Finding out that you’re considered a “high-risk” individual when it comes to life insurance can be overwhelming, especially when you’re trying to secure coverage for your loved ones. However, it’s important to understand that many people find themselves in this situation due to health conditions, risky hobbies, or simply due to aging.

The good news is that you have options. This article will provide a comprehensive look at the world of high-risk life insurance and offer practical steps to help you find the coverage you need. Whether you’re feeling uncertain or just need some guidance, know that we’re here to help. We’ll provide the information and support you need to make informed decisions.

Reasons why some individuals are considered high risk (and why it’s not always about your health)

Life insurance is a crucial aspect of financial planning that provides peace of mind and protects your loved ones in the event of an untimely death. However, not everyone can easily obtain life insurance coverage. Some individuals may find themselves categorized as “high risk” and face challenges in getting approved for coverage. In this article, we’ll explore the reasons why some people are considered high-risk when buying life insurance.

Health Conditions: One of the most significant factors that can make an individual a high risk is a pre-existing medical condition. Chronic health conditions such as diabetes, heart disease, or cancer can increase the likelihood of death and make an individual a higher risk for life insurance companies. In such cases, the insurance company may charge higher premiums or restrict the coverage options available to the individual.

Age: Age also plays a significant role in determining an individual’s risk level. Older individuals are considered high risk due to the increased likelihood of death. Additionally, insurance companies may also take into consideration factors such as age-related health issues, life expectancy, and mortality rates.

Occupation: An individual’s occupation can also impact their risk level when it comes to life insurance. For example, people who work in dangerous or high-risk jobs, such as construction workers or firefighters, face an increased likelihood of death. As a result, insurance companies may consider them high-risk and charge higher premiums or restrict coverage options.

Dangerous Hobbies: Insurance companies may also consider dangerous hobbies when determining an individual’s risk level. Activities such as skydiving, scuba diving, or racing cars can increase the likelihood of death and injury, making the individual a higher risk for life insurance companies.

Overweight: Being overweight can increase the likelihood of developing health problems such as heart disease, diabetes, or high blood pressure. Insurance companies may consider individuals who are overweight to be high risk and restrict coverage options or charge higher premiums.

Excessive Alcohol Use: Excessive alcohol consumption can lead to health problems such as liver disease and increase the likelihood of accidental death. As a result, insurance companies may consider individuals who have a history of excessive alcohol use to be high risk.

Drug Abuse: Drug abuse, including the use of illicit drugs, can have serious health consequences and increase the likelihood of death. Insurance companies may consider individuals with a history of drug abuse to be high risk when it comes to buying life insurance.

Marijuana Use: The use of marijuana, whether for medical or recreational purposes, can impact an individual’s life insurance eligibility. Insurance companies may consider marijuana users to be high risk due to the potential health consequences and increased likelihood of death.

Previous Felony or Misdemeanor Convictions: Individuals with a history of criminal convictions, including felonies or misdemeanors, may face challenges in obtaining life insurance coverage. Insurance companies may consider these individuals to be high-risk and restrict coverage options or charge higher premiums.

Poor Driving History: A poor driving history, including a history of traffic violations or accidents, can impact an individual’s life insurance eligibility. Insurance companies may consider individuals with a history of reckless or dangerous driving to be high risk and restrict coverage options or charge higher premiums.

It’s important to keep in mind that being labeled as a high-risk applicant for life insurance does not necessarily equate to an automatic denial of coverage. In many cases, it may not even result in a higher premium. Rather, it simply indicates the need for extra caution when searching for the right coverage.

Steps to improve eligibility for high-risk life insurance

For individuals labeled as high-risk, obtaining life insurance coverage can be challenging. However, one can take some obvious steps to improve your eligibility.

Steps such as:

1. Quit or Reduce Substance Use: Excessive alcohol consumption, drug abuse, and marijuana use can increase the risk of death, making it more challenging to secure life insurance coverage. If you fall into this category, quitting or reducing your substance use can significantly improve your eligibility for life insurance.
2. Maintain a Healthy Weight: Being overweight or obese increases the risk of many health problems, including heart disease, stroke, and diabetes. By losing weight and maintaining a healthy body weight, you can reduce your health risks and improve your eligibility for life insurance.
3. Address Chronic Health Issues: Managing and treating chronic health conditions, such as diabetes, heart disease, and cancer, can reduce the risk of death and improve your eligibility for life insurance. Regular check-ups with a doctor, following a healthy lifestyle, and taking prescribed medications can help you manage your health and improve your chances of securing life insurance coverage.
4. Improve Your Driving Record: A poor driving record, including multiple traffic violations or accidents, can increase the risk of death and make it more challenging to obtain life insurance coverage. Improving your driving habits, avoiding traffic violations, and having a clean driving record can improve your eligibility for life insurance.

While some individuals may have factors that label them as high-risk and are beyond their control, many others can improve their eligibility by making slight modifications to their lifestyle. These changes can significantly improve their chances of qualifying for traditional life insurance coverage.

Types of life insurance options for high-risk applicants

Being labeled as a high-risk applicant for life insurance can make finding coverage challenging, but options are available.  Available options such as:

1. Fully Underwritten Term Life Insurance: Fully underwritten term life insurance policies are traditional term life insurance policies that require a medical exam and a thorough underwriting process. For high-risk applicants, the underwriting process may be a bit more extensive than it would be for an average applicant. however, these policies offer the opportunity for high-risk individuals to obtain life insurance coverage with a higher death benefit at the most affordable rate possible.
2. Fully Underwritten Whole Life Insurance: Fully underwritten whole life insurance policies are traditional whole life insurance policies that require a medical exam and a thorough underwriting process as well. The main difference between these types of policies is that they provide life insurance coverage for the duration of the policyholder’s life rather than a set term. For high-risk applicants, the premiums for fully underwritten whole life insurance policies may be higher compared to traditional policies. However, these policies offer the opportunity for high-risk individuals to obtain life insurance coverage with a higher death benefit and the added benefit of a cash value component.
3. No Medical Exam Policies: No medical exam policies, also known as simplified issue policies, allow individuals to apply for life insurance coverage without undergoing a medical exam. These policies are ideal for individuals who are considered high-risk but are able to qualify for coverage given limited underwriting criteria. Coverage may be limited depending on how extensive the application process is.
4. Guaranteed Issue Policies: Guaranteed issue policies are life insurance policies that are guaranteed to be issued to the applicant, regardless of their health status. These policies typically have lower death benefits and higher premiums compared to traditional policies. They are ideal for individuals who have extensive and/or serious pre-existing medical conditions and are unable to obtain traditional life insurance coverage.

Finding the right life insurance policy

In our experiences here at IBUSA, we have found that these steps have proven to be effective in guiding individuals toward making the best decisions for their financial security.

1. Determine the coverage amount needed: Calculate the amount of coverage needed to ensure that the dependents are financially secure in the event of the policyholder’s death.
2. Evaluate the health condition: Be honest about the health condition, as lying on the application may result in the policy being canceled. Accurate information can help the applicant find a policy with better terms.
3. Shop around: Compare quotes from different insurance companies to find the best policy for their specific needs. This can be done online or with the help of an insurance agent.
4. Read the policy carefully: Read the policy’s fine print to understand the exclusions, limitations, and riders that are included in the policy.
5. Consider the premium: High-risk policies often have higher premiums, but it is important to find an affordable policy that still provides adequate coverage.
6. Choose a reputable insurance company: Choose an insurance company with a good financial rating and a solid reputation.

The good news is that this isn’t something that you’ll have to do all on your own. Instead, we here at IBUSA can guide you through these steps, and when you’re ready, we can also help you apply with a company that is best suited for your needs. All you need to do is give us a call, and let us show you what we can do for you!