Can You Get Enough No-Medical Life Insurance?

Brad Ward 25 Jan 2018

Are you concerned that you can’t take care of your family or business because of your lack of life insurance? Does your fear of medicals hold you back? Rest assured there is always a solution for any problem.

How much life insurance do you require?

When you care about your family or business, you will put the right amount of life insurance in place even if you do not have perfect health. The first thing you should do is determine how much coverage you need to make sure your family or your business can thrive even if you are no longer around. Sitting down with a trained insurance professional to determine how much life insurance you need is the first step.

For your family’s protection, you will have to estimate final expenses for yourself, your funeral costs, as well as any income you would like to provide your family and any legacies you would like to leave to charities of your choice. You may also want to leave an emergency fund and education funds to your loved ones and help with debt elimination. Don’t forget to take into consideration the eroding power of inflation in your analysis. There are a lot of online tools available to help determine your life insurance need, but it is probably best to leave it to the professional insurance agent to help with this calculation.

To determine your life insurance needs as a business owner you should estimate your value of your portion of the business if you are in a partnership or a shareholder. Use a professional to help determine the Fair Market Value of your business and make sure you put the right amount of life insurance in place. Also, consider the future growth potential of the business. 

If you have the right amount of life insurance in place, other shareholders will be able to buy out your portion of the business. This will make it simpler for your partners and your family and could ensure the business continues to do well should you pass away. If your expertise is very specialized in the business, your company may want to purchase Key Person life insurance for you to find a suitable replacement when you are no longer around.

After you have determined the amount of life insurance you require to protect your family or business, you should next decide whether or not you would like to apply for life insurance with medical checks or not. If you prefer the latter than there are a few options available to you.

Is No Medical Insurance the Best Option for You?

If you know you are healthy, you may qualify for a certain amount of coverage without a medical. This may be enough to meet your estimated life insurance needs. If it does not provide enough coverage – and a lot of non-medical policies are limited in coverage – then a healthy person should consider getting medical and applying for the full coverage they need.

If you are not in the best health and you would like to avoid medicals for life insurance, then you have a couple of options to make sure you get enough coverage:
You can maximize your life insurance at work. Some employers offer one to two times your salary. Also, you may apply for more coverage through a group plan that offers Evidence of Insurability (EOI), and you may qualify for the extra coverage even if you have poor health.

If you have group life insurance through an association, you may be able to convert it to an individual permanent life insurance policy without health checks.
You can apply for a survivorship life insurance policy if you have a spouse who is healthy. This could help for estate planning. The downside with this type of policy is that it does not benefit your spouse.

If an insurance company offers a Spouse Paid-up Insurance Purchase Option (SPPO), your spouse can add a life insurance rider to their policy for the uninsurable spouse.
Purchase a guaranteed issue policy that requires no medical, and you only must answer a few questions.

  • Buy a simplified issue policy which is a guaranteed issue policy, but you pay less if you cut.
  • Apply for a guaranteed issue or simplified issue policy through a professional association. The downside with this life insurance is that premiums can be steep.
  • Finally, you may purchase credit insurance or mortgage insurance. This is offered with large purchases like a home. The downside with this type of insurance is that the lender has exclusive control over the benefit and if you have some pre-existing condition not covered at the time of claim the insurance might not pay out.

What if You Still Can’t Get Enough Coverage?

If health challenges prevent you from getting the coverage you need there are other ways to make sure your family or business is not left in bad shape. After you have purchased all the possible insurance that you can get with your condition consider the following to make sure the right amount of coverage is in place:

  • Make your home and other real estate holdings joint ownership with your spouse or business partners.
  • Use insurance segregated fund accounts to be able to designate a beneficiary. This is not available with some mutual fund accounts. With segregated fund accounts, upon your passing the funds are transferred quickly – usually within ten business days – and the funds bypass probate. Also, segregated funds can protect from creditors.
  • Make your bank accounts jointly with your spouse or business partners.
  • Structure your business shareholder agreement so that the transition will be a smooth one.
  • Structure your wills and powers of attorneys to leave other valuables (like art or jewelry) to your spouse. For a business will and power of attorney, you may want to divide up the business properties, equipment, and assets.

To help with putting the right amount of coverage in place to make sure your family or business is well provided in your passing arrange an appointment with a trained life insurance professional at MyLifePolicy.ca.

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