Red Flags When Applying for Whole Life Insurance In Canada

You may have a policy, let's say, on a child or a grandchild or another family member that's already operating in that pool. So you're in a mutual environment here, kind of like a, like a co op. And so you want the underwriter to make good decisions. You don't want anyone who has an adverse health situation that might place extra risk and an early payout to the pool that you want to participate in. So they're doing it for the benefit of all parties. And that's something we need to be aware of.

All right, what exactly are the red flags, things that you need to be aware of when you're looking to get approved for life insurance? Specifically, we work with people applying for a lot of whole life insurance for the purpose of becoming your own banker. And, hey, you might be wondering, what are some of the things you need to be aware of from an underwriting perspective? What are some of the health things that you need to maybe be considering? What could be a red flag that you want to be aware of? And we're going to talk a little bit about the dreaded APS report, so stay tuned to learn more about that. I want to introduce you to my friend and amazing colleague and teammate of mine, Jennifer, also known as Niffer, with our client services team. Welcome and thank you for joining me today to talk about the magic of underwriting.

Hi, Richard. Thanks for inviting me today. Looking forward to this exciting topic, this.

Very exciting, this gripping content underwriting. But, you know, it's all about knowledge and helping people understand what goes into these things. And, you know, people have questions. It's hard to find some of that stuff online. And of course, you, you know, depending on what you're looking at, you could be looking at the wrong information. And of course, things do change over time, especially in the underwriting category. So let's talk about some of the red flags. Before we kind of hit the record button, we were talking about certain types of conditions and in your experience, helping people through the application process, what are some of the things that come up that can stall an application and either make it take longer or potentially, you know, lead to potentially a decline?

Actually, it's a really great question, Richard. I, I tend to find that any one previous condition that, that you may have, say you have asthma or say you have lightheadedness due to hypotension, any one condition is usually not of a great concern or a big red flag. What I find is that if you have two or three or a series of smaller conditions that's where the red flag might come into play.

Got it. So in other words, it's the combination of medical maladies that can be the sticking point. So an example then might be if a person has, say, type 2 diabetes and then they also have sleep apnea, the diabetes itself maybe won't be a problem, but it's that in combination with something else that now says, okay, we need to take a deeper look at this at the underwriting level.

And that's exactly it. That's what they're going to do. They're going to take longer in order to, number one, possibly ask for an attending physician statement, also known as the dreaded aps. And that's just to get a really good understanding of what the risk is for the insurance company for underwriting that policy. That particular person alone.

Got it. So let's talk a little bit now. You opened up the can of worms for the dreaded aps. I'm going to use some air quotes here for everyone that's watching. One of my favorite things to do. And so the APS stands for Attending Physician Statement. So walk us through what that would be. Why would the insurance company be requesting that? And then, and then how do they go about requesting it?

Okay, so the APS Attending Physician statement is basically a plain, simple doctor's report. They're wanting a report in regards to either the one condition, the possible two or three or several conditions, or they may be asking actually for a full health report on the individual that's applying for the policy. So what that entails is that the life carrier is going to put a request to a third party. That third party will get in contact with the known physician's information that you've already disclosed on your application. So there is no process of you having to contact the doctor. However many times we ask you to give them a heads up or a little bit of a nudge that that actually may be happening because an EPS report is not on the top list of what doctors want to do in a day. And so it always gets put to the back end of the pile and can take several weeks for them to actually do up the report and send it back to the insurer.

What do you mean? All those years of medical school and residency that they had to do that? They don't want to be filling out Mickey Mouse reports for insurance companies. That's not what they signed on for.

Imagine that. And unfortunately, with the times that we're living in right now, Covid has just increased that time frame of getting that APS back Because they're also swamped. They don't have as many staff available daily. So it just takes even that much longer for policies to receive their APS reports.

That's an excellent point. And I want to expand on that a little bit because, you know, time is a factor. That's one of the other things we wanted to talk about today is how long it might take to get an application done. So specifically to the aps. If an APS has been requested by the insurance company automatically, your time frame for getting anything approved just got amplified. I mean, you might as well add, you know, probably a minimum of 30 days additional time because we have to wait for the insurance company to initiate with the third party, which they're an underwriting company. That's specifically one of their jobs is to go and do get medical exams and reports like these. So let's say you're applying with insurance company abc. And then you as the client, call your doctor's office and say, hey, I'm applying for life insurance with company abc. Well, the doctor and their front desk team are waiting for a request to come through, but the request doesn't come through from that company. It comes through from a third party who's doing the request on behalf of life company abc. So that can create some of the miscommunication, usually because the medical industry still operates on fax machines. From a privacy rules and regulations thing, things sit on a fax machine request and then it goes into a file folder on a. On a desk until someone gets to processing it. I mean, again, they're all busy people and, you know, so we request that the client maybe reaches out and just notifies the doctor, as you indicated, to give them a nudge, simply to let them know as to where, hey, I'm doing something really important. I'm applying for insurance. Whether it's life or health insurance, it's important to me and my family. Can you please, you know, just make sure you keep an eye out for it and prioritize that when it comes in. So just by making that request often goes a very long way to speed up the process. Now, the other thing that's important about these APS reports, and you'd indicated something earlier, Nifra, you said that, hey, they're going to reach out to whichever doctor you've listed. So in the application, you'll list your primary doctor and if you've had a condition. So we mentioned sleep apnea as an example, or whatever the other conditions that might be. Maybe it's a perhaps, perhaps a mental health condition like a depression or anxiety. And you've seen a specialist. Well, we're going to want the information for the specialist as well, because that's likely who they're going to need to get the information from. So they may actually need to request information from more than one source. Again, that's just going to add a little bit of time. Now, what I want to ask about NIFR is, you know, why does, why does the insurance company need all this information anyway? Why do they have to have all this on hand?

Well, the underwriter is actually having to take your particular health concerns and figure out where you lie in regards to the possibility or the risk of dying, which is what the benefit payout does. So there is a standard that, that they all kind of go by and then each individual policy is kind of measured up. Either you might get a preferred rating because you've got excellent health, or you may get a substandard rating, which may just increase what the premiums are, but you may not actually be declined. So that gives you still an opportunity to have life insurance.

Well, and for the principles of what we teach people, for the process of becoming your own banker, a policy that might be substandard or slightly substandard often has very little to no impact on the ability for that policy owner to use it. And more importantly, if the insurance company has indicated that there's a reason that they want to place a rating on the policy, they're doing that to protect everyone in the participating pool, which you're trying to become a part of. And so you may have a policy, let's say, on a child or a grandchild or another family member that's already operating in that pool. So you're in a mutual environment here, kind of like a, like a co op. And so you want the underwriter to make good decisions. You don't want anyone who has an adverse health situation that might place extra risk and an early payout to the pool that you want to participate in. So they're doing it for the benefit of all parties, and that's something we need to be aware of. I always find it's helpful when you consider, instead of looking at it as a, what's in this for me, what is the insurance company looking at? What are the things that the insurance company's trying to do and who are they doing it for? All of their decisions in a mutual company are based around the policy owner. So they're really there to protect policy owners at the end of the day.

Yep.

Now, another thing that came up earlier in our conversation was, other than the apss, we talked a little bit about certain things that can make, you know, a policy or an application take longer. Maybe we should just give people an indication on, you know, what have you been finding, you know, right now, or Q1 as of this recording in 2022, and we're still dealing with COVID related stuff. What would you say an average case that you see come through application and you help it get through the underwriting process? How long does it take for an application to kind of go through, assuming there's kind of no problems? Everything's. All the information is provided, the client's given us everything that's needed. We don't have to go back and ask them for a lot of data. Roughly how long do you see it takes for an application to get into the end zone?

Well, in regular circumstances, everything's provided. There's no issues with financials, there's no issues with any health conditions. It can still take anywhere from four to six weeks to have a policy and get all the way through issuing and to approval. So anything that makes it take that much longer, it can be drawn out for a couple or a few months.

And then on top of that, there's also, if you're doing a corporate, you know, application, there might be additional paperwork. You need your articles of incorporation. Who are the directors that have signing authority in order to bind this insurance contract? You know, corporate bank, you know, how is the corporation paying for it? So there's some financial data that needs to be provided. So there is other ancillary paperwork that's outside of the health category. And there's other things that come up in an application. Such as, like, as an example, there's a question around, do you fly airplanes? In other words, you know, are you a commercial or a non, you know, a hobbyist pilot? Well, if you're a commercial pilot and you've been flying for 10 years, you've got some experience behind your belt, probably everything's okay. But if you just started taking flying lessons yesterday and you want to, you know, be a hobbyist flying person, you know, that could be something that you need to identify. There's a separate form that you fill in for that. So there's, there's other things of that nature or hazardous spirit sports, such as, you know, hela skiing. All right, well, if you're jumping out of a helicopter onto a mountain, you know, just kind of put two, put two and two together. I mean, the insurance company might think, oh, there's a little bit of risk there, you know, I mean, jumping out of a helicopter, I mean, that. That could have, you know, so. So just consider some of those things. Again, they don't mean that you can't get coverage. What it means is that these are things that must be assessed and disclosed to the life company. And here's the other thing that's really important I want to share, and you and I didn't get a chance to talk about this, but the insurance company only has one shot, one chance in a life policy to make that decision. So if you've ever bought a house and you've done a home inspection, you know, you get a home inspection because you want to make sure you're not buying a lemon, right? You don't want to end up, you know, having to replace the furnace and have mold and, you know, you've got all these other things that you have to take care of. Well, you spend a little bit of money to get the home inspector, spend three or four hours walking through the house, get a report, review the report to make a good decision. The insurance company is doing that by sending, you know, possibly sending a nurse to your house. They're gonna make sure that, you know, you. You didn't just drive home from the bar with your friends when you show up to the appointment, right? They're gonna bring a scale. They're gonna, you know, weigh you. They're gonna do blood pressure checks, potentially draw some blood, depending on the size of the policy, maybe a urine sample. So these are things that happen, depending on the. The size of the coverage, of course. And those testing, you know, the detail they get back helps them make a good decision. It's the home inspection. They're doing a home inspection on you. They want to make sure they're not getting a lemon, right? So. And again, it's all for the principles of protecting the overall participating pool. So there you go. Those are some of the important details you might be aware about. Red flags. Things to understand about the underwriting process, the dreaded APS is, and how you need to be prepared for it. To notify your doctor, make sure you let them know who's actually asking for the report, and stay in communication with the advisor that you're working with, the team that that advisor has in place. When it comes time to your application and consider, you know, if there's a request, try to get that stuff back as promptly as you're able so that it can move the process along. Any final thoughts about underwriting and red flags that you'd like to Share with the listeners today?

Absolutely. I think the number one thing to actually remember and to do is to disclose anything even, you know, almost as ridiculous as a paper cut. Because what the insurance company wants to know is how truthful you are with, with all of either the health concerns or your daily risk activities. Because if you're not truthful, then they, they can, that would be the number one reason as to why you would be declined. So go ahead, say everything that ever happens down to your baby toe and you should be.

On a good track to being approved.

And so, and on that note, I would say it also makes sense that you know, if you know your application coming up, prepare in advance for your application. You know, get your doctor's information and their, their address and their phone number. Have that ready to go. The last time you saw your doctor, what was it for? You know, was there any follow up or medication or something prescribed like it was for the common cold. That's fine. Indicate what it was for, have that ready to go. And you know, there's lots of people who may, they haven't seen a doctor in five or six years. They don't even remember the last time they saw. So take a few minutes and advance the application. Get a sketchbook, you know, you know, piece of paper out, jot down some notes and be prepared for that so that you have everything ready to go. It'll streamline the application, it'll make you feel better. And when, at least when you're doing it with the Ascendant team, you know, we provide a link to resources that help you explain what to expect during the application process. There's even a list of the questions that are asked on most typical life apps. Or again, it ranges based on the company, how they phrase, things can be different. But you can go through that list in advance and you can be like, oh yeah, yeah, I would check that box. I would check that box. Oh, right. I got X rays for, you know, I broke my foot playing rec hockey five years ago, you know, because I, whatever, somebody hit me with a slap shot. Okay, great, let's, let's jot that down so you can be prepared. It'll simplify things for the application, it'll make it smoother and it'll also condense the time. It will make it so it takes so long. You know, a lot of times these applications can be done in, you know, as little as 30 minutes, but on average you're probably in a 45 to 60 range. Right. That sound about right? Niver?

Absolutely.

Yeah. Yeah. So you got to be prepared for it. You know, often we do them over the phone or we do them over a zoom call. It's something that's important. It's important for the insurance company, it's important for you. Sometimes it provides a lot of great awareness because you don't always think about the medical stuff that's going on in your life because we're busy with other things. So. So it can produce a little bit of awareness. And more importantly, it's gonna get you into the end zone of what you really want, which is the policy you need to protect your family, protect your business. And if you're implementing the strategy of becoming your own banker to make sure that you can be ready to start building up the cash reserves, the cash reservoir you're looking to create for your own financing needs for the rest of your life and a multi generational aspect. Thanks so much for tuning in. Check out some of the other great content that's showing up on the screen. Look at the recommended videos and stay tuned for more. Hit the subscribe button. Keep coming back for more great content.