When I gained my Life Insurance Licence, I had one belief: there is very little difference between life insurance companies. After all, don’t all life insurance companies provide a product which pays out at death? Isn’t that all one needs to know about life insurance? I quickly learned that the answer to those questions is not that simple.
For example, all the big Canadian Banks partner with the largest Canadian Insurance companies to provide creditor insurance products in their retail bank branches. At this point, Canada Life Assurance Company works with ScotiaBank, TD Canada Trust, CIBC, & RBC; while SunLife Financial works with BMO. Manufacturers Life ensures that First National has a creditor plan.
However, there is a problem with this type of life and/or health insurance: there is no guaranteed payout. Now, for many people, this might seem odd; however, it is the truth. Because Canadian Banks cannot sell individual life or health insurance policies in their bank branches, they provide a group plan which promises to pay out the balance of any debt if nothing “unusual”' turns up in an investigation. If after an investigation, there are no underlying problems, conditions or concerns; and, if from the outset, the customer would have been issued a policy, then a cheque will be issued to the bank to pay the remaining balance of the mortgage, loan or other creditor product.
The problem for many people comes in the investigation. For, it is easy to turn up an “unusual circumstance”. Through no fault of their own, customers might forget about a medical test that they have taken, a drug that they are on or a minor condition which a doctor has mentioned in passing.
Accordingly, it is possible for mortgage customers to incorrectly answer questions about their health, including any pre-existing or underlying health conditions.
One doesn’t have to look hard to find situations where Banks or Lenders have demanded payment of a loan because the “bank provided insurance” (known as creditor life insurance) doesn’t pay out due to an undisclosed health condition. Every few years, CBC does an investigation talking about creditor or mortgage insurance. In 2011, CBC Marketplace interviewed two TD Canada Trust mortgage customers who didn’t receive a pay out because of pre-existing conditions. While in 2018, CBC’s Go Public questioned Canadian Tire Bank about a denial of a claim by their creditor insurance provider. In all cases, the issue came down to one thing: a pre-existing condition.
As a licenced insurance provider, these situations make me sad because I know that if these people had gone directly to a life insurance broker or life insurance company, they would have been covered. I know that people with pre-existing conditions can be covered because I have delivered the cheques to families where the client had a pre-existing condition. Additionally, I have also had to work very hard to find a company who would ensure a client with a high-risk lifestyle or a pre-existing condition.
Some companies like Canada Protection Plan or Humania actually prefer high-risk clients; while others, like Foresters, prefer lower risk clients who might have a bit of additional weight. Over my career, I have placed policies with many companies including but not limited to Sun Life, Foresters, Humania, Canada Protection Plan and Equitable Life; and I am constantly learning about what type of client each company prefers.
It is my opinion that the life and health insurance market today has so many providers, it is almost impossible to be uninsurable. While the cost and benefits of the products vary, I can almost guarantee that I can find a reasonable product which matches your needs. So not all life insurance is the same. SunLife might offer you a policy with an extra premium, while Foresters or Industrial Alliance will likely offer the same client a policy with no extra premium. I always look around because as I have learned, not all insurance companies are the same. So please don’t take the creditor insurance policies offered by well meaning bank employees or mortgage brokers. Take a moment to ask an insurance professional about your opinions to get reasonable, dependable and reliable insurance coverage.
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