High-Risk Life Insurance

Understanding high-risk insurance policies. What exactly is it and who are the most in need of it?

What Exactly Is High-Risk Insurance? How Does It Work?

A High-Risk Life Insurance policy is a term used to describe a life insurance policy that covers a riskier applicant. You could be considered a risky applicant if you have a job or hobby that puts you in life-threatening situations. You may also be considered a high-risk applicant if your health is below average. Insurers may use the high-risk label for a variety of reasons, including the applicant’s health history, lifestyle, occupation, high-risk hobbies, or even travel to certain foreign countries. Once the company classifies you as a high risk to insure, you will likely have to pay higher premiums.

When you find a high-risk life insurance company willing to provide you with coverage, you must decide what type of coverage you require. Typically, you will apply over the phone or online. When you submit your application, you will be given options that affect how much your agreement will cost, how much your beneficiary will receive when you die and how long the agreement will last. Generally, the healthier the policyholder, the less likely it is that a claim will be paid out, so the price for your premiums may be lower. However, if you are in poor health or lead a lifestyle that puts your life at risk, you may be charged more.

Key Points

  • The way insurance companies classify applicants with high-risk conditions varies significantly.
  • If you have a job or a hobby that puts you in dangerous situations, you may be considered high risk.
  • Your age, health, and hobbies all play a bigger role in determining your monthly premium.

What Factors Do Insurance Companies Consider When Determining Whether or Not You Are a High-Risk Applicant?

Insurers may use the high-risk label for a variety of underwriting reasons, such as your health history, occupation, lifestyle, high-risk hobbies, or even your plan to travel to certain foreign countries.

High-risk habits
Some of your lifestyle habits, such as smoking cigarettes, use of chewing tobacco, use non-prescribed drugs, and drink more alcohol than what the insurer considers as casual, may be regarded as high risk.

High-risk diseases
You are considered high risk if you have been diagnosed with a serious or life-threatening disease such as cancer, pancreatic disease, epilepsy, diabetes, or Alzheimer’s.

High-risk occupations
Many occupations can place you at a higher risk. Underwater welders, underground miners, and firefighters are examples of people who work in high-risk occupations.

High-risk hobbies
You could work a safe job during the week, but if you spend your weekend skydiving, scuba diving, or racing cars, you could be considered high risk.

The good news is that a number of insurance companies specialise in high-risk life insurance coverage. This means that, regardless of your profession, hobbies, habits, illnesses, or advanced age, obtaining the necessary life insurance is not impossible.

How Does Risk Affect Life Insurance Rates?

If you are considered high-risk, you can still buy life insurance, but your coverage options may be limited, and you will most likely have to pay higher rates.

Life insurance companies have “standard” rates, which are modified by the risk applicants present to the underwriter. During the application, you will be asked various questions about your lifestyle, job, medical history, and family history. If required, they may also request a medical exam. The insurance company will then assign a rate class and calculate your premium based on the data they receive from the application and medical exam (if required).

If you present as an above-average risk, your premium will be higher than the standard. On the other hand, if you present as a better-than-average risk, your premium will be lower.

High-risk habits will result in significantly higher life insurance rates and excessive high-risk habits will almost certainly result in the applicant being denied insurance coverage.

Is a Critical Illness Regarded as High Risk?

When an applicant fills out a life insurance application, the insurance company will focus on several health conditions based on the mortality rate associated with each condition. Every underwriter will be concerned about the following health conditions and will request detailed information:

If you answer yes to the “cancer” question (not skin cancer), the underwriter will sound the alarm. He or she will need a lot of information about your cancer and treatment, which will most likely result in a supplemental questionnaire about your condition.

Cognitive Heart Failure
Congestive heart failure occurs when your heart’s pumping action is insufficient to regulate blood flow throughout your body. This is usually caused by fluid accumulating around your heart causing it to pump inefficiently. It is a symptom of a more serious health problem. Your underwriter will want to know about the underlying health condition and how it is being managed.

Dementia is a condition that severely impairs the cognitive ability of the brain and in most cases, results in total disability. Applicants with Dementia or Alzheimer’s can obtain life insurance coverage through a guaranteed issue policy because medical conditions are not considered during the underwriting process.

Applicants who have tested positive for HIV or have been diagnosed with AIDS are generally ineligible to purchase a traditional life insurance policy. Despite the development of novel HIV/AIDS treatments, most insurance companies consider the risk and mortality rate to be too high and are unwilling to provide traditional coverage.

Heart Attack
A person looking for life insurance after having a heart attack can buy traditional life insurance. Because heart attacks are fairly common, insurance companies have a massive amount of data to which they can compare any applicant.

Similar to heart attack underwriting, an applicant who has had a stroke may be eligible for traditional life insurance if the event occurred more than 12 months ago and did not result in permanent paralysis. Because many stroke patients recover completely and have no ongoing problems, most life insurance companies are willing to provide first-day coverage life insurance.

There are a number of insurance companies that specialise in high risk life insurance coverage regardless of your profession, hobbies, habits, illnesses or advanced age.

How to Find the Right High Risk Life Insurance Policy?

We recommend comparing quotes and policies from as many insurers as possible before purchasing coverage if you are looking for affordable high-risk insurance. This necessitates investigating the underwriting policies of various insurance companies in order to determine which carriers will be appropriate for your high-risk situation. If an insurance company specializes in the type of high-risk life insurance that applies to your situation they are more likely to accept your application and provide you with affordable rates. Conducting your own research is extremely beneficial as the difference between a standard and table rating can significantly increase your annual premium by 25% or more.

If you’re having trouble finding a life insurance company that offers the policy you’re looking for, we recommend contacting an independent insurance broker. Experienced brokers and agents can answer your questions and provide insight into which risks insurers will underwrite. High-risk insurance brokers know which insurance companies accept applicants with your risk profile.

Is There Another Insurance Option Besides High Risk Life Insurance?

If life insurance is too expensive for you because you are considered high risk, there are still other options available to you like critical illness insurance which is intended to provide financial security in the event of the diagnosis of a specific illness, medical condition or disability specified in the policy. In the event of a claim, a critical illness insurance policy will pay the policyholder a tax-free lump sum which they can then spend as they see fit. For more information, please see our critical illness premiums.

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