What’s changed in life underwriting?

Despite dramatic changes to the life insurance industry over the past few years, life agents say the underwriting process has remained relatively static.

“The big carriers haven’t updated the health questionnaire,” said Amandeep Banwait, a financial security advisor and investment representative with Canada Life Assurance Co. and Quadrus Investment Services Ltd. in Toronto. He said carriers are still asking about major illnesses, particularly those that could affect lifespan.

Ahilan Balachandran, a certified financial planner and founder of BlueMind App, an insurance customer management program, said that underwriting guidelines have become more favourable for chronic diseases such as diabetes. Diabetes still is considered a risk, for example, but applicants aren’t automatically rejected for having it.

“One reason is medical improvements,” he said. “[Insurers] are saying, ‘You have diabetes, but you have control over it and don’t have other risky lifestyle habits, so we can offer [you] a lower rate.”

Other lifestyle habits like non-medical use cannabis are no longer deemed high risk. Balachandran said that if an applicant indicates they use cannabis but there aren’t cotinine* markers in their urine, they’re treated as a non-smoker and offered non-smoker rates.

Banwait said that he’s heard anecdotally that insurers are more worried about cannabis smoking than consumption in general.

“What they are very concerned about is the act of combustion,” he said. “When you burn something and you inhale carbon, that is a known carcinogen. Because of that, that’s why they would say [that] regardless of what the law says, it’s simply the act of combustion that can rate you as a smoker.”

As for the length of the underwriting process itself, Banwait said he saw an uptick in people looking for coverage while the industry experienced a staffing shortage.

“There were so many applications being put in [earlier this year] and we didn’t have enough underwriters,” he said, leading to approvals being delayed for several months.

Technology has helped with turnaround in some cases. Michael Van Alphen, vice-president of insurance solutions with Sun Life Assurance Co. of Canada, said many clients are now experiencing a less invasive, quicker process when applying for insurance coverage.

“Across the industry, we’re seeing things like fewer mandated health exams and online data intake because of improved risk management and data science capabilities,” he said. “For clients, that means fewer tests. Combine that with electronic meetings, online data intake and e-signatures, and it’s a better experience for everyone.”

One other change Banwait’s seen is a short line asking if a client has had Covid-19. He encourages his clients to disclose if they’ve had the virus.

“At this point, basically everyone has had Covid-19,” he said, and none of his clients has experienced negative consequences from making such a disclosure. “From what I’ve been seeing, [insurers] are treating it as if it was just the flu.”

*Correction: A previous version of this article said “protein” markers, which was incorrect.

Renée Sylvestre-Williams

Renée Sylvestre-Williams is a journalist covering finance and business who has written for many Canadian and U.S. publications.