By Sheryl Smolkin

The abolition of mandatory retirement across the country has removed a major obstacle for people who want to work beyond age 65. But options for older workers who need to be insured for long term disability (LTD) late in their career are very limited.

The reality is that if you stick with the same employer, your group LTD coverage will typically terminate at age 65. So I asked Lorne Marr, Director of Business Development at LSM Insurance* what’s available in individual LTD policies.

He told me that only one company (The Edge) he is aware of offers coverage to age 70 but the policy is less comprehensive than a more typical LTD policy from RBC ending at age 65.

Table 1: RBC LTD Quotes
Mid-level male manager
Non smoker

AGE	ELIMINATION PERIOD	BENEFIT PERIOD To Age 65	MONTHLY PREMIUM
30	30 days	X	$224.80
	90 days	X	$128.68
45	30 days	X	$573.61
	90 days	X	$261.14
60	30 days	X	$808.98
	90 days	X	$519.62

Source: LSM Insurance

First of all, the RBC policy provides that insured clients are covered if they are unable to work at their own occupation until age 65. In contrast, The Edge only pays benefits for three years if a disabled individual cannot be employed in his/her own occupation and then he/she is expected to work in “any reasonable” occupation.

The premiums on the RBC LTD policy are also guaranteed for the life of the policy. The younger the insured is when the policy is taken out, the lower the monthly payments. The Edge plan is guaranteed renewable, but the premiums can be increased for the whole class.

Finally, The RBC LTD policy has residual disability provision allowing disabled plan members to work in a limited capacity both during the elimination period and once they are receiving disability benefit payments. The Edge does not have comparable flexibility.

It is also interesting to note that policies from The Edge with an age 70 benefit period split out coverage for injury and illness and only 30 day and 120 elimination periods are available. Therefore, to get similar coverage to the RBC policy (subject to the differences discussed above), an individual would have to buy both.

Table 2: The Edge LTD Quotes*
Mid-level male manager
Non smoker

AGE	INJURY	ILLNESS	ELIMINATION PERIOD	BENEFIT PERIOD To Age 65	MONTHLY PREMIUM
30	X		30 days	X	$67.50
		X	30 days	X	$129.25
	X		120 days	X	$47.50
		X	120 days	X	$82.15
45	X		30 days	X	$67.50
		X	30 days	X	$208.55
	X		120 days	X	$47.50
		X	120 days	X	$132.15
60	X		30 days	X	$67.50
		X	30 days	X	$396.05
	X		120 days	X	$47.50
		X	120 days	X	$251.15

Source: LSM Insurance 

Table 2 illustrates that injury only coverage is relatively inexpensive. Furthermore, it is not displayed in the table, but The Edge’s guaranteed issue, injury only coverage is available to age 75.

In addition, Hunter McCorquodale offers unique solutions and high issue limits for executives and other highly-paid people still working beyond age 65 for as long as they are working. They will quote on full accident and illness coverage underwritten by Lloyd’s of London.

If you are applying for LTD at a young age, it may be difficult to predict if you will want or need to work beyond age 65. And with the limited, less than optimum types of polices with a benefit period to age 70 or beyond, you may eliminate such extended coverage from consideration almost immediately.

But Marr sees extending LTD benefit periods to age 70 as a good niche market opportunity for other carriers. “Because none of us can predict how long we might want to work, and coverage can be cancelled at any time, I’m hoping more companies will revisit their benefit periods and at least give clients the option to select coverage until age 70,” he says.

*LSM Insurance Brokers is located in Markham, Ontario. They have a working relationship with Delorie Jacobs and Gord Martens affiliates with the Sentinel Financial Group headquartered in Saskatoon.

By Sheryl Smolkin

If you are turned down for life insurance by one company, the odds of another carrier agreeing to cover you are slim. So it’s important to understand when life insurance coverage may be denied and what options are available if that happens.

When your application reveals you have or had a serious or life-threatening illness such as diabetes, HIV/AIDS, cancer, heart disease or Lou Gehrig’s disease (ALS), the insurer may charge you higher premiums or postpone coverage for specific conditions until you can show the condition has stabilized. Or, the insurer may refuse to cover you.

Insurance broker Chantal Marr of LSM Insurance* says when she thinks one of these circumstances may apply to a client, she first submits a preliminary inquiry on a no-name basis. Based on the insurance company’s response, she may recommend the client apply for a more expensive “simplified issue policy” that may have a less rigorous screening process.

There are other reasons why a life insurer may red-flag your file when you fill out a preliminary questionnaire. Here are some of them:

1. Obesity: For example, life insurance for a six-foot-tall man weighing 320 pounds will probably be declined, particularly if he has other underlying conditions such as high blood pressure or diabetes.
2. Uncontrolled blood pressure: Erratic blood pressure will typically trigger refusal of your application. If your blood pressure is high, but controlled by medication, most insurance companies will underwrite you.
3. Travel: An insurer can decline your application if you plan to travel to a region it views as dangerous or unstable. Your option is to exclude your trip from the policy or start your policy once you are back.
4. Alcohol use: Three or four beers a day will probably bump up your premiums. More than that and coverage will likely be refused, depending on the carrier.
5. Drug use: Use of illegal drugs such as cocaine, crack or heroin is a no-go. Marijuana users will be treated as smokers and pay twice the premiums of non-smoking applicants.
6. Dangerous recreational activities: Are you a rock climber or skydiver? Some providers offer a high-risk insurance policy that includes such activities.
7. Dangerous occupation: People with dangerous jobs such as miners, pilots and members of police bomb squad teams may need to seek coverage from specialized carriers or available workplace group coverage.
8. Careless driving or DUI: Careless driving or driving while impaired by alcohol or drugs can pose a life-threatening situation. Therefore, some insurers will either deny a life insurance application or cancel an existing policy if you have a record of such behaviour.

In some cases, lifestyle changes will improve your insurability. You can get into better physical shape and stop smoking, drinking or taking drugs.

But if your application is likely to be declined for other health-related reasons, you may improve the odds by applying for a simplified issue policy based on a less complex questionnaire and no medical examination.

“Simplified issue insurance is more expensive and has lower maximums,” Marr says. “So if you need $500,000 in life insurance, we may have to cobble together coverage from a number of carriers,”

Guaranteed policies (often referred to as funeral policies) may also be a partial solution. They require no health information whatsoever but coverage is typically limited to small amounts up to $25,000. There may also be a waiting period (usually two years), so if you die within that period, your beneficiaries will only receive a return of premiums.

Application acceptance outcomes for all types of policies can vary across numerous life insurers. As a result, it can help to work with an experienced insurance broker who regularly deals with many life insurance companies and understands their policies and practices.

Also, where you are eligible for group life insurance at work, make sure to apply for the non-evidence maximum benefit available to you, regardless of your health.

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*LSM Insurance Brokers is located in Markham, Ontario. They have a working relationship with Delorie Jacobs and Gord Martens affiliates with the Sentinel Financial Group headquartered in Saskatoon.