A Guide on How Traveling Will Impact Your Insurance Planning

February 15th, 2011

Dr. Ian Wexler

Over recent years, the issue of where you plan on traveling to, as well as where you have recently traveled has taken an increasing role in determining your insurability for life, and all forms of disability insurance including long term disability and critical illness protection. This article will serve as a guide in understanding how this issue may impact both new applications and any existing coverage you have.

General discussion

Some years ago, after 9-11, all major insurance companies in Canada started to look more closely at insurance applicants’ travel histories and travel plans. Companies have determined that if an applicant has specific “plans” to travel to a particular country (or even a specific area or part of a country) in the future and/or returned from a trip within the previous one to two year time frame, that this will impact how the plan will be issued.

Which countries are on “the list”?

Each insurance company has a “black box” of countries around the world that will impact their underwriting decisions. Underwriting, as I have mentioned in previous articles, is the comprehensive process of determining your insurability. No company, in my experience as an independent advisor, will divulge their entire list. What adds additional layers of complexity to this, is that “the list” changes over time. Countries I have seen include most Middle Eastern countries such as Syria, Lebanon, Israel, Iraq, Iran, and Afghanistan, as well as countries such as China, Brazil, and other countries in Southeast Asia.

The impact on new insurance applications

In my experience over the years in having submitted thousands of life and all types of disability applications, the insurance companies will offer coverage in one of three ways based upon the travel information provided.

  1. Standard acceptance

    • This includes no restrictions whatsoever on your plan

  2. Decline

    • No plan will be offered to you at this time. Companies however will often offer “reconsideration” in the future once you:

      1. Complete your travels and have not travelled to the restricted countries in the last two years
      2. Show no plans to travel again to the particular country in the foreseeable future

  3. Travel Exclusion

    • This means that the insurance company will approve you for the plan you have applied for, but that it will contain one of several benefit related restrictions. It has been my experience that insurance companies will often reconsider these exclusions for removal over time, and that most applicants, once learning how these exclusions actually work, are quite willing to accept them. The most recent ones that I have seen include:

      1. You will not be insured if you travel to a specific country (life and disability)

      2. You will not be insured if you travel abroad in general (life and disability)

      3. You will continue to be insured if you travel abroad (or a to a particular country) but benefits will not commence until you return to either Canada or the United States (disability)

      4. Same as iii, except the “elimination period” as noted in your contract, will not commence until you return to either Canada or the United States (disability)

The impact on existing coverage

  1. Guaranteed non-cancellable coverage

  • If you have an individual life or disability plan that has been purchased through an insurance advisor, chances are the plan cannot be changed or impacted by your travel plans. Review your policy contract for the actual wording.
  1. Association (CDSPI) coverage

  • If you have this type of coverage, as it is not guaranteed and the benefits (as well as premiums) are changeable, there is a risk that your travel plans could impact your plan and potential benefits at some point in the future.

How do the insurance companies differ?

Insurance companies differ in the following ways:

  • Countries that are on their particular list will influence their underwriting decisions;

  • How travel to these particular countries will impact an applicant;

  • How they phrase travel questions on their applications. For example, some companies inquire as to your travel history over the past year as well as travel plans over the next 12 months, while one particular company only asks about future travel plans.

What should I do?

  1. Avoid advisors who utilize scare tactics as a sales tool in getting you to purchase coverage. For example, advisors who tell applicants not to travel abroad until they purchase coverage.
  2. If you would like feedback and/or are concerned about how your travel history or future travel plans may impact your insurance planning, request that your insurance advisor “anonymously” submit to a number of companies to see how each would view an application from you.
  3. Consult with an insurance advisor who is independent and represents all major insurance companies.
  4. Ensure that your advisor is familiar with the differences in insurance applications and travel exclusions in general.

(810 Words)

Dr. Ian Wexler is a leading authority on insurance issues for dentists. He is the founder and President of Protect Insurance Agencies Inc. in Toronto which has provided specialized expertise in life, disability, critical illness, long term care, and other insurance products and services to professionals, executives, and business owners across Ontario for over 16 years. He can be reached for questions or other enquiries at (416) 391-3764 or drwex@protect-ins.com

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