A life insurance policy can be issued standard rates for normal health, preferred rates for exceptional health, substandard rates (which offer a rating surcharge for medical conditions or height/weight issues).
Policies can also be postponed until future tests are completed, or applications outright declined.
If you have been approved for life insurance without a rating, any health conditions that occur after policy approval/acceptance does not affect the policy (subject to policy terms + conditions).
Almost 1/5 of my clients contacted, upon review 8 years after application, have developed a change in health history that could then or later become a factor that affects them getting insurance at standard rates (based on limited sample size).
See Stats Can Release 2021 – Prescription Medications Use Among Canadian Adults.
Regular review of insurance optimizes the chances of locking in good health for any needed insurance modifications.
This is why it is so important to lock-in age and good health for best rates at the earliest opportunity.
Factors that influence the desired term
- Mortgage and other debts
- Age + dependency period of children
- Current age of life insured
- Specific need to be insured
- Budget
Personal term life insurance is like renting insurance for a defined fixed term. You have a guaranteed rate of premium. If you were to pass away during the term, the policy pays out.
When budget is a concern, sometimes a single shorter term insurance policy will cover that need initially. At the earliest opportunity, you should look towards improving the plan.
What happens after the initial term ends? IMPORTANT
Guaranteed renewal rates at the end of each term are usually significantly higher. The reason is that renewal is guaranteed for the next similar term, regardless of continuing good health.
Renewal rates for 10-year Term life insurance can increase as much as 300%-400%. A new policy, if you remain in good health can cost much less.