Life Insurance in Canada – Is Coverage More Affordable in the US?

Life insurance in Canada is very similar to its American counterpart…

…but are there any differences you should be aware of if you have ties in both countries? My wife was lucky enough to work as a marketer for an agent in San Diego. It gave us both some insights into the market and how it compares to ours here in the great north. 

The concept of life insurance is the same across the world. A contract is entered between you and a life insurance company. 

You pay a premium in return for a payout of a guaranteed sum to your beneficiary/ies if you die during the agreed to term.

There are different ways to achieve this goal but that’s the gist of it. 

The question are there any differences between the way life insurance is handled in the US vs. Canada? 

My name is James Heidebrecht and I’m the founder of Policy Architects. The reason I’m writing this article is that my wife is American and I have many clients with interests in the US who want to know more about the similarities and differences between these two countries. 

No matter what your opinion, we’re amalgamating into an increasingly global community. 

Which means regulations, laws and our approach to insurance, banking, and business are homogenizing across the board. Prior to the internet, it used to be that other countries seemed far away. Now with Google, we can access international content with the click of a button making everything seem closer than ever. 

The US and Canada have always shared a special relationship because of a shared border, history, and language BUT we are also very different.

So let’s explore how this applies to life insurance now! 

So to give you some insight let’s start with a life insurance definition. Underwriting is the process your application goes through when you apply for a traditional term or permanent insurance policy.

You and your agent go through a number of questions, a medical exam is booked and your height, weight, and vitals are taken along with a urine and blood sample. This is information is analyzed along with your medical records by an underwriter who assigns you a rating based on the risk a life insurance company takes to insure you. 

In the US the pool of applicants is clearly larger. Which means there is more money, diversity of health and options for the consumer. 

There are also more reinsurers which make the market more competitive. This allows companies to underwrite people who may not be insurable in the Canadian market. 

Let’s say you live in Canada but you have family in the US, so you maintain a vacation home in California to visit your family regularly.

You’re 68 years old and want to cover the rest of your mortgage in Toronto so you can leave the family home to your kids. The issue is, not everyone is fit as a fiddle.

Sadly you have a medical condition that makes you uninsurable in Canada. 

Well, now that’s some bad news…

Better luck next time! But hold ‘yer horses we aren’t done yet. You may be eligible to apply for coverage in America.

Had you called Policy Architects and familiarized us with your connections to the US we would suggest giving the American market a shot. 

We will shop your case out to a number of underwriters to see what they think. In fact, I have some terrific contacts that work specifically with cross border life insurance matters so we may be able to solve this problem. If there’s a policy to be had we will find it. 

Sometimes it pays to take advantage of the more lenient underwriting available in the US. So that condition the Candian companies scoffed at may now be insurable at a standard rating! 

Don’t get me wrong, if you’re at death’s doorstep this isn’t going to help you. But if you are in fairly good health we may be able to squeeze you in. 

The second category deals with Candian citizens and yes we can apply for life insurance as a non-US citizen. This is also true for Mexico. To be perfectly honest the application process can get a little tricky though. All aspects of your application must be completed in the US. This includes: 

• Solicitation 
• The Application Process 
• The Medical Exam 
• Inspection & Delivery of the Policy 

A traditionally underwritten policy takes anywhere from 6 -12 weeks to complete, so we recommend that applicants plan to be in the US for at least 90 days.