP often offers some of the highest coverage amounts available for guaranteed issue policies, sometimes up to $50,000.
- Manulife: The CoverMe Guaranteed Issue product is a well-known and trusted option, often sold directly to consumers.
- Assumption: A mutual company with a strong presence, offering a flexible suite of no-medical and simplified-issue products. High coverage for guaranteed issue product, up to $50,000 (age 18-75).
- Sun Life: Another major provider. Sun Life offers guaranteed acceptance life insurance directly, focusing on simple, accessible coverage for final expenses.
- Foresters Financial: Known for competitive rates.
Tips: Work with an independent life insurance broker who can help compare policies across insurers and find you the best rate. Be sure to lock in coverage at a younger age to secure the lowest premiums possible.
How to Make a Claim on Guaranteed Issue Life Insurance
Making a claim on a guaranteed issue life insurance policy involves:
- Contact the Insurance Company Promptly – Call them as soon as possible after the death. There is usually a phone number right on your policy documents.
- Provide the Required Documentation – This includes a certified death certificate and any other documentation the insurer requires to validate the claim.
- Insurance Company Pays Out Death Benefit – Once the claim is approved, the tax-free death benefit will be paid out to your designated beneficiaries.
- Settlement May Take 30-90 Days – After submitting all paperwork, insurers take 30-90 days to validate claims and issue the payout.
To ensure your loved ones receive payment promptly, contact the insurance company immediately and submit all required claim documents.
The Bottom Line
Guaranteed issue life insurance serves a valuable purpose for older or higher-risk individuals who don’t qualify for regular coverage. While premiums are higher and death benefits are lower compared to standard policies, guaranteed issue life insurance offers approved coverage to those who would otherwise be declined.
Following the tips in this guide will help you secure the best guaranteed issue life insurance policy at the lowest price. Shop rates from leading Canadian life insurance companies and speak with an independent broker to ensure you get the right coverage you need.
FAQs on Guaranteed Life Insurance
Does guaranteed issue life insurance cover pre-existing medical conditions?
Yes. After the two-year waiting period, the policy will pay the full death benefit for any cause of death, including pre-existing conditions.
What is the difference between guaranteed issue and simplified issue life insurance?
Guaranteed issue has no health questions and guarantees approval, but has a waiting period and low coverage limits. Simplified issue asks a few health questions; if you pass, you get higher coverage for a lower premium, usually with no waiting period.
What is the maximum guaranteed issue coverage I can get?
Most policies offer between $5,000 and $25,000. However, some providers like Canada Protection Plan and Assumption may offer up to $50,000. You can also hold policies from multiple insurers to increase your total coverage.
Where can I find the cheapest guaranteed issue life insurance?
Your best bet is to use an independent broker or online comparison platform to shop for quotes from multiple providers. Compare rates to find the cheapest guaranteed issue life insurance.
Can I renew my guaranteed issue life insurance policy after it expires?
Most guaranteed issue life insurance policies provide permanent, lifetime coverage as long as you pay your premiums. It does not expire, so there is no need to renew the policy.
Will my guaranteed issue life insurance rates change if I start smoking or my health get worse?
No. Once your policy is in force, your premiums are guaranteed to remain level for the life of the policy, regardless of any changes to your health and habits.
Will my guaranteed issue life insurance benefits reduce if I develop a health condition?
No, your coverage cannot be reduced or cancelled due to any new health conditions once your guaranteed issue policy is in force. The death benefit is guaranteed.
