What to do if you become uninsurable
In the life insurance industry there is a concept known as the “line of insurability”—the point in time when you can’t qualify for an insurance policy. The line is invisible and is located at a different point in time for different people. Some may never cross the line and others may cross the line as children, perhaps due to a diagnosis that significantly impacts life expectancy. The reasons for crossing the line of insurability are many: health, lifestyle, travel. But what can you do if you become uninsurable?
Know why you are uninsurable
Insurers decline for a variety of reasons and the decision to decline is not always permanent. The most common reason is because of pending medical investigations that need to be completed. Ask your broker or insurer for the exact reasons why you’ve been declined and confirm whether you could apply in the future if health or circumstances improve.
Review all current policies
Do you have existing coverage in place that you can tweak without needing a medical exam? Many term-life insurance policies allow you to extend coverage into a permanent plan. Disability policies are often issued with a guaranteed insurability feature that allows you to increase coverage with no health checks if you exercise the options at prescribed times.
I also recommend putting all policies on a monthly automatic payment plan. If you miss paying an annual policy premium, regardless of the reason, the policy lapses after 30 days and you may not be able to reinstate coverage due to your current circumstances.
Explore alternative insurers
Most brokers sell policies from well-known companies in the Canadian insurance industry. These insurers have a limit to the amount of risk they can take on, and if you fall outside of their parameters you may be uninsurable. In some cases, boutique specialty insurance providers can step in and provide some form of coverage. These policies are typically more expensive than traditional insurance offerings but may provide the coverage you need and cannot purchase otherwise.
In addition, some carriers offer guaranteed-issue policies. These types of policies tend to provide low amounts of benefits and carry restrictions on when benefits pay out, but they ask few, if any, medical questions on the application.
Consider buying insurance for your children
You can buy insurance policies on children from a very young age. Purchasing insurance policies for your children can lock in their good health status and provide them with a policy that can grow over time, potentially providing a source of funds at a later date. If you were declined for insurance due to a hereditary health issue, it can be wise to implement a strategy for your children at an early age.
Self-insure
Unfortunately, you may be in a situation where no company is willing to offer an insurance contract to you. In this case, discuss this with your financial planner, and adjust your planning and your practice accordingly. This could involve structuring investments so there will always be liquidity upon your death, holding significant emergency savings in place in the event of a disability, or both. Professionally, this could mean taking a salaried position that provides benefits or choosing a practice where you are not responsible for clinic expenses if you’re unable to work.
Getting declined by an insurer is frustrating but may not be the end of your options. The insurance advising team at Doctors of BC works with traditional and specialty insurers to provide comprehensive options to our members. To schedule a comprehensive, complimentary insurance review for you or your family, contact me at ehiggins@doctorsofbc.ca.
—Erin Higgins
Insurance Advisor, Doctors of BC