Life Insurance For Sick People: Is It Possible?

Life insurance is a crucial financial protection tool for individuals and families, but what happens when you fall sick? Can you still get insured? The answer is yes, even with a pre-existing condition, you may be able to obtain life insurance. However, the specific policy options and costs will depend on the insurer and the nature of your illness. Shopping around and consulting experts are recommended to find the best coverage for your circumstances.

How does a chronic illness affect your life insurance options?

A chronic illness can affect your life insurance options in several ways. Firstly, it can increase your chances of dying while the policy is in effect, which will be assessed by insurers when determining your eligibility and rates. They will consider your overall health, the specific chronic condition, and your treatment plan. This information will be used to assign you a health classification, which will then determine your premium costs. The lower the insurance risk, the better the health classification and the lower the rates.

The type of chronic illness and its severity will impact your insurance options and costs. For example, mental illnesses that are easier to manage may result in a standard or standard plus classification, while more serious diagnoses could lead to higher monthly payments. Chronic physical conditions often result in a substandard classification, regardless of the specific condition, and premiums are then determined based on the illness's severity.

Additionally, if your chronic illness significantly impacts your daily functioning or ability to work, your application for traditional life insurance may be declined. However, there are alternative options available, such as guaranteed issue life insurance, which offers near-certain approval odds and financial protection if traditional coverage is not an option. Group life insurance through an employer is another possibility, although coverage is usually limited and ends when employment ceases.

It is important to note that having a chronic illness does not automatically disqualify you from obtaining life insurance. Many providers offer coverage for people with chronic conditions, and it is recommended to shop around and compare quotes from multiple insurers to find the most suitable option.

What types of life insurance are available if you have a chronic illness?

Having a chronic illness does not automatically disqualify you from getting life insurance. The type of life insurance you can get depends on your budget and coverage needs. Here are some options:

Term Life Insurance

Term life insurance is a good choice for most people as it is affordable and has few tax restrictions or limitations. It provides financial protection during the time you need it the most, such as when you have large expenses like paying off a mortgage or raising children. Term life insurance is usually available if you have a well-managed chronic illness.

Permanent Life Insurance

Permanent life insurance lasts your entire life and usually has a cash value savings component that grows tax-free over time. Because of this, it is significantly more expensive than term life insurance. A chronic illness won't automatically disqualify you from applying for permanent life insurance, but it may contribute to even more expensive premiums.

Final Expense Life Insurance

Final expense life insurance, also called burial insurance, is meant to cover end-of-life expenses such as funeral or medical bills. It is a good option for older adults, people who need less than $50,000 in coverage, or people with health conditions that might disqualify them from getting term insurance.

Guaranteed Issue Life Insurance

Guaranteed issue life insurance is a type of final expense coverage that offers near-certain approval odds. It can provide financial protection if you don't qualify for traditional coverage, and you don't need to take a medical exam for approval.

Group Life Insurance

Group life insurance is often offered by employers for free or at a subsidised rate as part of an employee benefits package. While coverage amounts are typically low and you lose coverage if you leave your job, these policies generally have fewer health requirements for approval.

Life Insurance Riders

You can add living benefits riders to your life insurance policy, which offer supplemental coverage under special circumstances. For example, some of these add-ons can provide funds if you receive a diagnosis for a terminal illness or if you need critical care after an unexpected medical event like a heart attack.

What to do if you've been denied life insurance?

What to do if you've been denied life insurance

Being denied life insurance can be disappointing, especially if you have a family relying on your income. However, there are steps you can take to try to get coverage. Here are some options to explore if you've been denied life insurance:

• Contact your agent or broker: Speak to your insurance agent or broker to understand the reason for the denial. It could be due to insufficient information, a misunderstanding, or an error. Discuss your options with them and see if there is anything you can do to improve your chances of getting coverage.
• Consider lifestyle changes: If you were denied due to a factor within your control, such as a health issue, risky hobby, or financial situation, work on making improvements and then reapply. For example, if you were denied due to high blood pressure, work with your doctor to get it under control and then reapply.
• Try other life insurance options: Explore alternative types of life insurance policies, such as final expense insurance (guaranteed issue life insurance), accidental death insurance, or life insurance through your employer. Final expense insurance is a permanent life insurance option for those between 50 and 80, and it does not involve medical underwriting. Accidental death insurance provides a death benefit if you die due to an accident, but not if you die from an illness. Group life insurance through your employer usually offers basic coverage at a low cost or for free, but it may be limited and tied to your employment.
• Consider working with a broker: Captive agents only have access to the life insurance company that employs them, whereas independent brokers have access to many different companies. Each life insurance company has its own underwriting process and criteria for approval, so working with a broker can help you find an insurer that is more likely to approve your application.
• Apply with a different insurer: Every insurer has different criteria for approving life insurance applications. Try applying with other insurers before giving up.
• Appeal the decision: If you believe the denial was based on incorrect or insufficient information, you have the right to appeal the decision. Submit timely and complete information, including up-to-date medical records, and any other relevant information such as your credit report, driving record, or updated information about your occupation.
• Work with a financial professional: Many people are denied life insurance when they apply on their own. A financial professional who works with multiple insurers can help you navigate the application and appeal process and increase your chances of approval. Some even specialize in helping higher-risk individuals obtain life insurance.
• Try again later: Use a waiting period to get any health conditions under control, improve your finances, and clean up your driving record. Making progress in these areas may increase your chances of approval.

What is a pre-existing condition?

A pre-existing condition is a medical issue that is diagnosed or treated before applying for life insurance. Each insurer has its own underwriting process to assess an applicant's risk profile. Insurers typically group applicants into rate classes based on their health, such as standard, preferred, or super preferred. The name given to each class can vary among insurers, but the goal is the same: to categorize the risk of insuring you based on your life expectancy.

Most people qualify for preferred or standard rates, but if you have a serious health condition, you may only qualify for substandard rates. This is because a pre-existing health condition might cause an early or unexpected death, increasing the risk for the insurer. As a result, the cost of the policy is higher. If the risk is too high, the insurer may deny coverage altogether.

Examples of pre-existing conditions include asthma, diabetes, heart disease, anxiety, depression, cancer, and hypertension. It's important to note that age and health are the two most important factors life insurance companies use to determine insurability and cost. Therefore, a pre-existing condition can adversely affect your coverage options and result in higher costs.

In the context of pet insurance, a pre-existing condition refers to any health condition that first occurs or shows symptoms before the coverage starts or during a waiting period. This means that the plan will not cover costs directly related to the pre-existing condition but will still provide coverage for other accidents and illnesses.

How to get life insurance if you have health problems?

It is possible to get life insurance even if you have health problems, but it may be more difficult and expensive. The specific policy types you qualify for will depend on your particular medical problems, how well your condition is managed, and the insurer. Here are some steps to follow to get life insurance if you have health problems:

• Check with your employer to see if they offer group life insurance. Basic group life insurance is often available through employers, and your health conditions will most likely not be taken into consideration. However, the coverage may be limited, and you will likely lose the coverage if you leave the job.
• Shop around and compare quotes from different insurers. Every insurance company has a different approach to qualifying customers and underwriting policies, so research your options and obtain quotes from several providers.
• Work with an independent life insurance agent who works with an impaired risk specialist. They will know which insurance companies are more likely to provide a good rate for your particular condition. Make sure your agent is submitting informal inquiries rather than formal applications that will be recorded.
• Be mindful of when you apply. An insurer will likely turn you down if you apply shortly after a major diagnosis, but you can always reapply as your health improves.
• Take advantage of improvements in your health. If you are accepted but are being charged a high rate, you can ask for a life insurance re-rating (and a lower premium) once your condition is under control and your prognosis is positive.
• Consider a guaranteed issue life insurance policy. These policies do not require a medical exam or health questions, but they are more expensive and have lower payouts.
• Be honest about your health on your application. Misrepresenting your health could result in your claim being rejected or your policy being cancelled.

Frequently asked questions