VANCOUVER - Finding a life insurer to give you a $1 million policy when you are terminally ill is next to impossible, insurance experts say.
But it is the claim that just such a policy was on offer to Chuck Cadman in 2005 as the late MP was dying from skin cancer and the government of the day was teetering on the brink of defeat that has rocked Ottawa.
"If you are terminally ill, you are uninsurable (for $1 million),'' said Ken Hunter, a partner with Toronto-based Hunter McCorquodale Inc., which offers life insurance for "hard to insure'' clients.
"In theory, there is a price you could charge, but the reality is the price would be more than $1 million. If I'm the insurer, I need more than $1 million to cover the cost of doing business.''
While there are some companies that will sell policies to clients without a medical exam, Hunter said the benefits would never reach $1 million.
"I can't conceive of why anybody would suggest that might be possible,'' Hunter said.
Gerald Cilliers, who has his own independent financial services firm in Langley, B.C., said there are two ways of applying for insurance: through the traditional underwriting process where you answer detailed questions and undergo medical tests; or with guaranteed issue, where there are limited questions and no medical required, but rates are often much higher.
You can also get insurance, through a bank or other financial institution, to cover future mortgage payments or other obligations in the event of death. This is called underwriting on claim, where limited questions are asked when you apply, and the main assessment and investigation only takes place on claim.
However, all of these options would still be a barrier to someone getting a policy as rich as $1 million with a terminal illness, Cilliers said.
Wendy Hope, a spokesperson at the Ottawa-based Canadian Life and Health Insurance Association, said insuring a terminally ill patient would be "highly unusual, if not impossible.''
"When you apply for insurance you are required to provide accurate and complete information on the application, which typically includes a health questionnaire. The purpose of insurance is to mitigate against risk of an unanticipated tragic event ... to provide financial security to you beneficiaries,'' said Hope.
"On that basis, any individual who has been diagnosed with a terminal illness wouldn't qualify.''
Hope said the industry is puzzled by the claim that a $1 million life insurance policy was offered to Cadman weeks before his death.
Cadman died on July 9, 2005, at age 57, after a two-year battle with skin cancer and about five weeks after his vote in a confidence motion in the House of Commons enabled the minority Liberals to survive in power, helping avert an election at that time.
Cadman's widow, Dona, says in a book about her husband to be released next month that he told her two Conservative Party officials offered him a $1 million life insurance policy if he voted with the Tories and against the Liberal government. Cadman's daughter says her father also told her this.
Ryan Sparrow, a spokesman for the Conservative party, denies those allegations, and he adds that Cadman wouldn't have been eligible for life insurance under the party's plan.
"Members of parliament aren't eligible for life insurance form the Conservative party of Canada,'' Sparrow said.
Cadman would have been covered for life insurance as an MP, a job he held for more than six years prior to his death, which meant he was eligible for full retirement, survivor and life insurance benefits.
The basic life insurance policy for MPs, paid for by the government, is relatively modest, worth twice their last full year's salary _ starting around $300,000.
When MPs leave politics, whether voluntarily or in an election loss, they can convert this life insurance to a private plan, but must pay their own premiums.
"You can make this conversion without undergoing a medical examination and regardless of your state of health,'' says the MP's guide.
They have 60 days from the date of the election to make the conversion.
With files from Bruce Cheadle in Ottawa
