Life Insurance After a Diagnosis: What You Need to Know

A diagnosis changes the life insurance picture, but not always in the way you'd expect. Here's the real story. If you already have life insurance: - KEEP IT. Your current policy can't be cancelled because of a new diagnosis (as long as you keep paying premiums) - Check if you have an 'accelerated death benefit' rider — this lets you access part of your death benefit while alive if you're diagnosed with a terminal illness (usually 12 months or less life expectancy). Many policies include this at no extra cost. - Check for a 'waiver of premium' rider — if you become disabled, the insurer pays your premiums so your policy doesn't lapse. Many people have this and don't know. - If your policy has cash value (whole/universal life): you may be able to borrow against it or do a partial withdrawal for medical expenses - Don't cancel a policy to save money — replacing it after a diagnosis may be impossible or extremely expensive If you need new coverage after a diagnosis: - It's harder but not always impossible. It depends on: the condition, how long since diagnosis, treatment status, and prognosis - Group life insurance through your employer: usually doesn't require medical underwriting during open enrollment — this is your best option if available. Sign up during your next enrollment period. - Guaranteed issue life insurance: no medical exam, no health questions — but coverage is limited (usually $25,000-$50,000) and expensive. Only worth it if you can't qualify for anything else. - Simplified issue: no medical exam, just a health questionnaire — better rates than guaranteed issue, but you may be denied based on your condition - Term life with medical underwriting: best rates but requires medical exam and health history — may be declined or rated (higher premiums) based on your diagnosis - Work with a broker who specializes in 'impaired risk' or 'high-risk' life insurance — they know which insurers are more lenient for specific conditions Important timing: - During the 'contestability period' (first 2 years of a policy), the insurer can investigate and potentially deny claims for misrepresentation — be honest on ALL applications, even about minor things - If your diagnosis is new and you have group life enrollment coming up: enroll BEFORE you have extensive treatment records — the enrollment doesn't require medical questions - Converting group life to individual: if you leave your job, you can usually convert your group life to an individual policy without medical underwriting — but the premiums will be much higher Canada: Same general principles apply. Group life through employer is the easiest path. CIBC, Manulife, and Sun Life all have 'simplified issue' products. Check if your provincial medical status affects underwriting. Riders to look for: - Accelerated death benefit (terminal illness access) - Waiver of premium (disability premium payment) - Long-term care rider (access benefit for long-term care costs) - Return of premium (returns premiums if you outlive the term — more expensive upfront)