High risk life insurance is life insurance coverage for individuals who pose a higher risk of mortality than the average applicant based on their health or lifestyle.
Impaired risk life insurance accounts for an increasingly large number of applicants. As obesity rates have climbed, so have many illnesses that go hand-in-hand.
But even if you’re in shape, exercise, and eat right, you might still pose additional risk based on your lifestyle choices, financial concerns, criminal activities, and more.
Read on to learn just how high risk factors can impact life insurance and what you can do to get the best life rates.
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Understanding What High Risk Life Insurance Really Is
So, what exactly qualifies as an impaired risk life insurance policy, and who is it for?
High risk life insurance is essentially coverage for those who exceed a pre-defined level of risk of mortality, resulting in a higher than average chance that the life insurance company will have to pay out a claim.
In other words, you could be a candidate for high risk coverage if anything in your life puts you at a higher statistical probability of dying before your true life expectancy.
Most life insurance shoppers wouldn’t consider themselves to be high risk applicants, especially if there’s a blip on their medical history they’ve recovered from.
However, many health conditions come with long-term risks, which a life insurance carrier must take into consideration.
Even easily treatable conditions can become a big issue several years or decades down the line.
Your lifestyle can play just as big a role, especially if your job or hobbies pose an above-average level of risk.
While you’ll likely pay more for coverage, it’s often possible to be approved for traditional life insurance with some high risk conditions.
How to Determine If You’re High Risk
If you’re an impaired risk applicant, it’s helpful to familiarize yourself with the underwriting process and find the best high risk life insurance company for your situation.
Here are a few questions you’ll likely encounter when you apply for coverage.
The first few questions you’ll need to answer about your medical conditions are as follows:
- Have you been to the hospital in the past decade?
- Do you smoke or use any kind of tobacco products?
- Have you had any surgeries in the past 10 years?
- Are you currently taking any prescriptions, or have you in the past?
- Are you on disability?
- In your immediate family, is there any family history of heart disease, diabetes, or cancer?
If you answer “yes” to any of the questions above, you can expect to be asked some follow-up questions by the life insurance company you’re applying for coverage from.
Being prompted to provide more information on your condition might not automatically classify you as a higher risk.
Other non-health related questions designed to assess your level of risk might include:
- Have you been through any type of financial hardship, like bankruptcy?
- Have you been incarcerated in the past 10 years?
- Do you have any history of drug abuse?
- Do you have any infractions on your driving record?
- Do you have a criminal record?
- Do you participate in any dangerous or hazardous activities or occupations?
- Do you plan to travel in the next 5 years?
Again, answering “yes” to one of the questions above doesn’t necessarily mean you’re high risk.
Here are a few exceptions:
- One-off hospitalization: Someone who went to the hospital from dehydration while running a marathon is probably fine, assuming the rest of their health is in good order. In fact, there’s a great chance the applicant above is healthier than most.
- Low-impact surgery: Along those lines, an athlete who torn an MCL and required surgery is not in life-threatening danger, nor would they be in the future. Similar operations include mole removal, cosmetic surgery, or elective enhancements.
- Some medications: Some prescriptions are acceptable and will not result in an increase in premiums or rating class. Others might result in severe increases or declines, based on a case-by-case review.
- Driving violations: Someone who’s gotten a ticket for a minor offense like rolling through a stop sign on accident or received a speeding ticket (within reason) is of little concern. If the crimes were more severe, the effects could be worse.
Before we get into specific high risk conditions, it’s important to understand how high risk policies are priced.
How High Risk Life Insurance Rates Work
What you pay for life insurance depends heavily on your answers to questions about your health and lifestyle.
To determine your rates, life insurance companies have a rating system in place, putting you in a category based on your risk factors.
The better rating class you’re in, the lower rates you’re eligible for.
While the names might look different from company to company, here’s the basic range of ratings for applicants who pose only average risk to insurers.
- Preferred Plus
- Standard Plus
- Preferred Smoker
- Standard Smoker
If your health, family history, or lifestyle put you in the high risk category, calculating your rates is a little different.
High risk rates are determined by table ratings and flat extras, which we’ll look at below.
If your health is considered to be sub-standard, your premiums will be determined by table ratings, which increase standard premiums by a percentage based on the level of risk you pose.
For example, if a high risk applicant applied for a policy with a Standard rate of $100 per month, their rates would be decided by the table below:
|Initial Premium||Rating||Increase||New Premium|
Table ratings are straightforward, but you may not be able to predict rates with 100% accuracy as your final rating is ultimately up to the underwriter reviewing your application.
Flat extras are additional fees, mostly used to underwrite policies for individuals with high risk hobbies or hazardous occupations.
While table ratings are percentage-based increases, a flat extra is a numerical increase to the cost per thousand dollars of life insurance for a period of time.
For example, if someone applied for a $500,000 policy with a flat extra fee of $1, their flat extra fee would be $500.
If the base premium for coverage was $1,000 a year, the added $500 fee would bring the annual premium to $1500.
Flat extra fees can decrease or disappear after a couple of years if the policyholder no longer engages in the high risk activity responsible for the flat extra.
Flat Extra + Table Rating
In some cases, both a table rating and flat fee extra are applied to determine premiums.
Again, table ratings are usually used for individuals with health conditions or a concerning family health history, with flat extras added for anything from DUIs to dangerous activities.
If you present some health risks and your job or hobbies put you at a higher risk of dying, you might expect to see increases based on a table rating and flat extra, those these instances are less common.
High Risk Health Conditions
Your body houses a series of complex systems, and an issue in any one of them can affect your day-to-day life and longevity.
Additional conditions, like autoimmune diseases, are not limited to just one area of the body, potentially affecting several systems.
Insurers also consider mental illnesses and conditions brought on by strictly environmental factors that impact several systems at once.
Here’s a list of the medical conditions that could influence your life insurance rates:
- Alcohol Abuse
- Artificial Heart Valve
- Atrial Fibrillation
- Bell’s Palsy
- Benign Tumors
- Bipolar Disorder
- Blood Clots
- Cardiovascular Disease
- Celiac Disease
- Chronic Back Pain
- Colon Polyps
- Cushing’s Syndrome
- Eating Disorder
- Elevated PSA
- Enlarged Prostate
- Epilepsy (or Seizures)
- Gastric Bypass
- Grave’s Disease
- Hashimoto’s Disease
- Heart Attack
- Heart Murmur
- Heart Palpitations
- High Blood Pressure
- High Cholesterol
- Kidney Disease
- Liver Disease
- Myasthenia Gravis
- Pulmonary Embolism
- Sleep Apnea
- Sickle Cell Anemia
- Skin Cancer
- Suicide Attempt (Thoughts)
How To Get Better Rates Even With A Risky Profile
There are plenty of ways to save money on life insurance if you’re a high risk applicant.
Here are a few pointers as you navigate through the application process:
- Use an independent agent: There is no reason to restrict yourself to one company by using a captive agent because every single detail could change the outcome of your approval from one company to the next.
- Write a cover letter: Medical records alone might not paint an accurate picture of your health. Explaining your situation more clearly yourself might get you positive lifestyle credits, which can result in lower premiums.
- Get quotes: Why not apply to the carriers who will likely yield the cheapest prices for your condition? Some companies specialize in coverage for seniors, smokers, etc. Quick quoting can connect you with the companies worth applying to.
- Get a medical exam: No exam policies are more expensive, and it’s unlikely that a high risk person will get approval without traditional underwriting.
- Pay annually: Paying annually as opposed to monthly can save you anywhere from 5-9% on policy premiums, so it could offset some of the increases you incur.
- Know your numbers: Familiarize yourself with the details of your medical history, occupation, or high risk hobby. The more information you can provide, the better your rates will likely be.
- Request a reconsideration: If your situation or health changes, you can ask for a reconsideration from the carrier annually to see if you may qualify for a lower rate.