You get your insurance policy for one final review before asking for the coverage to start
After you apply for life or health insurance, the underwriting process starts. Once your application is approved, we will give you details about the offer from the insurer. You then decide whether you accept the terms. If yes, the next step is the delivery of your policy.
Tip: Since your insurance policy is personalized for you, be sure to refer to your actual contract for specific details.
- 1 The offer from the insurer
- 2 The actual policy delivery “meeting”
- 3 Review key portions of your insurance policy
- 4 Product-specific portions of your insurance policy
- 5 Changes in health
- 6 Payment and signatures
- 7 Acceptance by the insurer
- 8 The “reason why” letter
- 9 The “end”
The offer from the insurer
After reviewing your insurance application, the underwriter informs us of their decision. The offer for coverage is conditional upon factors such as:
- No changes in your health since the time you applied for coverage
- No medical visits since you applied
- No medical visits pending
- No travel outside of Canada that wasn’t disclosed before
Once we have the specifics, we will inform you of the offer. Here are the possible outcomes:
|Underwriting Outcome||Your Decision||Next Step|
|Approved at better rates than applied for||Congratulations! Your health is much better than average for your age, which means lower premiums.||Agree to the policy delivery|
|Approved as applied||Congratulations!||Agree to the policy delivery|
|Approved with a rating||Decide whether to pay the higher premium or reduce coverage to match your intended premium.||Discuss your options with us. The reasons for the rating can be sent to your doctor to discuss with you.|
|Approved with exclusions||Decide whether to accept the coverage. |
Example: disability insurance may exclude claims arising from nervous disorders due to your prior medical history.
|Discuss your options with us|
|Postponed||If you have medical tests outstanding or need to be symptom-free for a specified period, the insurer will usually postpone their decision.||Meet the requirements. In some situations, you may need to complete a new insurance application, going through the same process as before.|
|Declined for coverage||Some people do not qualify for insurance. You can protect against this outcome by providing us with details about your health before applying for insurance. We can then check on your insurability without identifying you.||The reasons for the decline can be sent to your doctor to discuss with you. In some situations, you may be able to apply for coverage in the future. For example, you may have medical tests pending.|
The actual policy delivery “meeting”
Before COVID-19, policy deliveries used to take place in person. You received a paper insurance policy contract (after we received it by courier and reviewed it).
Now, the delivery process has been modernized and done primarily by email. You generally receive an electronic contract. This lets you review your policy at any time. You don’t need to worry about misplacing or losing the original.
You sign via e-signatures from your smartphone, tablet or computer.
Tip: If you like, we can have a video meeting to simulate the old experience.
Do not delay the policy delivery
Take delivery as soon as you can. If your health changes before the policy delivery, the insurer could change their decision. Also, your premiums are due as of the policy date in the contract, not the date you take delivery. Waiting means you’re ultimately paying for time you weren’t covered.
Example: Suppose your policy date is April 2, and you don’t take delivery until May 30. You pay your premiums from April 2, even though that was about two months ago.
Review key portions of your insurance policy
Your insurance policy is a contract. Some portions warrant special attention to ensure that you understand them. If you spot any mistakes, notify us, and we will inform the insurer.
Reminder: the information here is general. Rely on the wording in your insurance policy.
Your “free look” period
You now have your actual insurance policy contract for the first time. This is when you can read all the terms and conditions. You generally have 10 days for your review. This is called a “free look” period. If you do not want the coverage for any reason, you can cancel the coverage during this period and get a full refund.
Note: You can cancel your coverage anytime after the free look period, but you will not receive a full refund and may face surrender penalties.
The initial policy pages
The initial policy pages show details like the:
- Policy number
- Policy date
- Coverage amount
- Life or lives insured
- Premium schedule
- Coverage expiry date
If the life insured dies by suicide in the first two years of the policy, usually all premiums are refunded, but the death benefit is not paid. It is as if the insurance never existed.
After two years, death by suicide is usually covered and treated like other causes of death.
Under the Medical Assistance in Dying (MAID) rules, the death would not be considered suicide, but the other contract provisions would apply. This is the position of the Canadian Life & Health Insurance Association (CLHIA).
If the life insured dies within the first two policy years, there is additional scrutiny from insurers since this rarely happens. There may be an investigation to see if:
- Information was knowingly omitted (example: health issues were not disclosed)
- Misstatements were made (example: a smoker claiming to be a nonsmoker)
If evidence of fraud is found, the death benefit may not be paid because the insurance policy would not have been approved.
After two years, the insurer can usually only challenge (“contest”) the death benefit payment where fraud is suspected.
If evidence of fraud is found at any time, whether the life insured is alive or dead, the death benefit and policy can be voided. The focus is on conscious actions, like:
- Misremembering details (example: a smoker claiming to be a nonsmoker)
- Omitting details (example: a cancer diagnosis five years ago)
“Cotinine testing analysis shows that 42.5% of applicants tested positive for tobacco but said they did not smoke on the application.”ExamOne 2021 continine testing
Your application form
Your insurance application is part of your insurance contract. That’s because the offer from the insurer is based on the accuracy and completeness of the information you provided when applying for coverage. While you saw the details on your screen during the e-application process, this is the ideal time for a thorough review.
Beneficiaries receive the death benefit when you pass away. A beneficiary could be a person, corporation, trust, charity, or other entity. If the beneficiary is a minor, a trustee must be designated to manage the proceeds of your life insurance until the beneficiary reaches the age of majority.
This beneficiary details are generally within the insurance application. If the beneficiaries are revocable, as the policyowner, you can change them later.
If the beneficiaries are irrevocable, they must sign off on any policy changes, including changes to beneficiary designations. The main action you can take without their consent is halting the payment of premiums.
Product-specific portions of your insurance policy
Some portions of your insurance policy only appear for specific products.
Term life: conversion option
You can convert some or all of your face amount to permanent life insurance regardless of your health. Your premium for the portion converted is based on your age at the time of conversion.
Your policy generally shows:
- The maximum age by which you must decide
- The products to which you can convert
Tip: Insurance companies differ in the quality of the products to which you can convert. That’s why we consider conversion options when showing you proposals for temporary (“term”) life insurance. Because of competition, having a better conversion option has a marginal effect on your premiums.
Disability insurance: definition of disability
Getting strong definitions protects you better.
Universal life insurance: investment options
You have many investment choices with universal life. Some investments guarantee your principal at the cost of lower returns. There are many considerations, such as your age, goals, deposit amount, and risk tolerance.
Tip: Since the worlds of investing and insurance are so different, we recommend you consult your independent investment advisor for guidance on what investments are right for you.
Whole life insurance: reduced paidup option
If you decide to stop paying future premiums, you can cancel your coverage, but you will likely face penalties:
- Penalties from the insurers: there are usually cancellation charges
- Tax penalties: a portion of your cash value may be taxed
With whole life insurance, you can use up the cash value in your policy to buy life insurance coverage that lasts for life without any more premiums. The death benefit on this “reduced paidup” insurance will likely be significantly lower than on your original policy.
Tip: We can help you understand your choices before you decide to stop your premiums.
Changes in health
You are usually asked to confirm your health hasn’t changed since you applied for insurance. If there have been changes, give us details. We will inform the insurer and then inform you of their decision.
Payment and signatures
If you did not provide your payment information earlier, this is the time:
- Insurance for needs: clients tend to select monthly premiums through Pre-Authorized Debit (PAD) for the convenience of budgeting, though this may cost 8% more than paying annually
- Insurance for wants: clients tend to select annual premiums (which may save 8%) since the funds usually come from other assets. In future years, the insurance company will send you a premium notice before your policy anniversary. You can send the money through online banking or by mailing a cheque.
- Insurance for gifts: the choice varies
Note: you may not pay your premiums with cash. Also, all premiums are payable to the insurer (never to the insurance advisor).
Tip: Universal life insurance does not have an 8% surcharge for paying monthly instead of annually. The cost is the same with either option.
Acceptance by the insurer
We send your completed delivery documents to the insurance company for their final review.
If the insurer has any concerns, we will contact you once we are informed.
If the insurer is satisfied, your first premium gets charged, and your coverage goes into effect. Congratulations!
Note: with some term policies, especially those on younger clients and smaller death benefits, a premium may be withdrawn before you sign the delivery forms. These policies tend to be simpler to underwrite, and the insurer may not anticipate a reason for the settlement to be postponed. In these situations, you can still cancel your coverage during the free look period, and have the premium returned to you.
Reminder: Premiums are due from the policy’s effective date, not from when you take delivery. For instance, if you take delivery two weeks after the effective date and you’re paying monthly, you’ll be paying for the full month, including the two weeks you before you took delivery. Your next premium would be due one month from the effective date or two weeks from the delivery date. After that, you would pay on the same day of every subsequent month.
The “reason why” letter
Once your insurance is settled (“inforce”), we email you a letter summarizing why you got your coverage. This is s handy reminder for the future.
We remain available to provide ongoing service. Please feel free to ask us questions. We’re here to help.
To get clarity from your family team at Taxevity, schedule a chat.