As a Canadian, we’re required to love and support Canadian Tire, second only to the love of Tim Horton’s. Nevertheless, is their life insurance offering a good buy for us?
I recently reviewed their website and came to the conclusion that in fact, no, it’s not the best product for most Canadians. In the cases that I reviewed, Canadians have far better products available, far cheaper.
1) No medical exam. I think consumers don’t understand this. You may think that you can just call, and you instantly have a life insurance policy. That is not the case. There is no physical exam, however there is an extensive medical questionnaire. That medical questionnaire is reviewed and underwritten, and if they don’t like it, you get declined.
Any number of life insurance companies offer insurance policies that don’t require a physical exam at smaller amounts of insurance. Rather than sending a nurse out, answering a variety of questions is used instead.
In short, don’t confuse ‘no medical exam’ in this case as meaning ‘no underwritting’. There is underwriting and you can be declined.
If you’re likely to be declined, you should use a broker who is able to shop the market from a variety of companies to find one that is lenient for your specific condition.
2) It’s term insurance. Actually, it’s 5 year term. That means the premiums are level for 5 years, after which point they increase. They don’t appear to disclose on their website what happens after 5 years.
3) Premiums are inexpensive. Uh, no. Not even close – expensive is the word I’d be using. I ran a Male Nonsmoker age 47 for $250,000 recommended you read. Canadian tire premiums for 5 years: $65.75. RBC premiums for 10 years (not 5 – level for 10), $33.64. Yes, you’re reading that correctly – you can get insurance with rates that are level for 10 years, at half the price of CT Life’s policy which is only level for 5 years. It pays to shop around.
4) What happens in 5 years? No conversion. A typical term insurance policy you would select through a broker would normally have the abilty to convert your policy to permanent. While not an option you may expect to use, this is a serious fail safe clause should you become uninsurable. With CT Life’s 5 year policy, you’re locked in to their policy with premiums after 5 years that they’re not disclosing until you get the policy – and it expires completely at age 75. If you become uninsurable, you have no options. With a typical term life insurance policy you can switch your term policy to permanent, thereby locking in your premiums level for life – with no medical exam and at healthy rates.
5) Who you gonna call? If you purchase your life insurance through CT Online, who you gonna call when you have questions? Need to change your banking? Have a claim? Canadian Tire? Really? As an online broker myself, I have seen this criticism of my model before – but there’s a difference. I do business remotely, but I am still a physical life insurance broker you can call for service (I just don’t come out to your home for sales presentations). With brokers, including online brokers, you typically are able to get service directly from a professional involved in the life insurance business – not a call center.
In short, consumers have products with similiar underwriting, better features, and substantially lower premiums. While I love my Canadian Tire store as much as the next Canadian, CT Life’s product is a case of using a great brand name to market a sub-par life insurance product. Shop around, you’ll be better off.