I get asked this question a lot.  I think what leads to the question is there are many different types of insurance such as home, auto, travel, health, in addition to Life insurance, Critical Illness, Disability and Long Term Care insurance.   Additionally there are public forms of insurance, group insurance, simplified issue insurance and underwritten insurance.  The different types of insurance and types of underwriting all contribute to different payout rates.

The more information that is provided and greater level of underwriting involved will increase the chances of insurance paying out.  For underwritten insurance policies in Canada the pay out rates for Life Insurance are approximately 98%, for Critical Illness it is about 94% and for Disability the pay out rate is about 84%.  These are very high payout rates.

It is important to understand the differences.  The more information that is provided for underwriting and approving coverage at time of application, then the greater likelihood of payout.  The biggest reason insurance policies don’t payout is due to pre-existing health conditions.  Ie. People who have had heart attacks and cancer will have difficulty getting coverage.  In addition to health concerns, lifestyle habits can also affect eligibility.  Addictions (ie drug and alcohol) can impact ability to get coverage.  Travelling to dangerous parts of the world where there’s conflict or having dangerous hobbies or occupations may also impact the ability to get coverage.

Don’t assume because you’re had past health or lifestyle issues that you are ineligible for coverage.  The longer in the past the incident took place and what treatments have been undertaken to cure the health or addiction issues will increase the chances of coverage.  Policies may be issued with exclusions for certain health issues or events.

It’s best to consult with a licensed advisor to get the correct information to ensure you have the protection you desire.