Explained: Qualifying For Life Insurance



Life insurance is not a simple concept - hence why it's recommended to speak to a professional if you're considering life insurance for yourself, or a loved one.


However, if you're like me, you enjoy taking some initiative on your end to educate yourself, whenever you're considering any investment or purchase.


So here's what you need to know about qualifying for life insurance...


When it boils down to it, there are three main factors that life insurance companies will look at to determine your qualification of life insurance:

  1. Your age

  2. Your current health

  3. Your lifestyle


When a life insurance company issues someone a life insurance policy, they're essentially making a bet that based off the factors mentioned above, they won't have to pay you out. It's their money, after all!


Let's talk about each factor, and how they determine your life insurance eligibility.


Age.


The concept is simple.


As depressing as it may sound, we're only here temporarily.


As we age, we get closer to the end of our time on this planet.


That being said, the older you are when you apply for life insurance, the more costly it will become.


A 20 year old applying for a 20-year term policy will not pay the same amount as a 60-year old applying for the same policy.


The reason is simple.


The 20 year old after 20 years will be 40.


The 60 year old after 20 years will be 80.


During those 20 years, who is at greater risk of passing?


Exactly.


This is why insurance agents and brokers like myself preach consistently to younger Canadians that they should consider life insurance!


Age is just one factor that insurance companies will look at - let's look at the next.



Current health


Life as we know, is very unpredictable. All you have to do is look at the year 2020 and 2021 for proof.


Unfortunately, many Canadians start to consider life insurance after they've been diagnosed with an illness - at this point it's usually too late, depending on the illness.


As I mentioned earlier, life insurance companies are making a bet. They're protecting you for a specific sum of money, but are hoping that you don't use that money, because it's theirs!


So if you're looking for life insurance after you've been diagnosed - say with liver cancer, the chances are you won't qualify for anything!


You've become too high of a risk for the insurance company - it's a bet they're not willing to make.


Let's look at another example: Smokers vs. Non-Smokers.


As per scientific data, smokers are at a much higher risk to be diagnosed with a ton of illnesses: heart disease, lung cancer, liver disease, throat cancer, and the list goes on...


Smokers in most cases can still be eligible for life insurance, but you can be sure that a smoker's premium and a non-smokers premium will be not bet the same.


These are just two examples of current health conditions. Life insurance companies will look at EVERYTHING!


Overweight?

Diabetic?

History of MS in your family?

Previously had a heart attack?

Asthma?


All of these health conditions will affect your qualification of life insurance.


To put it simply - The healthier you are, the easier you qualify for life insurance.


On the plus side, if you've got some current health issues that are under your own control, it gives you a reason to change up your lifestyle - put away that bag of chips and throw out your cigarettes!


Let's look at the last factor.



Your lifestyle


Why would a life insurance company care about your lifestyle, it's none of their business, right?


As a matter of fact - it is their business. They need to not only know your age, your current health, but also what you do on a day to day.


Why?


Imagine you're a life insurance underwriter, and you're evaluating two applications that have just been submitted:


Application #1

- the applicant wants $1,000,000 of coverage

- male, non-smoker, 25 years old, works full-time as a financial advisor at a bank


Application #2

- the applicant wants $1,000,000 of coverage

- male, non-smoker, 25 years old, works full-time as a sky-diving instructor


Did you spot the difference?


What job seems riskier to you...helping people with their finances, or teaching people how to sky dive?


Your lifestyle plays a huge role in your eligibility for life insurance as well. If you're sky diving on a daily basis, clearly you're a greater risk to the life insurance company, and they may not even issue you life insurance!


Another example can be that you're working full-time as a financial advisor, you don't smoke, you're 25, and every summer you visit your family in Iraq.


The insurance company might consider this a risk, based off the history of violence in a specific country.


Examples of higher risk lifestyles:

  1. Pilot

  2. Roofer

  3. Frequent drinking of alcohol

  4. Poor driving record

  5. Frequent traveller to countries with a history of violence


This might be a lot to digest.


But that's what life insurance brokers like myself are for.


You're not expected to know the nitty gritty of the life insurance industry.


Make your life simple, speak to your existing life insurance broker and get the best possible advice.


If you don't have an existing broker, I'm more than happy to steer you down the right path answer any of your questions!


You can give me a call or text at 647-393-3474.


To speed up the process, you can complete the 1-minute intake form below and I'll call you in less than 24 hours!


Complete 1-minute intake form here.


Thanks for reading, and as always, I hope you learned something new!


Best,

Dan