Simple life insurance provides hassle-free option

Natasha Krivokapic, director of individual product
development at Equitable Life of Canada

Most financial advisers view life insurance as one of the critical components of a sound financial plan. Yet one in three Canadians have no life insurance, according to a 2013 survey by global research firm LIMRA.

"Canadians are underinsured," says Natasha Krivokapic, director of individual product development at Equitable Life of Canada, a Waterloo, Ont., insurance and savings products company. "Although industry surveys indicate that Canadians would like more insurance, many still don't have any coverage."

LIMRA's survey uncovered a number of reasons for not having coverage, including a perception that life insurance is not affordable and that it simply isn't a high-priority item.

Many Canadians are also worried they'll be declined for coverage because of their age or health, says Ms. Krivokapic. Others don't want to go through the hassle of a medical exam.

A number of insurance products address these concerns. Known collectively as simple issue or simplified issue life insurance, these products fall into two main categories: guaranteed issue, which requires a declaration of health and asks no medical questions; and simple issue, which uses a short list of health questions to qualify applicants.

"These products do not offer large benefits, and there are fewer add-ons or riders," explains Ms. Krivokapic.

Guaranteed issue tends to cost more than simple issue, and it doesn't pay out benefits for at least two years. Ms. Krivokapic notes that premium payments would be returned with interest in case of death during this no-payout period.

For thousands of uninsured Canadians, simplified life insurance can provide a measure of protection – one that can be obtained with a quick phone call or visit to an insurance provider's website.

"These products would definitely appeal to people who want to provide a small inheritance or ensure they're not leaving family members with outstanding debt," says Ms. Krivokapic.