Have you ever wondered what it is that makes you “high risk” from a life insurance company’s perspective? The notion that “nobody is perfect” is not exactly the best defense in the eyes of underwriters. Insurance companies, after all, use underwriting to classify risk. The better your risk class, the lower your premiums will be.
Underwriters set forth a set of guidelines to help them better assess your life expectancy and other risk factors, including income, lifestyle, medical and family history, and overall health.
Most illnesses suffered by family members over 60 years old should have very little, if any, effect on the cost of your premiums.
Generally life insurance companies use these risk classes:
- Preferred Plus Non-Smoker (sometimes called Preferred Best or Super Preferred)
- Preferred Non-Smoker
- Preferred Smoker
- Standard Non-Smoker
- Standard Smoker
So, what if you have high blood pressure. Is this a red flag for most underwriters? Would you automatically be categorized as “high risk” by most insurers? The real answer is “no” as long as it is being well-managed. In fact, some carriers might still allow you to qualify as “preferred”.
The truth is it is important to shop insurance companies and compare quotes when deciding on a policy that is both affordable and right for you.
Where does Type 2 (or adult onset) diabetes fall on the “high risk” pendulum for most insurance companies?
Because it can lead to coronary artery disease, peripheral vascular disease, renal failure and blindness, Type 2 Diabetes will absolutely affect your risk classification. Most carriers will scrutinize the insured’s application to see if there is a history of any potentially life-threatening complications that can arise as a result of the condition. Contrary to most factors that affect life insurance rates, the younger you are, the worse it is for a Type 2 diabetic. A 40-year-old is unlikely to qualify for “preferred” in most cases. Managing the condition so it does not get out of control and being under the care of a medical professional can help the underwriters to better determine what risk class is most appropriate for the insured.
Here is list of health issues considered to be “high risk” for an insured by the insurance industry:
- Uncontrolled Diabetes (Type 1 and Type 2)
- Heart Bypass, Stents, or Angioplasty
- DUI within 12 months
- Atrial Fibrillation (Non-Paroxysmal)
- Untreated Sleep Apnea
- Chronic Obstructive Pulmonary Disease (COPD)
- Multiple Sclerosis
- Doctor recommended Drug or Alcohol Treatment
- Invasive Cancers (Skin Cancer, Elevated PSA or Prostrate Cancer)
- Kidney Disease
- Opiate Based Pain Medications
- Crohn’s Disease
- Bladder Cancer
- Congestive Heart Failure
- Colon Cancer
Generally speaking, as a result, these cases are approved at substandard rates resulting in higher premiums.
Substandard rates, by definition in the industry, usually contain special or restricted provisions or higher premiums because the insured carries a greater risk, which increases the probability that the insurance company will incur a loss.
Other health concerns that can affect your rating, but should not put you automatically in a “high risk” classification include some of the following, but are not limited to:
- Mild Stroke
- ADD or ADHD
- Sleep Apnea
- History of Cancer
- History of Heart Disease
- Tobacco Use (i.e. Cigars and Chewing Tobacco)
- Mitral Valve Prolapse
- Elevated Liver Enzymes
- DUI more than 12 months ago
- Multiple speeding tickets and/or accidents
- Hepatitis C
- Basal Cell Carcinoma (BCC)
Before you apply for a life insurance policy from a carrier specializing in high risk policies, or low-cost life insurance, it is important to weigh your likelihood of being rejected. Simply put, a rejection could jeopardize your chances of getting accepted by another insurance company. Insurance companies know if you have been rejected by another carrier and every time you apply a red flag is raised which could cause an increase in premiums.
What should you do if you have been previously denied for coverage on a life policy?
Most likely there is a carrier that is willing to take on the risk of insuring you. It is just a matter of finding the right life insurance company. One of the best ways to ensure that you get the policy you need, regardless of your situation or current state of health, is to work through an independent agent. Working with someone who is independent gives you access to the largest selection of companies and policies while helping you get the right coverage for you.
Now, if you are still having a hard time getting coverage there are a few things you can do:
- See if you are eligible for group life coverage either through work or another organization.
- Consider permanent life insurance which has more liberal guidelines than term life.
- Consider a “no exam” life policy although understanding some of the nuances of a “no exam” policy can be tricky. For starters, there are two different types of life policies that do not require a medical exam: Simplified Issue and Guarantee Issue.
- Try and “undo” any physical ailments, although not always possible, that caused you be rejected by another carrier like losing weight or quitting smoking.
“High risk” life insurance specializes in insuring occupations that are traditionally considered dangerous such as civilian contractors in war zones, offshore oil platform workers, missionaries, loggers, commercial fishermen, scuba divers, sky divers, and pilots.
So, if you think you are “high risk” you should probably consult an independent agent to help you with the process.
It used to be that people with a history of serious health issues could forget about purchasing life insurance at decent rates, but not anymore with some of the changes in medicine such as better detection, earlier diagnosis and more effective treatment of illnesses. As a result of advancements in medical technology, the insurance landscape also has changed with the times. Consult an independent agent today.
Conditions that could possibly make you “uninsurable”
- Abdominal aortic aneurysm (within past 6 months)
- Alcoholism treatment (past 2 years, using or used in the last year)
- Alzheimer’s disease/dementia (at any time)
- Bankruptcy (not discharged)
- Cancer treated with chemotherapy or radiation therapy (present)
- Cirrhosis of the liver (at any time)
- Eating Disorders (Bulimia or Anorexia Nervosa)
- Illegal drug use other than marijuana (within 3 years)
- DUI/DWI (several, within 5 years)
- Gastric/intestinal bypass (within 1 year)
- Heart attack (within 6 months)
- Heart bypass surgery (within 3 months)
- HIV positive (at any time)
- Kidney failure/disease, on dialysis (present)
- Lung disorder, on oxygen (present)
- Mental disorder requiring hospitalization (within 1 year)
- Organ transplant pending or received (within 1 year)
- Post Traumatic Stress Disorder
- Probation/parole (currently serving)
- Pregnancy with complications (currently)
- Suicide attempt (within 2 years)
- Stroke (within 1 year)
- Valve replacement (within 1 year)
Source: Genworth Financial Life Insurance Underwriting Guide
Top 10 health conditions that affect your life insurance rating
- High blood pressure
- High cholesterol
- Type 2 (adult onset) diabetes
- Sleep apnea
- Cancer (except skin cancer)
- Heart disease
- Coronary artery disease
- Mitral valve prolapse
Source: Genworth Financial Life Insurance Underwriting Guide
So, the next time you try to reach for perfection talk to an independent agent who can help you through the process of getting an affordable policy that matches all of your imperfections. The “savants” at Ivy Ridge Asset Management, LLC are here to help you.