If you want to buy life insurance, you first need to apply and prove your eligibility. The life insurance application process typically involves providing personal and financial details, answering health-related questions, providing family medical history, and taking a simple medical exam.

The lower the risk you present to the insurance company, the more affordable your life insurance rates will be. 

From determining what type of life insurance you need to what to expect in each stage of the application process, we’ve simplified the life insurance buying process with this step-to-step guide. Let's dive in.

What type of life insurance do you need?

Generally speaking, there are two types of life insurance policies: term and permanent. Both have their pros and cons, so knowing about them in detail is necessary before you start shopping. With either policy, your family can use the death benefit to cover a variety of costs, such as end-of-life expenses, mortgage payments, and education fees.

However, depending on your specific financial obligations, one type of life insurance may fit your needs more than the other. 

Term Life Insurance

The Basics: Term life insurance provides coverage for a set number of years, like 10, 20, or 30 years. However, some term life plans provide coverage until you reach a certain age, like 65. Your beneficiary receives a payout if you pass away while your policy is active. Once the policy’s term runs out, coverage terminates automatically, unless you renew the policy. 

Pros: 

• It is the cheapest type of life insurance 
• Provides coverage for only as long you need it
• Doesn’t have any complex tax implications
• In most cases, you can renew the policy at the end of the policy term without a medical 

Cons:

• There’s a risk of you outliving the policy

Best for:

Term life insurance is a right for anyone who is looking for an easy, affordable way to secure their family’s future for a predetermined period in the event of their death.

You may want to consider it if you want coverage for financial obligations that are temporary, such as mortgage payments, providing income replacement to your spouse or partner for a certain number of years, or covering the years until your kids become financially independent. 

Permanent Life Insurance 

The Basics: Permanent life insurance provides coverage that you can’t outlive. In addition to lifelong protection, many permanent plans include a savings element, called the cash value. Your policy’s cash value grows at a fixed or varied rate, depending on the type of permanent life insurance plan you have. As a policyholder, you can access the cash value at any time while you are living. Typically, your beneficiaries only receive the death benefit.

Pros: 

• You don’t have to worry about outliving your policy
• Your policy grows wealth on a tax-deferred basis
• The cash value is a liquid asset, which you can use to meet various financial needs

Cons: 

• More expensive than term life insurance
• Accessing the cash value may have tax implications and reduce the death benefit

Best For:

Permanent life insurance may be worth the cost for people with unique needs. You may want to consider it if you: 

• Need coverage that lasts your entire lifetime
• Want to use life insurance to build wealth
• Want to leave an inheritance
• Are a business owner and want to use life insurance as loan collateral or to fund a buy-sell agreement

How does the life insurance application process work?

For the most part, applying for life insurance is easy and simple. First, you fill out the life insurance application form. Next, you may have to undergo a paramedical exam similar to the annual physical. Once that is done, the underwriter will determine whether to insure you or not, and if you are approved, the premium rate you will pay. Finally, you will receive a copy of your policy and the coverage will start the day you pay the first premium. 

What questions are asked during the application process?

Every life insurance application form has certain mandatory sections, each of which will likely include a series of questions. 

Personal Information

You’ll be asked to provide personal details, such as: 

• Name
• Gender
• Date of birth
• Address
• Occupation
• Residency status

Plan Details

This section will ask you about the type of life insurance you are applying for, the amount of coverage you need, and any optional benefits (riders) you want. 

Personal Medical History

Your life insurer wants to know your life expectancy, or to be more specific, the odds of your dying while the policy is active. To figure this out, it will ask you several questions related to your current health, personal medical history, and lifestyle. 

You will be asked to provide details such as: 

• Your weight and height
• Pre-existing conditions, along with details such as the date of diagnosis, symptoms, treatments, prescription drugs, and the name of the doctor treating you
• Current health status

Family Medical History

Certain diseases tend to run in the family. If you have a family history of any such condition, it may impact your premium rate. 

Your insurance company will want to know: 

• History of hereditary conditions like diabetes, heart attack, certain types of cancer, and more
• If your parents or siblings have a hereditary condition, the date of diagnosis. If they are deceased, their age at death

Lifestyle 

Your lifestyle impacts your insurability and premium rate. For example, someone with a dangerous hobby or history of heavy drinking is riskier to insure than the average person. 

Your insurer will want to know:

• Whether you have used tobacco in the last 12 months
• How many drinks you have in a week on average
• If you do drugs or have done them
• Whether you participate in any dangerous activity, like bungee jumping, scuba diving, or rock climbing, and if so, then how often
• License suspensions or driving violations
• History of criminal offenses
• Any history of insolvency 
• Your travel history in the past 12 months and if you intend to travel outside Canada in the next 12 or 24 months

Financial Information

Life insurance is there to provide your loved ones with a safety net in the event of your death, not to make you worth more dead than alive. For this reason, your life insurance provider will ask you questions regarding your annual income, unearned income, and net worth. They want to make sure you are not buying more insurance than you may reasonably need. 

Insurance History

The life insurance company will ask you if have any other life insurance policies, and if so, their details, like the policy number, type of coverage, and death benefit amount. You will also be asked to provide details regarding any pending life insurance applications that you may have. If it seems that you are over-insuring yourself, the insurer will likely ask the reasons behind it. 

Life insurance Beneficiary

In this section, you can fill out the details regarding your beneficiaries, such as: 

• Names of the beneficiaries
• Their relationship to the insured
• The percentage of the death benefit each beneficiary will receive
• Name of the trustee in the case of a minor beneficiary
• Name of the contingent beneficiary 

Payments

The insurer will want to know:

• How often you will pay the premiums, like annually, semi-annually, quarterly, or monthly? 
• Banking information and preferred date of withdrawal if you want to be billed every month

The Life insurance medical exam

After you have submitted a life insurance application, you may need to undergo a medical exam. The life insurer you’re applying to pays for it, not you. 

A paramedical examiner will contact you to schedule the exam. You can arrange to take it at a place and time convenient to you — for example, at the office in the evening. 

During the exam, the paramedical examiner will take your height and weight measurements, collect blood and urine samples, and review your answers to the health questions included with the application form. If you are above a certain age, you may also be asked to take an electrocardiogram.

The examiner will likely ask additional questions about your medical and family’s medical history. The entire proceedings are not likely to take more than 25-30 minutes. 

How long does it take to get life insurance?

For standard life insurance policies, you can expect to get approval within four to six weeks after applying. However, the waiting period can be longer if the insurer requests an attending physician statement (APS). The APS is a detailed health report written by the doctor who has treated or is currently treating you. It is usually requested when the applicant has a chronic or more complicated health condition. 

What if your application is denied?

Having your life insurance declined doesn’t mean you can’t get life insurance at all. Since each insurer uses its own guidelines to evaluate risk, you may still be able to get a medically-underwritten policy with another provider. But even if multiple life insurance carriers turn down your application for a traditional policy, it’s not the end of the road for you. You still have options.

Consider applying for simplified issue or guaranteed issue life insurance, both of which have less stringent requirements and hence are easier to qualify for. 

Simplified Issue Life Insurance

Simplified issue life insurance uses a simplified application process that lets you skip the life insurance medical exam. While traditional policies include both a medical exam and a health questionnaire, simplified issue plans include only the latter. The insurer determines your insurability and calculates your premium rate based on your answers to a handful of general health questions. 

Because the underwriting process is not very detailed, you can get approval fairly quickly. However, these policies do have drawbacks. For one, the death benefit is usually capped at $100,000 or $250,000, though a few providers may offer coverage up to $500,000. Secondly, the premiums are more expensive than traditional plans.

Thirdly, some simplified issue plans have graded death benefits, meaning your beneficiary will receive the full death benefit only after your policy has been in force for two years. If you pass away from natural causes within the first two policy years, your beneficiary will receive the premium amount paid till then plus interest. 

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Guaranteed Issue Life Insurance 

Guaranteed issue life insurance is even easier to qualify for than simplified issue plans. That’s because it lets you forgo both the paramedical exam and health questionnaire. Acceptance is guaranteed provided you are below a certain age. 

What’s the catch? Guaranteed issue policies have significantly higher premiums. In addition, the death benefit is capped at $25,000 or $50,000. Furthermore, all guaranteed issue plans have a waiting period, typically two years. If you die from natural causes before the waiting period is over, your beneficiary will not receive the full death benefit. 

All the same, these policies are not without merit. If you do not qualify for traditional and simplified issue plans, guaranteed issue life insurance can help you secure some amount of coverage.    

How to save money on life insurance?

There are several things you can do to lower the cost of life insurance, such as: 

• Buying life insurance when you’re young
• Paying the premiums annually instead of monthly
• Buying term life insurance instead of permanent life insurance
• Shopping around and comparing quotes from multiple providers
• Bundling policies to get a policy discount

Conclusion

When you apply for life insurance, you will need to share information related to your medical history, lifestyle, and financial situation. Most likely you will also have to undergo a medical exam. Typically, standard life insurance applications take anywhere between four to six weeks to process. 

Now that you know how to apply for life insurance, are you ready to take the next step? If so, Dundas Life can walk you through every step of the application process. We will also help you secure the right coverage at the lowest possible price. Book your free call today.

Frequently Asked Questions

How does my medical history affect the life insurance application process?

Life insurance companies look at many factors, including your medical history, when determining your premium rates. If you have a pre-existing condition, you may receive higher premiums.  

Can I apply for life insurance if I have a pre-existing medical condition?

Yes, you can apply for life insurance with a pre-existing condition, but it may lead to higher premium rates.

Do I need a medical exam to apply for life insurance?

A medical exam is typically required for life insurance applications, although some insurers offer no exam or simplified issue policies.

How does smoking or tobacco use affect my life insurance application?

Smoking or tobacco use are considered major lifestyle risks and as such lead to higher premiums. Premiums for smokers can be two to three times higher than for non-smokers. 

Are there any age restrictions when applying for life insurance?

Life insurance carriers have a maximum age at which they issue policies. Many providers do not write policies for those aged over 75 or 80, while some have much lower age limits, and a few issue policies up to age 85. 

What happens if I don't disclose a medical condition during the application process?

It may be tempting to not disclose a pre-existing condition to get a better rate, but lying on a life insurance application process amounts to fraud and can have serious consequences. If the insurer discovers the truth during the underwriting process, it may turn down your application or charge you higher premiums.

If the truth comes to light after the policy has been issued, the insurer may cancel it or refuse to pay the death benefit when your beneficiary files a claim.   

Can I apply for life insurance for someone else?

The simple answer is yes — you can take out life insurance on someone else as long as you have their permission. However, this doesn’t mean you can buy a policy for anyone. To buy life insurance for someone else, you will be required to prove that you will suffer a financial loss if that person were to pass away.