Evidence of insurability (EOI) is a crucial but often misunderstood aspect of the application process. Insurers use EOI to assess if an applicant is eligible for the requested amount and type of coverage based on their health and finances.

Navigating EOI requirements can be complex, but this guide breaks it down into clear, actionable steps for Canadian insurance applicants.

What is Evidence of Insurability?

Evidence of insurability refers to the proof insurance companies need to determine if an applicant is insurable for the requested amount of coverage.

Insurers use EOI to evaluate if the applicant is a sound risk based on their current health status, medical history, finances, assets, income, net worth, and other qualifying factors.

EOI justifies the requested insurance amount. It ensures the coverage aligns with the applicant’s needs and circumstances rather than exceeding reasonable limits.

Main Functions of Evidence of Insurability

• Confirm insurability: Verify the applicant is eligible for the requested insurance based on health, finances, and other criteria.
• Justify coverage amount: Ensure the amount of insurance applied for is proportional to income, net worth, debts, dependents, and other financial considerations.
• Mitigate adverse selection: Prevent people with more significant health risks from disproportionately seeking more coverage.
• Avoid over-insurance: Ensure the death benefit does not incentivize insurance fraud or financial benefit from the insured’s death.

Evidence of Insurability Components

EOI typically involves completing detailed medical questionnaires, undergoing medical exams and tests, providing financial documentation, and authorizing access to medical records.

Key elements assessed include:

• Age
• Income
• Net worth
• Existing assets
• Outstanding debts
• Number of dependents
• Family medical history
• Current health status
• Lifestyle habits
• Financial obligations

Insurers use this information to evaluate insurability and coverage eligibility thoroughly.

When is Evidence of Insurability Required?

Insurers require EOI in situations when approving coverage presents an increased risk, such as:

New Policy Applications

• Applying for high coverage amounts, typically above $1 million.
• Older applicants, usually over age 60.
• Policies with fast-tracked underwriting, waived exams, or accelerated decisions.

Policy Changes

• Increasing existing coverage.
• Adding supplemental benefits like disability income or critical illness insurance.
• Reducing premiums due to improved health.

Group Insurance Plans

• Enrolling after the initial eligibility period.
• Applying for coverage over the guaranteed issue limit.
• Adding dependents outside the open enrollment window.

Other Situations

• Reinstating a cancelled or lapsed policy.
• Prior coverage denial or rated policy from another insurer.
• Applying with high-risk health conditions, occupations, or lifestyle factors.

Evidence of Insurability Requirements by Insurance Type

EOI needs to vary based on the insurance product. Here are typical requirements for common insurance types:

Life Insurance

Life insurance commonly requires EOI for:

• Policies over $1 million.
• Term life over 5-10 times annual income.
• Permanent life over 7-10 times annual income.
• Older applicants are seeking higher coverage limits.

EOI involves financial documentation and a detailed medical history. Testing may include medical exams, bloodwork, and EKGs.

Disability Insurance

EOI for disability insurance often involves:

• Occupation details and income verification.
• Documenting education, training, duties and abilities.
• Financial need analysis.
• Thorough medical history and physician records.
• Functionality testing like grip strength and cognitive assessments.

Critical Illness Insurance

Critical illness insurance EOI may require:

• Medical exams and testing are based on health, age, and benefit amount.
• Physician statements documenting health status.
• Reviews of medical history and treatment.
• Interviews regarding lifestyle, family history, and related factors.

Long-Term Care Insurance

EOI for long-term care insurance typically involves:

• Cognitive and functional assessments.
• Documentation of medical conditions and prior hospitalizations.
• Prescription medication reviews.
• Analysis of lifestyle habits and risk factors.
• Financial documentation verifying income sources and assets.

Evidence of Insurability Process and Timeline

The EOI process involves multiple steps and can take several weeks to complete. Here is an overview of what to expect:

Initial Application

• Complete insurance application detailing personal, health, financial, and family information.
• Authorize medical records access and undergo basic exam requirements like height, weight, and blood pressure.
• Provide initial financial documentation like tax returns and bank statements.

Supplemental Requirements

• Receive notice of EOI requirements based on application details.
• Complete detailed medical history questionnaires.
• Schedule appointments for medical exams and testing like bloodwork.
• Gather and submit financial records identified by the insurer.

Underwriting Review

• Insurance underwriters carefully evaluate all EOI documentation.
• Additional clarification or records may be requested.
• Underwriting decisions take 2-6 weeks, depending on requirements.

Decision Notification

• Applicants are notified if EOI is approved or if the application is declined.
• Policies may have exclusions, limitations, or adjusted premiums.
• Approved policies can be issued and delivered.

Staying organized and promptly completing all requirements speeds up the underwriting process. Keep your agent updated on any health or financial changes during the review.

How Insurers Evaluate Evidence of Insurability

Insurance underwriters use EOI to assess the risk of approving requested coverage amounts and policy terms.

Here are the key factors evaluated:

Age	Younger individuals represent lower mortality risk and may qualify for higher coverage relative to income. Older applicants often require more extensive justification for higher limits.
Income	Income, combined with factors like age and dependents, determines the appropriate coverage needed to protect dependents and maintain their standard of living.
Net Worth	Income, combined with factors like age and dependents, determines the appropriate coverage needed to protect dependents and maintain their standard of living.
Health Status	Medical history, exam results, and records from physicians and specialists factor into mortality expectations.
Lifestyle	Habits like smoking and hazardous hobbies influence health outlooks. Documentation of positive lifestyle changes can improve eligibility.
Financial Obligations	Significant debts, business partnerships, and contractual obligations help determine coverage needs and dependents’ level of financial reliance.

Strategies for EOI Approval

Evidence of insurability approval is critical for obtaining needed coverage. Here are tips for completing EOI:

• Disclose medical and financial details thoroughly and accurately. Any discrepancies found later may nullify the policy.
• Maintain the same level of health and fitness during underwriting. Significant weight changes or new conditions raise red flags.
• Keep insurance needs proportional to income and net worth. Asking for unreasonable amounts prompts further scrutiny.
• Provide supporting documentation like physician statements and test results for any medical conditions.
• Coordinate scheduling efficiently to complete all requirements in a timely. Delays can negatively impact eligibility.
• Be responsive to any additional underwriting requests or questions. Noncooperation can result in declination.
• Keep agents and underwriters updated on any status changes during the review period.

Options if Evidence of Insurability is Declined

If EOI results in a coverage declination, alternatives include:

• Reapply later: Improving health or finances may lead to future EOI approval.
• Reduce amount: Apply for lower coverage limits deemed acceptable by underwriting.
• Apply to other insurers: Each carrier has distinct risk appetites and underwriting processes.
• Consider simplified issue life insurance: These guaranteed issue policies have limited coverage options but don’t require EOI.
• Add term life as a rider: Some permanent life policies allow attaching term life riders without additional EOI.
• Appeal the decision: Supplying additional medical evidence may overturn the declination.

Evidence of Insurability for Existing Policy Changes

In addition to new applications, EOI is often required to make changes to in-force policies such as:

Increasing Coverage	The higher death benefits or income amounts require a reassessment of risk and insurability.
Reducing Premiums	Better health or risk profile must be evidenced to qualify for lower insurance rates.
Changing Term Periods or Plans	Modifying coverage terms involves underwriting to fit the new specifications.
Adding Benefits or Riders	Extra benefits like disability riders or long-term care require EOI.
Removing Exclusions	Eliminating policy limitations due to improved health status necessitates EOI.
Reinstating Lapsed Policies	Reinstatement involves proving current insurability to revive cancelled coverage.

Evidence of Insurability for Group Insurance Plans

EOI is also common for group insurance plans when:

Enrolling Late

Employees joining group insurance after the initial eligibility period must provide EOI.

Increasing Benefits

Raising benefit amounts beyond guaranteed issue limits requires EOI.

Adding Dependents

New dependents outside open enrollment may need to submit EOI.

Group insurance EOI may involve reduced requirements but still includes financial and medical reviews. Having existing coverage helps demonstrate ongoing insurability.

Simplified Issue Life Insurance

Simplified issue life insurance allows applicants to obtain limited coverage amounts without submitting EOI.

Policy maximums are typically under $100,000 to $250,000. Insurers accept applicants regardless of health, asking only basic medical questions.

Simplified issue meets basic final expense needs but offers less customization and higher premiums per dollar of coverage compared to fully underwritten policies.

The trade-off is guaranteed acceptance without invasive exams or tests. For small coverage amounts, the simplified issue provides a fast EOI-free option.