When a person is deciding on making an investment in life insurance a few thoughts come to mind at first; what rating will i get, how much will my monthly premiums be, and can i even afford coverage. First it is important to know that if you’re healthy than the carrier is assuming most of the risk because your premiums will be cheap, but if you aren’t healthy than that risk will slide over to you.
The more risk that you are to insure, the more that the company is going to charge for the coverage. There are several different factors that could put you in the “high-risk” category.
Many applicants who have been turned down for life insurance due to an adverse health condition or for participating in risky activities may feel that there is nowhere else to turn for getting the coverage that they need. However, there are alternate avenues for obtaining life insurance – one of which is applying for a high-risk life insurance policy.
High-risk life insurance policies, also oftentimes referred to as impaired risk policies, represent a specialized area in the insurance industry. Such life insurance plans are geared towards those who work in a high-risk occupation, as well as individuals who participate in more dangerous activities such as bungee jumping or skydiving.
In addition, there are some who possess adverse health conditions such as high blood pressure or diabetes who may not qualify for a standard life insurance plan. These individuals may also have a better chance of being successfully underwritten for high-risk coverage.
Just some of the issues that will generally deem an applicant for life insurance as being a high-risk include:
- High Cholesterol
- Multiple Sclerosis
- Rheumatoid Arthritis
These are only a few of the dozens and dozens of factors which could cause you to be a high-risk applicant. Most of them are health related, but it could also be your hobbies, your lifestyle habits, or your job. Regardless of the reason you’re a higher risk, it’s possible to get cheaper insurance coverage. Don’t assume your risk is going to cause you to have to pay major rates.
Determining Risk Class
When obtaining quotes for a life insurance policy, premiums are typically set in large part by an applicant’s “risk class.” This risk class is generally determined by the issuing insurance company’s underwriting guidelines.
Other factors in a policy’s premium determination include the applicant’s life expectancy, as well as the face amount and length of the policy. These criteria are combined with the individual’s overall health and medical history, lifestyle, and any hazardous activities that are performed on the job or as recreation. Overall, however, the better an applicant’s risk class, the lower his or her life insurance premiums will be.
Insurance companies will also inquire as to whether or not an applicant for life insurance coverage uses nicotine in any form. Oftentimes, an applicant could be required to undergo a medical examination – especially for high face amount policies. In most cases, life insurers will use the following risk classes:
- Standard Nicotine
- Standard No Nicotine
- Preferred Nicotine
- Preferred No Nicotine
- Preferred Plus No Nicotine
Finding Life Insurance For Those Considered High Risk Applicants
While most life insurance companies will underwrite risk somewhat differently, there are some insurers that will look at unique risks more favorably than others. Each insurance company is different, and all of them are going to look at high-risk applicant through different medical underwriting. One option for finding coverage is to seek out an agent who is a high-risk life insurance specialist. Throughout the insurance industry, there are professionals who will even focus on a particular area or type of risk.
Often, an agent may be able to send information regarding a high-risk applicant to several different insurance companies without the need to complete multiple applications. This can help to avoid the need to complete a medical exam until one or more favorable replies from these insurers have been received.
In some cases, an applicant who is able to lower his or her risk, for instance by ceasing the risky activity or lowering their blood pressure, may even be able to re-apply for standard life insurance coverage at a future time.
Obtaining High-Risk Life Insurance Quotes
While those in a high-risk category will likely pay a higher premium for their coverage than someone who does not possess the same risk factors, there are many top rated life insurance companies that provide high quality and low cost coverage.
Typically, exact quotes for high-risk life insurance coverage will not be available online. This is because the insurer will usually need more in-depth information about the applicant’s health and other underwriting-related factors in order to best determine the individual’s underwriting class and the appropriate premium amount.
Once an applicant’s health or other high-risk factors are known, a company or agent that specializes in impaired risks can submit the necessary information to the appropriate insurance companies.
Prior to submitting this information, an applicant will typically be asked to complete a detailed questionnaire, as well as a life insurance needs analysis. This analysis will help in determining whether or not the applicant will have budget related issues with what will likely be a higher amount of premium for the coverage.
One of the primary keys to getting approved for a high-risk life insurance policy is to obtain quotes from as many insurance companies as possible. This is especially the case if the applicant’s health condition is borderline, as each insurer may classify their condition in a different manner.
It is important to note that just because an applicant has been turned down by one insurance company, it does not mean that he or she will be declined by another. Therefore, it helps to shop around and to compare options for obtaining the best life insurance policy available.
If you’ve been declined for life insurance in the past, or you’ve been given expensive rates, don’t assume that you can’t get an affordable life insurance policy. With the amount of insurers in the marketplace today, we feel confident that we can still find a life insurance policy that will fit your needs. One type that might be appropriate is a non-medical exam style policy.
These plans are exactly what they sound like, you can get a life insurance plan and you don’t have to have a para med exam. For anyone with health issues these can be a great option. They will allow you to get life insurance protection and your health won’t be calculated into the risk. There are several advantages and disadvantages that you should be aware of while you’re purchasing life insurance.
First, there is no limit on who can buy no-medical exam policies! Carriers created these plans for high-risk persons that would normally not be eligible for a standard plan. Not only can anyone obtain these plans, but they’re also super quick to get issued!
Though the advantages are nice, we also need to discuss the cons of no-medical exam life insurance plans. Off the bat, you’ll notice that purchasing one of these plans will be more expensive. Probably more expensive than you might think and the reason is, like stated above, the company is passing that high-risk to you.
Another disadvantage to these plans is your face value amount will be limited. Carriers will usually cap your coverage at around $25,000 of protection, and generally this will only be enough to cover the funeral and not much else. If you need more than this, you’ll need to purchase an additional policy or apply for a traditional insurance plan.
Another alternative is to buy a guaranteed issue insurance plan, which is even simpler than a no exam plan. With a no exam policy, you still have to answer the health questions and the insurance company will still pull your medical records and prescription records.
With a guaranteed issue plans, you don’t have to answer those questions. Pretty much, you answer two or three simple questions and then you’re given life insurance coverage. These plans can sound attractive because of how simple they are to buy, but much like no exam plans, there are serious problems.
Just like no exam policies, they are going to be more expensive and you’re going to be restricted on how large of a policy you can buy. We never recommend our clients to use a guaranteed issue policy unless they are the last resort. In just about every case, there is a cheaper option which will offer more protection.
How Much Life Insurance Do You Need?
Determining how much face-value, or death benefit, you want to purchase can be tricky. Obviously, you’d love to purchase as much as possible, but there are three categories to think about first when figuring out the base amount to buy. Forgoing our advice and choosing a number randomly could leave your family vulnerable to debts and expense that will burden them for a while.
Step one is your debt and any final expenses that your loved ones would be responsible for if you were to pass away. Some of the most important debts are your mortgage, car payments, student loans, and much more. These debts could quickly add up and make the grieving process super stressful.
Also you need to factor in the annual income of the insured. If you’re one of the main income-earners in your household, then your family will have financial struggles if you were to pass away, which can lead to serious problems after your passing. A life insurance plan is going to give them the money that they need to replace your paycheck.
How to Buy High-Risk Life Insurance
As a high-risk applicant, you may have shopped for life insurance in the past. If you have, you’ve probably seen how expensive life insurance can be. Don’t let those massive premiums keep you from getting quality life insurance coverage. Some companies are more risk tolerant than others, and those companies are going to give you cheaper coverage. Finding affordable life insurance is all about choosing the right company.
There are over 6,000 different life insurance companies on the market. If you contacted two or three, the quotes you would get would be all across the board. One company could decline you while another might get you standard rates. There is no way of knowing if you have the cheapest life insurance without getting a dozen quotes to compare.
If you want to save time on your life insurance search, we are here to help. We are a group of independent agents, meaning we aren’t tied to one carrier. We can provide quotes from a dozen highly-rated companies on the market. In just a few minutes, we can bring a custom tailored set of quotes.
Do not wait to have any other questions or concerns answered. Our team is happy and available to give you any information you need. For any questions or advice, check out our full Life Insurance Guide.