Making Informed Choices for Life Insurance in Toronto

This is a prime example of why people should avoid Creditor Insurance offered by lenders. There was only a simple questionnaire and after death this application went through the approval process and Mr. Foreman was essentially declined. Had he went to a Life Insurance broker and applied for proper underwritten insurance it is likely that he would have been rated or declined. At least he would have known prior to dying that he didn’t have insurance on this loan. A quality life insurance broker would have then sourced him some guaranteed issue insurance and at least he would have been covered.

Insurance Mistake

Sheryl Smolkin writes for The Star:

”A top Ontario court has ruled that a woman cannot claim a $97,500 life insurance policy because the application by her late partner contained inaccurate information about his health.

This decision by the Ontario Superior Court again highlights the importance of correctly answering health-related questions on insurance applications…”

Most financial advisors agree that life insurance in Toronto and elsewhere in the province should be purchased through a licensed insurance broker. These policies are underwritten at the time of application. This means the life insurance company goes through a detailed underwriting process first and when they make a final decision you are either approved or not. Once approved, YOU ARE COVERED, the policy Face-Amount (the amount you are insured for) on death is paid out to the beneficiary of your choosing and the funds can be used to pay out the line of credit debt or any debt for that matter.

Bank creditor insurance is usually post-underwritten as was the case in this unfortunate story. What this means is you are only asked a few simple questions during the application process and then when there is a death, the bank will start to investigate your medical records. They will typically contact your doctor and request your medical records. Remember at this point you are no longer living and cannot be involved in the process. Your life insurance is essentially being underwritten and you are going through the approval process post mortem. They may very well decide you did not qualify for the coverage and the insurance you thought you had is not paid out leaving your grieving family with an unpaid debt or mortgage. To see more details about the pitfalls of getting your life insurance (post underwritten creditor insurance) through a bank/lender, Google a YouTube video called “CBC Marketplace: In Denial”

The smarter way is to consult licensed Toronto life insurance brokers such as Insurance Advantage. With their detailed product information, resourced from major life insurers in Ontario, you will be able to get coverage that will actually be there when you need it and avoid a lot of heartache and stress for you loved ones.

(Source: One couple’s $97,500 life insurance mistake, The Star, December 5, 2013)