Life insurance can help you plan for the future and ensure your loved ones are financially secure. But it may be challenging to qualify for an affordable life insurance policy that suits your needs if you’re considered a high-risk applicant.
Factors Considered High Risk for Life Insurance
Life insurance companies generally consider an applicant to be high risk if they have a shorter life expectancy because of medical or lifestyle risk factors, such as chronic health conditions or a dangerous job.
Medical risk factors
The following conditions—which are known to shorten a patient’s life—typically put applicants in a high-risk life insurance bracket.
- Certain types of Cancer: Life insurance for cancer patients and survivors can be limited and expensive. But whether or not you are considered high risk could depend on the type of cancer you were diagnosed with, if you’ve been successfully treated and if you have been in remission for a number of years. For example, if you had basal cell carcinoma and the spot was surgically removed, you may still qualify for preferred rates for traditional life insurance.
- Chronic Conditions: Health conditions such as high blood pressure or heart disease can lower your life expectancy, and as a result, insurance companies typically consider applicants with these conditions to be higher risk.
- Heart Attack: You can still usually get life insurance after a heart attack, but it will likely make you a higher-risk applicant. Your life insurance company will usually factor in your overall health and how long it has been since your heart attack.
Lifestyle risk factors
Your lifestyle can affect your life insurance risk level, and as a result, increase the price you pay for life insurance.
- Alcohol use: Drinking alcohol can have negative impacts on your health, so your insurance company might consider drinking a lifestyle risk.
- Dangerous hobbies: Insurance companies will likely consider activities like skydiving, snorkeling and rock climbing as being high risk. If you have dangerous hobbies, your life insurance application may be denied, or the cost of your premium could be higher to reflect that risk.
- Dangerous jobs: If you have a dangerous occupation, life insurance companies will likely consider you a high-risk applicant. The most dangerous occupations are fishing and hunting, logging, roofing and construction, according to a report by the Bureau of Labor Statistics.
- Tobacco/nicotine use: More than 480,000 Americans die from cigarette smoking-related issues every year. Over 16 million Americans are living with a disease caused by smoking. Since smoking can damage your health, life insurance companies consider it a significant risk factor.
Life Insurance Options For High Risk Applicants
Life insurance companies may limit your policy options if you’re considered a high-risk applicant. You might be able to buy term life insurance but will pay more for a policy than an applicant with lower risk.
Applicants with very high-risk conditions, like certain types of cancer, can have a more challenging time getting life insurance. But policies such as guaranteed-issue life insurance can help high-risk applicants get at least some coverage.
Guaranteed-issue life insurance is a type of policy that doesn’t require a medical exam. These policies function basically the same as a standard life insurance policy, but they cost significantly more than traditional life insurance and the death benefit is often lower.
High-Risk Life Insurance Underwriting Classes
A life insurance company reviews your application during a process called underwriting when you apply. An underwriter considers your health and lifestyle risk factors to determine your underwriting class, which influences how much you pay for coverage.
Life insurance underwriting classes help life insurance companies determine your premium, or the amount you will pay for your life insurance policy. These underwriting classes are based on your health, age and specific lifestyle considerations.
Is High-Risk Life Insurance Expensive?
High-risk life insurance can be expensive, depending on your individual level of risk and the type of life insurance policy.
Life insurance premiums generally correspond to how much coverage you purchase and how long a life insurance company believes you’re going to live.
If you have risky habits or a high-risk medical condition, an insurance company generally charges you higher premiums.
How to Get a High-Risk Life Insurance Policy
Work with an experienced, independent life insurance agent. An experienced agent will know which companies are most likely to give you the best rate based on your particular health condition or lifestyle factor. An agent can even shop your application around anonymously among a few insurers, so you avoid application denials.
You could also seek out an impaired risk specialist, who is someone who specializes in high-risk life insurance applicants.
Don’t assume you’ll be stuck with an expensive guaranteed issue policy that you can buy online before you have explored your other options.
Author: Lizzy Nealon & Heidi Gollub
Source: ©2023 forbes media
Retrieved from: forbes.com
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