Insurance and Genetic Testing

Genetic testing has become one of the fastest growing trends of recent years.  The improvements in technology and science are making the process more affordable, faster, and easier to access for a larger part of the population interested in ancestry, reproduction, and especially to see if they have a predisposition to genetic disease that is already present in their family lineage.

Much media publicity was involved in how this information would be used and by whom.  Recent legislation prohibits insurance companies from using this information to underwrite a case.  Bill S-201 is a private member’s bill that would actually make it a criminal offence to request access to genetic testing results for commercial purposes including the underwriting of life and living benefits (critical illness insurance, disability insurance, and long term care insurance) in Canada.

insurance_genetic_testingGenetic Non-Discrimination Act:

An Act to prohibit and prevent genetic discrimination

“This enactment prohibits any person from requiring an individual to undergo a genetic test or disclose the results of a genetic test as a condition of providing goods or services to, entering into or continuing a contract or agreement with, or offering specific conditions in a contract or agreement with, the individual. Exceptions are provided for health care practitioners and researchers…”


Insurance companies are issuing statements and advising brokers/agents to make sure they ask no questions about any genetic tests or results of those tests, and certainly not to record any of this information when answering medical questions on applications.

Where is all this going?

Remember the cell phone hoopla?  We didn’t want to be locked into contracts for 3 years.  Government got involved, legislation was passed that a maximum of 2 years was allowed.  What happened?  All we ended up with was a higher cost to the phones that we usually got for free.

Medical questions, including medical questions with regards to medical tests, like urine and  blood analysis, EKG’s, PSA tests, and “information of a genetic nature”, like family history of heart disease, cancer, or diabetes, have always been used by insurance companies to underwrite the risk of insuring individuals.  The more accurate their measures, the better pricing model they can offer their clients.  Correct underwriting ensures that clients pay premiums that are directly related to their individual risk.

Insurance companies are concerned with “anti-selection”.  The process by which people who know they are at high risk are the most likely to request coverage.

Comments such as:

“We are concerned that this legislation could make it more difficult for all Canadians to access life insurance and living benefits products.”


“Bill S-201 is not specific to life insurance only and will impact all lines of our individually underwritten business including living benefits and medically underwritten group insurance.”

Insurance companies are busy assessing the potential impact this legislation will have on their business.  The bottom line is that premiums could increase for all categories, including life insurance, especially critical illness insurance, disability, and group coverage – which many Canadians still rely on but costs are controlled by their respective employer.

All good intentions aside, just like the cell phones, we may all end up paying higher premiums.

What should you do?

Get while the going is good.  Firstly, if you don’t own insurance, start asking questions and get some.  Most Canadians own life and health insurance.  If your contract is coming up for renewal, ask now.  If your mortgage life insurance is through a bank then it is doubly important for you since you have no control over whether they raise rates. They have the right to do so.  If the only insurance you have is through your work, then get your own.  When you purchase your own insurance you can control the amount and cost.  Otherwise, you are leaving both to your employer.  They too can raise rates or reduce your coverage in order to control their costs.

If you know you have a family history of diabetes, high blood pressure, heart disease, cancer, etc. then be smart about it and get your life and health insurance as early as you can.  Lock in the rates for a long duration, or lifetime, or add a guaranteed insurability clause (limitations apply).  You are never too young to have insurance.

Parents, protect your children by applying on their behalf early, especially if you yourself are predisposed to any hereditary illness.  

We take for granted the availability of life insurance and health insurance, like critical illness and disability.  We also take for granted the pricing structure; the knowledge that premiums are fixed for a period of time, or even lifetime.  What if all that changes?

Who’s to say it cannot?  Long term care insurance is a prime example of a product where premiums are only fixed for 5 years at a time.  This was not always the case.  Insurance companies are leaving room for increases to their cost based on experience.  This may become the norm moving forward for both life insurance and critical illness and even disability.

Can I get Life Insurance?

Do I qualify for Life Insurance?

There’s a good chance you will, most people have a lot of preconceived notions or misinformation regarding whether or not they will be approved or qualify for Life Insurance.  The way the market is today chances are there will be a policy that you can get even if think you are hard to insure or are hard to insure.  

The insurance companies look at three things when they are deciding or evaluating the risk of insuring you.  People often don’t realize; when you apply for life insurance all you’re really doing is giving the insurance company permission to underwrite the risk of insuring you.  After they have completed evaluating the information you have allowed them to collect they will make you an “offer to insure” When you get the offer you are under no obligation to accept any offer you are made.

After all this is not the Godfather, you CAN refuse an offer



Let’s look at what Life Insurance companies look at when they are deciding on whether or not they will make you an offer to insure.

First they will look at your health

If you are buying $250,000 of life insurance or more there is a good chance they will send a nurse or Health Care Professional as they like to be called to do a Paramedical Exam.  This is not like a full physical your Doctor does annually.  No need to undress and it can be done in your home or your office.  They will check your vitals, meaning your height, your weight, your blood pressure, your pulse etc.  They are also going to ask a lot of health related questions. For example, have you ever had cancer?  have you ever had a heart attack? They cover almost every health category in the questions and will want to know what medication you’re currently on, the dosage, how long you been on the medication and why you’re on the medication.  They will also ask for your doctor’s information.

  • Who is your Doctor?
  • When did you last see your Doctor?
  • Why did you see your Doctor?
  • Were any follow-up visits or examinations needed?
  • Were you referred to a specialist or were further tests or diagnostics ordered?

All these things are to do with your health.  Depending on the face amount or the amount of insurance you are buying and your age they may also ask for blood and urine samples and tests like a resting ECG for example.

Blood and Urine samples are usually but not always a requirement on people buying $250,000 of coverage or more.  This also gives you the opportunity to be offered a better than standard rate, what is referred to as a preferred rating.  When the underwriters have this information and it is determined you have great health or exceptionally good health they are at liberty to reduce your monthly premiums and offer what is called a Preferred Rating or a Preferred Plus rating.

I should mention when they look at your health there not looking to decline you on every single thing, for example you can have high blood pressure and or high cholesterol and as long as it is well controlled by medication, it will not preclude you from getting Life Insurance.  Even for more serious conditions like diabetes for example you’ll probably still get an offer but it will likely be rated, meaning it will be more expensive than standard rates typically quoted by all insurance companies.

If a client is older or there are some health challenges or something that needs clarification that was not satisfied by the nurse the insurance company underwriter may request an APS (attending physician report).  When an underwriter orders an APS they will be communicating directly with your doctor and accessing information in your medical file.  This is most always in the form of written communication. Doctors get these all the time and are compensated by the insurance company for their time.

You might be wondering “isn’t my medical information private?” Isn’t what I tell my Doctor in confidence and to remain private?”  Yes it is BUT remember when you apply and before any underwriting of the risk of insuring you is done there is the application I mentioned at the beginning of this article.  When you apply you are agreeing to allow the insurance company to gather this information in an attempt to evaluate the risk of insuring you.

Next on the list of things Life Insurance companies look at when deciding on whether to insure you is:

Your Lifestyle choices

What you do for fun?  Do you scuba dive? Do you pilot your own plane? Are you a backcountry skier who likes to motorcycle race and car race on the weekends?  Do you BASE jump or engage in extreme sports?  If you do they are going to want to know some more details.  If you are a scuba diver, what training have you had? How deep do you dive?  How often do you Dive? Do you Dive for pleasure or is it what you do for a living?

For pilots they will ask how many hours do you have? How long have you been a pilot? Have you had an incident?

You can count on there being a separate a questionnaire to fill out for things the insurance companies deem as being dangerous sports or activities.

Lifestyle choices also includes things like smoking or tobacco use.  If you are a smoker you will have to pay more than standard rates.  The good news is, since it is a lifestyle choice as the name implies and you manage to kick the habit for at least 12 months, you have a shot at getting this rating reduced and qualifying for non-smoking rates.

Next on the list of things Life Insurance companies look at when deciding on whether to insure you is:

Family Health History

They will want to know general health information on your parents and your brothers and sisters.  They will just ask if any of them have had any major serious illnesses.  If they have, when was the onset of the illness? Are they still living?  And if they have passed away, what age were they when they passed away?  This is a way of uncovering hereditary illness that you may be susceptible to. It certainly does not mean an automatic decline by any stretch but it is all considered when they’re looking at your entire health picture and deciding on whether or not to offer you insurance and at what price.

The final step is underwriting

Now that the insurance company has all this information on you, your policy is underwritten by an underwriter that is employed by the insurance company.  When the underwriting has been completed you will be made an offer (or not), you could be offered standard rates, a preferred rate, a preferred plus rate or on the flip side, worse than standard rates which we call  a rating,  where they decide they want a little bit more than standard rates or no offer at all, a decline.  Even if you are declined there are still options available to get Life Insurance.  There are a lot more policies today offering what is commonly called No Medical Insurance.  It doesn’t mean they’re not going to ask you just as many medical questions but they’re not going to send out and nurse and do traditional underwriting.  Typically the questions they ask are in some form of order and the further you make it through the questions the better the price they will offer you.

They will start by asking medical questions that deal with the most severe medical conditions first, for example have you had a heart attack in the last 2 years?  Are you currently suffering from cancer?  You likely are still going to be able to get some Life Insurance even if you are suffering from these serious illnesses but the price will be higher than normal.  Also there may be other restrictions on the policy whereby they only cover you for accidental death in the first two years.  Once you survive past two years then you are fully covered for not only for accidental death but also death as a result of an illness.

In Conclusion

Each insurance company has different tolerances for different conditions and it is important to apply with the right company from the onset.  An experienced insurance agent will know which company to apply with considering your specific issues.  Most people can get some type of Life Insurance and over-think the fact that they may not get coverage.  The insurance companies want clients.  That is their business, their bottom line.  They are not running all over town declining everybody for no reason.  It is not the way it works so give it a shot see what offer you get!    Remember it’s not like the Godfather, you can refuse their offer, so getting back to the initial question Can I get Life Insurance? Or Do I qualify for Life Insurance?  

The answer is yes you probably can and you probably do and there is no cost or obligation to try.

What is Universal Life Insurance?

Universal Life Insurance is a type of permanent life insurance.  It was created in the early 1980’s to take advantage of the rising trend of consumers’ interest in managing their own investments.  No insurance product up until this point allowed for an active role for the consumer.

Most types of life insurance were (and still are) passive; Once purchased, they are reasonably straightforward and require little ongoing management.

Universal life, on the other hand, includes many moving components that provide choice and must be actively managed.

Let’s examine what these components are:

  • Death Benefit/Face Amount: Common to all insurance products, you, the consumer chooses the amount of insurance you want to purchase.   However, you must choose at the time of purchase whether you want yearly/annual (YRT/ART) adjustable term rates OR level cost rates.  This is the cost of your life insurance (mortality charge).  Either you will have an increasing cost every year based on age (the schedule is in the policy – not for the feint of heart) OR you will pay a higher but constant rate throughout the policy’s life – level cost.  Or you can start with renewable term and switch to level cost at a later date that is predetermined, for example age 85 OR some policies allow you to choose the year/age when you want to switch .  The choice must be made with care; if you start with low YRT/ART rates your cost will be low initially but escalate as you age whereas the level cost is higher but locked in at that time of purchase.You must also choose the “death benefit option”.  This will determine the actual amount the insurance company pays out at as a claim.  
    • If you choose “LEVEL FACE” then your beneficiary gets the amount you contracted for, that is, the death benefit/face amount.  
    • If you choose “LEVEL FACE PLUS DEPOSITS” then your beneficiary will receive the death benefit/face amount PLUS gross deposits made into the plan.  
    • If you choose “LEVEL FACE PLUS ACCOUNT VALUE” then your beneficiary receives the death benefit/face amount PLUS the value held within the policy account.  (See below under investments.
  • Expenses:  these are policy related and include monthly administration fees and most likely transaction fees (see below under investments) and sales charges and will differ among the various insurance companies.  These remain usually fixed and in addition the minimum premium includes the provincial tax applicable in each province.
  • Investments:  This is where you take control and why this product was created in the first place.  Deposits into the policy can build a pool of savings in the account, called the account value or the accumulation fund.  Universal Life policies provide you with a range of options for investment.  Usually, fixed-interest options such as guaranteed term deposits, or simple savings accounts , as well as equity and indexed options are available. Certainly different carriers have different options, and like all investments careful selection based on management and performance should be considered.  Like all investments, your personal risk tolerance and return expectations must be considered. Pay attention to any minimum guarantees in the policy.  Older policies have some nice guarantees contractually built in.  Newer policies tend to have none. 

It is important to understand that the investment portion is completely optional.    If you choose to set your premium to cover the basic mortality and expense charges then you will simply have a permanent policy.  If you choose to contribute over and above the minimum charge then you select where you would like the additional money to go – the investment portion.  You can change or stop this additional amount at any time.  This flexibility is what makes this product so unique.  

The investments grow tax deferred inside the policy.  Active management of your investments inside the universal life policy is as important as managing any of your regular investments.  You can request monthly statements, quarterly, semi or annual depending on your preference from most insurers. As your investments grow you should build up cash value.  You have access to this cash at any time.  

Before removing cash from your policy you must understand that in the early years of the life policy there are substantial charges for the insurance company.  These expenses have to be recovered and are quite high in the early years and diminish to zero over time. There is a schedule of surrender charges inside the policy contract.  Different insurance companies have different schedules but most decline to zero between year six and ten.  

Therefore your cash surrender value is your cash value LESS any surrender charges (and any loans if you’ve borrowed from the policy).  If you are not sure check your last statement.  It will be listed there.  Insurance companies are striving to make these statements easier to understand.  

Under a Universal Life policy you must cover the minimum cost of the insurance (mortality and expenses) in order for your policy to remain in force.  A policy owner that only contributes the minimum cost will not build up any cash value.  Without cash value a missed premium could result in the loss of the insurance coverage.  For those plans that have a good build up of cash value the minimum cost of the insurance can be removed from the accumulating (cash) account without additional deposits.

Money in the accumulating account can be removed, borrowed against, used as collateral, and used to offset the cost of the minimum insurance.

There is also a maximum deposit allowable. The formula is defined in the Income Tax Act.  If the maximum is exceeded, the policy will lose its tax status as “exempt” and may be taxed as an investment.  Most insurance companies have mechanisms to make sure that this will not be the case.

A special note for the Policy Illustration:

A policy illustration is designed based on assumptions.  If you are contributing additional deposits to be invested then you need to pay attention to the illustrated rate of return – especially if you have chosen a variable cost of insurance (YRT/ART).  Why?  The rate of return will determine the growth of your deposits necessary to pay for the rising cost of insurance.  If you do not achieve the illustrated growth then you may end up having to pay additional sums of money in later years in order to meet the minimum requirements and not have your policy lapse.

projected rate of return on universla life insurance

All illustrations usually use an assumed rate and show an alternate scenario with a lower rate.  The alternate must meet your minimum cost and it needs to be illustrated at a rate of return that is reasonable.  

If you choose a level cost of insurance then you already know what your minimum cost is throughout your policy.  If you contribute additional deposits for investment then your illustrated rate and alternate rate will only demonstrate how much money you will accumulate with time.

Reality check is when you receive your statements.  Actual performance results can differ from the assumptions made.   You may choose to increase, decrease, or stop additional deposits.  Any changes will affect the financial performance of your plan, therefore, it is imperative that you continually manage the plan.

Same example as above:  primary projected rate of return is 5.5%.   The alternate (favourable) will show +2% (7.5%) and negative (adverse) -2% (3.5%).   Witness the difference in cash surrender value.

cash surrender value on universal life insurance

Who should buy this plan??

Anyone that needs life insurance and is looking to purchase a permanent plan.  

The flexibility to add additional funds if needed, is an excellent option as people’s lives change.  If you’ve maxed out on RRSP’s or employer pension plans, TFSA’s, etc. and like the idea of insurance AND additional money growth that is tax deferred, then this product is an excellent choice.  The growth can help supplement retirement income, fund your children’s education, start a business, or any other financial goals you may have.

This product is especially appealing to business owners for insurance, pension building, wealth accumulation, and tax minimization strategies.  

Anyone more willing to make and control their own investment decisions and take on the risk.  Anyone that requires more flexibility with designing their own plan.

Cost oriented people that prefer to see the “unbundling” of the cost of insurance, expenses, and investment performance.

Anyone with a “buy term and invest the rest” mentality – that is the UL policy in a nutshell.  Money over and above the cost of the term (either you will have a variable term cost or a level to age 100 term cost or some combination of the two) but the rest (“additional money”) can be invested in a tax deferred environment.
Anyone planning for their estate.  If you want to leave money to family, charity, church, then you must buy permanent life insurance as opposed to term.  The need for permanent insurance fulfills the requirement to leave funds on death for estate taxes, probate fees, capital gains, final expenses, etc.


Universal life is a great permanent life insurance plan that combines life insurance protection with a tax deferred savings/investment account.   The flexibility built into the plan makes it suitable for anyone needing life insurance protection that wants a plan tailored to their own needs.

What is No Medical Insurance?

No Medical Insurance is an interesting category of insurance that has grown over the last number of years both in product and the number of insurance carriers that now offer such products.


Traditionally, this category of insurance was made available to people who, by regular standards, would simply not qualify for life insurance due to their health history that may include, most notably: cancer, heart disease, stroke, by pass surgery, stent insertion, chronic kidney and liver disease, diabetes (with additional complications), and so on. The amount of insurance was usually restricted to under $50,000 and was usually of the permanent (lifetime) variety.

Today, as demand grows, No Medical life insurance coverage has increased to $500,000, and the variety now includes term insurance for 10, 20 and 25 years as well as permanent insurance (lifetime), and critical illness insurance.

No Medical Insurance usually means there is no paramedical nurse that will visit and no medical records will be checked or requested from your doctor during the underwriting process. It does not mean that there will not be medical questions that will have to be answered in order to issue the policy.

The number of questions varies from company to company. There may be pre-qualifying questions, followed by eligibility questions, followed by more questions to determine what category you fit in –which will determine the overall cost. There may only be one question: Do you live in Canada? Generally, the fewer the questions, the lower the maximum amount of insurance will be, and the greater the cost.

Questions may be replaced by declarations. Read them carefully to make sure that you do not have any of the conditions listed since you are in effect declaring that you do not.

There are many different options and no two application questionnaires are alike. 

To get the right No-Medical Life Insurance Policy for your particular health issues call our in-house expert at 416-774-8595

There are many differences in what each company considers a serious health issue and it pays to have a qualified agent walk you through the questions and help you get the best price possible.

Most (but not all) No Medical plans are deferred. That means that you are insured for the first two years (but check your policy in case it is more or less) for death caused by accident only. After the deferral period you are then covered for death regardless of cause.

The key to remember with NO Medical plans is that you are answering questions or making declarations that will be verified AFTER death. Unlike traditional insurance where the file is underwritten during the application process; No medical insurance plans will be underwritten after death occurs. The answers to the questions or declarations must be accurate in order for the claim to be paid.

It is important to make sure you are dealing with an insurance professional during this process. They can help you understand the insurance products available to suit your needs and budget and help you navigate the questions correctly. Chances are that they have run in to similar conditions with other clients and can further clarify the questions with underwriters.

However, only you and your doctor have knowledge of your health status. If you are not sure whether you were diagnosed with, for example, cardiomyopathy or angina, then solicit the help of your doctor. Find out the exact condition(s) you were diagnosed with and the exact dates. Was it two years ago, was it three years ago? Dates matter. Questions and/or declarations will be time referenced.
After all, your doctor is whom the insurance company will request the final report from in order to approve or deny the claim.