Why Is Life Insurance Important?
Life insurance is an important part of every Canadian’s financial security. Life insurance will ensure that your survivors are not encumbered with your debt, as well as providing them the finances that will enable them to live without your income. Therefore, it is imperative to make sure that any claim made against your life insurance policy does not get denied due to incorrect information on the application.
How Are Life Insurance Rates Determined?
Life insurance rates can be based on factors such as your health status, habits and/or lifestyle. Higher premiums will be applied to people who smoke, are grossly obese, and/or engage in “high risk” activities, i.e. skydiving, car racing, etc. These higher rates reflect the greater likelihood that you may die earlier than what is statistically determined for your age. Your life insurance application will ask questions regarding your health status in order to determine which rates you are eligible for.
Some people may be unclear about what is considered a “smoker”. If, for instance, you only have a cigarette once every several months, you most likely do not consider yourself as a smoker. Your life insurance carrier, however, takes a very different view to this. You are considered a smoker if you have had any tobacco and/or nicotine products within 12 months of applying for coverage. This also applies to smoking marijuana. Having the “odd” cigarette or smoking marijuana will constitute you as a smoker when you apply for your life insurance; thereby running the risk of having to pay a higher rate.
For those people who have the occasional cigarette, it may seem unfair that they have to pay the “smoker’s rate” and just identify as a non-smoker. However, “fudging” on your life insurance application means you risk potentially having your claim denied and/or delayed while it is under investigation. Even if smoking in no way contributed to the death, the failure to honestly answer the questions on the application may cause the carrier to conduct an investigation; it may also be grounds for the carrier to consider denying the claim.
Honesty Is The Best Policy
Honesty is definitely the best policy when it comes to applying for life insurance. This will ensure that should a claim be made it will be processed quickly and your beneficiaries will not have to experience any delays. If you are unsure about what health status you should use on your application, make an appointment and discuss these issues with your broker.
Remember to discuss any and all activities that may be considered high risk in order to avoid confusion at a later date.
Also remember to consult with your broker if your status changes, i.e. you have been tobacco and nicotine-free for a minimum of 12 months.
Full disclosure on your application means that you and your family will have the security of knowing that you are insured, and that should something occur, your family will not be subjected to an unexpected delay while the claim is being processed.
For more information on applying for Life Insurance in Canada contact us at 1-866-369-4474
