Like most financial decisions, applying for life insurance deals with balancing risk. The unique thing about it is the kind of risk involved. 

The process involves taking the time to do some research and have a discussion with a licensed insurance advisor/broker to review your circumstances and the options available. Applying for life insurance can be as simple as completing an online questionnaire.

In most cases, an application can be completed with an insurance advisor either in-person or virtually. Depending on the answers to the application questions, the insurance company may require additional information through medical tests, including gathering information from your family doctor. In rare cases, information from your financial professionals may be requested.

There are three different types of life insurance—term, universal and whole life. In this article we’ll take you step-by-step through how to apply for life insurance in Canada. 

Step one: Needs assessment

Your first step is to understand the various risks you may face and determine how much coverage you require and for how long. Questions you should think about in advance:

• How much income would need to be replaced to support your family if you were to die?
• What expenses would you want to have covered upon your death (for example, your funeral or your child’s education)?
• Are there any immediate outstanding debts that you would like to be covered upon your death?
• Do you currently have any other life insurance coverage or coverage through an employer plan?

Answering these will help your advisor provide you with options and explain the advantages and disadvantages of each. 

Step two: Applying

The next step is to complete an application for life insurance. Policy applications will most often include questions regarding your health, family history, finances and lifestyle. You may also be required to take a medical exam. It’s important to be completely honest with your application, as an inaccurate application can void your policy later. 

Once the application is completed it will be submitted to the insurance company for review.

Step three: Underwriting

Once the insurance company receives your application, they will do a risk assessment. Insurance carriers look for more detail on the information provided in the application so they can accurately rate the risk. Your advisor can help you prepare all the additional information you might need:

• Medical information: This may include details regarding illnesses, family history, special procedures, physicians, medications. In some cases, additional medical testing may be required.
• Attending physician contact information: The insurance provider may request an attending physician statement from your physician. This is a confidential personal health history record that is sent directly to the insurance carrier. 
• Inspection report: This is a confidential interview conducted by a professional consumer reporting company or credit agency that is contracted by the insurance company. They may ask you about your finances, lifestyle, driving, foreign travel and more.  

Step four: Policy issue and delivery

Once a decision is made, the policy contract is drafted and sent to the advisor who will meet with you to review. If the policy contract is agreed upon, you’ll sign the policy delivery and pay the premium.

Step five: Policy service

Once you’ve purchased your life insurance, your policy will be in place. Keep your policy in a safe location and contact your advisor if you experience life changes, such as a job loss, purchase of a business, the birth of children or other major events which may impact your insurance needs. 

Keep your advisor and the insurance company up to date with any changes in your contact information to ensure you continue to receive policy correspondence.

Depending on the situation, a policy can be issued in a very short period of time or as long as several months.

Peace of mind is priceless

Applying for life insurance may not always be top of mind, but it’s often a wise financial decision. The right advisor can help you determine whether you need insurance—and, if you do, they can make the application process as smooth and predictable as possible.