When it comes to life insurance, a high-risk individual is someone who is considered to have an elevated likelihood of death during the term of the policy. This can be due to a variety of factors, including various pre-existing medical conditions, high-risk jobs or hobbies, or a history of risky behavior.
Because of this increased risk, these individuals may have a harder time finding affordable life insurance coverage and may be charged higher premiums. However, it’s important to note that just because an individual is considered high risk, it does not mean that they cannot secure life insurance coverage.
There are options available for high-risk individuals, but it may require more effort and research to find the right high risk life insurance company that will offer coverage.
And this is why we wanted to take a moment and examine exactly what might make someone a “higher risk” to an insurance company and provide a few tips which may help high risk applicants, not only qualify for the coverage they’re looking for, but also get the best rate possible.
Challenges high risk life insurance applicants face
When applying for traditional life insurance coverage, high-risk individuals may face a number of challenges. For one, they may be denied coverage by traditional insurance companies due to their increased risk.
Then, even if they are approved, they may be charged significantly higher premiums than those considered to be low-risk.
Additionally, the application process for traditional life insurance can be extensive and may require extensive medical examinations and background checks, which can be difficult and expensive for high risk individuals.
Furthermore, traditional life insurance policies often have strict underwriting guidelines and medical requirements, which high-risk individuals may not be able to meet. This can make it difficult for them to find the coverage they need at a price they can afford.
Extra fees and exclusions
In some cases, high-risk individuals may be approved for traditional life insurance coverage, but they will likely have to pay higher premiums, added “flat extra” charges and/or agree to certain exclusions.
A flat fee additional charge to a premium is a way for insurance companies to account for the increased risk associated with high risk individuals when they are approved for traditional life insurance coverage.
Instead of denying coverage or charging significantly higher premiums, insurance companies may charge a flat fee in addition to the standard premium. The flat fee is determined by the insurer and is based on the individual’s level of risk.
For example, a person with a pre-existing medical condition may be approved for coverage, but the policy will include a flat fee that is added to the standard premium. This allows the insurance company to account for the added risk while still providing coverage for the individual.
Additional exclusions are specific conditions or circumstances that are not covered under a life insurance policy. They are added to a policy as a way for life insurance companies to account for the increased risk associated with high risk individuals when they are approved for coverage.
For example, a person with a pre-existing medical condition may be approved for coverage, but the policy will exclude any death related to that condition. This means that if the individual dies as a result of the pre-existing condition, their beneficiaries will not receive the death benefit.
Similarly, an individual who engages in risky activities such as skydiving or rock climbing may be approved for coverage, but the policy will exclude deaths resulting from those high risk activities.
Types of high-risk individuals
Life insurance companies typically consider a variety of factors when determining whether an individual is considered high-risk. Some of the most common types of high-risk individuals include:
Individuals with pre-existing medical conditions:
This can include conditions such as cancer, heart disease, diabetes, or obesity. These conditions can increase an individual’s risk of death and make it more difficult for them to qualify for traditional life insurance coverage.
Individuals with high-risk jobs or hobbies:
This can include individuals who work in dangerous occupations such as firefighters, police officers, or pilots, or those who engage in high-risk hobbies such as skydiving, rock climbing, or motorcycling.
Individuals with a history of risky behavior:
This can include individuals who have a history of smoking, excessive alcohol consumption, or drug use. Such individuals may be considered high-risk because they are more likely to develop health problems or die prematurely.
Individuals with a family history of certain medical conditions:
Having a family history of certain medical conditions such as cancer or heart disease can increase an individual’s risk of developing the same condition and can make it more difficult for them to qualify for traditional life insurance coverage.
Individuals with a dangerous occupation:
This can include individuals who work in hazardous environments, such as oil rig workers, miners, or construction workers.
As people age, they are more likely to develop health problems, which can make it more difficult for them to qualify for traditional life insurance coverage.
It’s important for individuals to be aware of these types of high-risk factors when shopping for life insurance coverage, as they can affect their eligibility for coverage and the cost of their premiums.
Not all life insurance companies follow the same underwriting guidelines
That’s correct, different life insurance companies use different underwriting guidelines when determining whether to approve an individual for coverage and at what cost. Underwriting guidelines are the criteria that insurance companies use to assess the risk of insuring an individual.
Underwriting guidelines can vary from company to company and may be influenced by a variety of factors, including the individual’s age, health, lifestyle, occupation, and family history.
For example, one insurance company may have stricter guidelines for approving individuals with pre-existing medical conditions, while another may be more lenient.We see this a lot with things like diabetes, anxiety, and sleep apnea.
One insurance company may charge higher premiums for individuals with high risk jobs or hobbies, while another may not. Some companies are more forgiving when it comes to dangerous lifestyle choices, while others may deny you outright.
Additionally, some companies may consider certain high-risk activities or professions as uninsurable, while others may not. Some examples would be deep sea diving below 100 feet, or hang gliding and parasailing hobbyists.
This is why it’s important for individuals to shop around and compare different life insurance companies to find the one that best fits their needs and budget. They should also work with specialized insurance agents or brokers who have knowledge of different companies and underwriting guidelines and can help them to find the best high risk life insurance coverage at the most affordable price.
How to qualify for affordable high risk life insurance rates
There are a few things high-risk individuals can do to qualify for more affordable life insurance rates:
Maintain a healthy lifestyle:
One of the best ways to lower your risk and qualify for more affordable rates is to maintain a healthy lifestyle. This can include eating a balanced diet, exercising regularly, and not smoking or using tobacco products.
Manage pre-existing medical conditions:
If you have a pre-existing medical condition, it’s important to manage it properly with the help of a healthcare professional. This can help you to control your symptoms and lower your risk of complications, which can result in more affordable life insurance rates.
Shop around and compare quotes:
It’s important to shop around and compare quotes from different insurance companies to find the most affordable rates. It’s also important to work with specialized insurance agents or brokers who have knowledge of different companies and underwriting guidelines, and can help you to find the best coverage at the most affordable price.
Consider alternative options:
If you are unable to qualify for traditional life insurance coverage, you may want to consider alternative options such as guaranteed issue life insurance or modified life insurance. These options may have lower coverage amounts and higher premiums, but they can still provide financial protection for your loved ones.
Be honest and transparent:
When applying for life insurance, it’s important to be honest and transparent about your health, lifestyle and any pre-existing conditions. This will help the insurance company to assess your risk accurately and offer you a fair price.
Keep in mind that life insurance rates are subject to change and that it’s important to review your coverage regularly and make adjustments as needed. This can help you to ensure that you have the right amount of coverage at the most affordable price.
Available options for high-risk individuals
There are a few life insurance options that are available for high-risk individuals who may have difficulty qualifying for traditional life insurance coverage:
Guaranteed issue life insurance:
This type of life insurance is designed for individuals who may not qualify for traditional life insurance coverage due to their age, health, or other factors. With guaranteed issue life insurance, the applicant is guaranteed coverage regardless of their health condition or lifestyle and there are no medical exams or health questions required. It should be noted that these policies will contain a 2-3 year waiting period until natural causes of death will be covered.
Term life insurance:
This type of insurance provides coverage for a set period of time, typically 10-30 years. It generally has lower premiums than whole-life insurance policies, making it more affordable for high-risk individuals.
Whole life insurance:
This type of insurance provides coverage for an individual’s entire life, as long as premiums are paid. It’s more expensive than term life insurance and may be less affordable for high-risk individuals.
Simplified issue life insurance:
This type of no exam life insurance won’t require an individual to take a medical exam, however, they will still be required to complete a questionnaire about their health status and activities which could preclude one from being eligible for coverage.
Now as you can see, high-risk individuals may face challenges when trying to secure term life insurance coverage, but the good news is that we here at IBUSA have pretty much seen it all when it comes to challenging cases, so if you’re ready to give it a shot, we’re ready to do our best to impress!