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Risky Business: Making sense of financial underwriting guidelines

June 2019 | Download this article (PDF)

It still has to make sense!

Insurance is intended to provide protection against the risk of a potential loss. “Over-insurance” exists if the value of the insurance coverage exceeds the potential loss. Insurance policies that exceed the apparent need for coverage may lead to early lapses, early claims experience, and in some cases, false claims as the client attempts to profit from an insured loss.  

Our industry has well established financial underwriting guidelines and practices to safeguard against over-insurance. Our need to request formal third-party verification of an applicant’s finances has greatly decreased over the last few years as we leverage alternative, publicly available information on businesses and real estate values. GOOGLE is an essential tool when we seek supplemental information about an individual or company. Additionally, we have information around income based on occupation.

Underwriters determine if it makes sense

With all of the information at our disposal, it’s the underwriter’s role to determine if the amount of insurance applied for, defined as the dollar amount that Manulife makes a promise to pay once the policy is issued, makes sense based on the facts provided in the application.

The death, disability or critical illness benefit that the underwriter approves has to make sense the day we put the policy inforce.

What if it doesn’t make sense?

In most cases, the benefit payable makes sense based on the applicant’s situation. In some cases, it doesn’t, and the underwriter will seek additional information such as:

  • Source of premium – If the premium for the policy is a large proportion of the client’s income, the underwriter will request the source of premium payment. This is both an anti-money laundering and an underwriting requirement. If premiums are not affordable to the customer, there is a greater likelihood of lapse. In addition, if there is a third-party payor or premiums are being financed, we need to know the source and reason for the financing to ensure appropriate insurable interest exists.
  • Total death benefit – If the total death benefit at any time the policy is inforce is outside of reasonable liability projections, the case will not likely get approved without supporting documentation for the death benefit. Recently, we’ve seen examples where the death benefit has been increased to cover loans associated with the policy. We don’t generally approve amounts greater than the established projected liabilities. If a client has a net worth of $50,000 today at age 40, it’s unlikely they’ll need a $4,000,000 death benefit at life expectancy. In this case, the total death benefit would be driven off of income replacement and affordability of premiums.
  • Purpose of insurance – Underwriters look at the purpose for buying insurance and utilize existing financial guidelines to test for reasonableness and persistency. The reason for purchasing the insurance should be clear from the start, however when it’s not, the underwriter will ask questions. Again, most cases are sold with a clear need for income replacement, estate preservation and business needs. When the death benefit isn’t reasonable, we will ask more questions.

Financial underwriting guidelines

Take a look at our financial underwriting guidelines on

Understanding our financial underwriting guidelines

Need help to understand our guidelines? We are at your service.

Elite Program advisors: Contact Greg Lands or our field underwriter, Marilene Audet (dedicated to Quebec), for help with field underwriting (pre-application) including direct contact with your clients and packaging cases of any size (pre-submission), including cover letter preparation.

Non-Elite qualifying advisors: Contact your wholesaler for large, Manulife exclusive large cases, for help with field underwriting (pre-application) including direct contact with your clients and packaging cases of any size (pre-submission), including cover letter preparation.

Marilene lives in Montreal, is bilingual and has extensive underwriting experience. Given Marilene’s strong DI expertise, she is also available to consult with regarding living benefits exclusive inquiries, outside of Quebec. 

Marilene is a great addition to our National Field Underwriter, Greg Lands, who continues to service all other provinces for all product lines. Both work exclusively at the field level helping bridge the gap between your client and our underwriters and setting your business up for success in underwriting.

Disability insurance (DI) underwriting guidelines

If you are applying for an amount that exceeds our guidelines, please provide a cover letter to provide additional information and context.

Ultimately, we want to approve as many cases as possible and put profitable long-term business on the books. We strive to build strong relationships with our advisors and help you succeed and provide the protection customers need to ensure their financial security. When cases are well outside of established parameters, good underwriters will ask a few questions.

Lifecheque financial underwriting guidelines

Published limit for Issue and Participation with all companies is $2 million

Individidual basis special quote: Maximum Issue and Participation limit is $2.5 million
(Issue and Participation limit is based on the insured: includes personal and business with Manulife and ALL other carriers: individual and group).

Personal insurance

Client is working: based on age and earned income

Issue  age
Maximum available: mortgage balance on personal residence or cottage PLUS
9 X earned income (typically exclude rental/interest, pension/invest income)
7 X earned income (typically exclude rental/interest, pension/invest income)
5 X earned income (typically exclude rental/interest, pension/invest income)

Client is a non-income generating spouse
Generally we will consider the lesser of:

  • $250,000, or
  • the amount of Critical Illness (CI) insurance the working spouse has inforce/applied for, or
  • if the primary wage earner does not have any CI insurance inforce, the amount below:
Issue  age
Maximum available: mortgage balance on personal residence or cottage PLUS
4.5 X earned income of spouse (typically exclude rental/interest, pension/invest income)
3.5 X earned income of spouse (typically exclude rental/interest, pension/invest income)
2.5 X earned income of spouse (typically exclude rental/interest, pension/invest income)


High school students

University students
NOT enrolled in a professional program: $250,000

Medical/Dental students

Enrolled in a program in an “A” country
Enrolled in a medical or dental program in Canada
Final year in a medical or dental program

(Note: they must complete the application/evidence/settling in Canada before they leave, and we must use Canadian banking and have confidence that their plan is to return to Canada when they are done)

$500,000 up to $ 1,000,000 based on High net worth exception below

IF client has at least $1,000,000 life applied for or inforce; or disability insurance applied for or inforce

High net worth clients

If Canadian home is primary asset:
25% of home’s value to $250,000

High net worth exception: majority of assets and income are outiside Canada:

  • IF no adverse risk factors: we will consider up to 50% of overseas assets: they must be held with an international financial institution and your client must provide us with copies of statements in English. We’ll also consider foreign business assets if financial information is provided by a well-known international accounting firm.

> $500,000 to $1,000,000:

  • I.C. basis and subject to facultative reinsurance

Favourable factors which may support an application for > $500,000 include:

  • Permanent plan: 15 pay, Term 75 or Pay to age 100 with ROPS or ROPX
  • Concurrent Manulife UL/Performax Gold insurance product applied for/inforce
  • If a young client, both parents also have significant CI insurance and Performax Gold insurance with us and app is 15 pay with ROPE

Medical requirements:

  • Paramedical in a language the client speaks (not just vitals)
  • Blood profile with Hep screen (not just blood)
  • Urine
  • An APS from a Canadian MD showing evidence of at least an initial check up with a Canadian MD.  If this is not available, an Exam by an MD

Proposed Financial guidelines

  • CFQ NN0781
  • Copies of current bank and investments statements to provide third party validation of income and assets in Canada

Business Purposes

Established and financially sound business
Key person (up to age 60 only)
Business loan
5 times annual salary + bonus of the key person (an amount up to 7 times may be considered on an individual consideration basis)
Require full details of reason for loan, amount, name of lender.  All owners must apply for their proportional share
May apply for 100% of their value in the business – subject to all owners with a minimim 10% share applying

In the event of a recent bankruptcy
Postpone until discharged and demonstrate financial stability for a period of at least 1 year

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