Life Insurance: Pre-Existing Conditions And You

Life insurance is a valuable financial tool that can help protect your loved ones in the event of your death. However, for those with pre-existing health conditions, the process of obtaining life insurance can be more challenging and expensive. A pre-existing condition is typically defined as a medical issue that has been diagnosed or treated prior to applying for life insurance. While it may be more difficult, it is still possible to obtain life insurance coverage with a pre-existing condition. The specific policy types and premiums will depend on the individual's medical problems, the effectiveness of their condition management, and the insurer's criteria. This article will explore the options available for individuals seeking life insurance with pre-existing conditions and provide guidance on maximising their chances of approval.

How to get life insurance with a pre-existing condition

A pre-existing condition can make it more difficult and expensive to get life insurance. However, even if you have a chronic or terminal health problem, you can likely find a policy that you qualify for if you shop around. The specific policy types you qualify for will depend on your particular medical problems, how well your condition is managed, and the insurer.

A pre-existing condition is a medical issue you were diagnosed with or treated for before applying for life insurance. Each insurer has its own underwriting process, which is how they assess applicants' risk profiles. Some insurers are more flexible about certain health conditions than others. In general, you’ll raise a red flag if you have one or more of the following pre-existing conditions:

• High blood pressure
• Asthma
• Diabetes
• Heart disease
• Cancer
• Mental health conditions (depression, anxiety, etc.)

Be mindful of when you apply

An insurer will likely turn you down if you apply shortly after a cancer diagnosis or a heart attack, but you can always reapply, especially if your medical records demonstrate that your treatment has been effective. In some cases, companies will have a specific timeline for when you can apply, such as two years after a final treatment for breast cancer.

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.

Find the right agent

It’s important that you look for an independent life insurance agent who works with an impaired risk specialist — a broker who’ll 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 by the MIB Group. This could save you a lot of denied applications.

Get quotes from a handful of insurers

Insurance companies can be unique in how they review specific health conditions. Compare life insurance quotes to make sure you're getting the best possible coverage at the best possible price.

Don't conceal your condition

The worst strategy is to conceal your condition from your insurer. Life insurance companies use many methods to identify fraud. Misrepresenting your health on your application could cause the insurer to reject a life insurance claim, jeopardizing the benefit for your beneficiaries. If the insurer discovers fraudulent information, it typically records the incident in the MIB Group insurance database, which is shared with other insurers. This might hurt your chances of buying coverage from another company.

Types of life insurance for people with pre-existing conditions

Guaranteed issue life insurance

If your pre-existing condition stops you from securing a competitively priced term or permanent life insurance policy, you might want to consider a no-exam policy such as guaranteed issue life insurance.

These policies guarantee acceptance as long as you are within a certain age range. You’re not required to take an exam or answer questions about your health to qualify. However, this means you often pay much more for less coverage.

Group life insurance through work

Many people, including those with health problems, can get basic group life insurance through their employers. Basic coverage is typically limited to one or two times your annual salary, but you won’t have to take a health exam to qualify. Note that you will most likely lose the coverage if you leave the job.

Accidental death and dismemberment insurance

If you don’t qualify for a term or permanent life insurance policy, you may want to consider accidental death and dismemberment insurance. The death benefit is paid out only in the event of an accidental death, which means your medical history is not used to determine eligibility. However, your death must be caused by a covered accident for your beneficiaries to receive the payout. Make sure you ask the insurer what accidents are covered and how a pre-existing condition can affect the payout.

Factors that can improve insurability for people with pre-existing conditions

Even with a pre-existing condition, it is still possible to get life insurance. Here are some factors that can improve your chances of getting life insurance and may even help lower your premium:

• Follow your treatment plan: Keeping your medical condition under control will help reduce the risk to insurers and increase your chances of maintaining and improving your health and insurability.
• Exercise regularly: Exercise has well-documented benefits for your health and overall well-being. It also helps to mitigate the factors that make a person risky to insure. However, remember to check with your doctor before starting a new exercise regimen, especially if you have had a serious health event.
• Lose weight: Losing weight can be challenging, but it is possible and crucial as excess weight can affect your health, well-being, and life expectancy. Make gradual changes to your diet and increase your activity levels to lose weight consistently over time.
• Apply early: The older you get, the more expensive life insurance becomes as the likelihood of the insurer having to pay out increases. Applying for life insurance earlier in life, such as in your 20s or 30s, can help you lock in more affordable rates for the long term.
• Share improvements: If you are approved for life insurance with a pre-existing condition, be sure to communicate any improvements in your health to your insurer. They may adjust your premium if they see that your health has improved or your condition is under control.

Types of life insurance with people with pre-existing conditions

Types of Life Insurance for People with Pre-Existing Conditions

People with pre-existing conditions can still qualify for various life insurance policies, although they may have to pay higher premiums. Here are some of the options available:

Term Life Insurance

Term life insurance policies offer more affordable premiums and large death benefits, but the coverage only lasts for a set term, typically 10 to 30 years. This type of policy may be suitable for those who want the most coverage for their budget.

Guaranteed Issue Life Insurance

Guaranteed issue life insurance policies accept all applicants, regardless of their health status. There are no medical questions or exams required. However, these policies offer limited coverage and typically come with higher premiums. They also have a cash value growth component that helps build wealth over time.

Group Life Insurance

Group life insurance is a type of term life insurance policy offered through an employer. Employers usually offer limited coverage, typically up to $50,000 in death benefits, to keep premiums low and manageable. While this option is convenient and affordable, the policy is only valid as long as you remain employed with the company.

Whole Life Insurance

People with pre-existing conditions may still qualify for whole life insurance, which provides coverage for the insured's entire life. This type of policy also includes a cash value growth component that allows the policyholder to build wealth. However, the premiums for whole life insurance can be significantly higher, especially for those with pre-existing health conditions.

Tips to increase your chances of getting life insurance with pre-existing conditions

While it is possible to get life insurance with a pre-existing condition, it can be a challenging process. Here are some tips to increase your chances of getting life insurance and potentially lower your premium:

• Shop around for policies: Different insurance providers have different definitions of pre-existing conditions and varying levels of coverage. Comparing policies and providers can help you find the most suitable option for your needs.
• Be honest when applying: While disclosing your pre-existing condition may increase your premiums, not being honest about your medical history can be even more costly. Failing to disclose your medical condition may result in your claim being denied, meaning you would have paid premiums for a policy that does not cover you.
• Provide detailed information: The more information you provide during the application process, the better your insurance provider can understand your requirements and potentially save you money on premiums. A pre-assessment can also help give your provider a clearer understanding of your current condition.
• Follow your treatment plan: Keeping your medical condition well-controlled by following your treatment plan can increase your chances of maintaining and improving your health, insurability, and quality of life. This can make you a lower-risk applicant in the eyes of insurance providers.
• Exercise regularly: Regular exercise can help mitigate factors that make you a risky applicant. However, check with your doctor before starting a new exercise regimen, especially after a serious health event.
• Apply earlier in life: Life insurance rates tend to increase as you get older. Applying for life insurance earlier in life, such as in your 20s or 30s, can help you lock in more affordable rates for a longer period.
• Communicate improvements: If your health improves or your pre-existing condition gets better managed, let your insurer know. They may adjust your premium if they see that your health has improved or your condition is under control.

What to do if you don't get approved for life insurance

Being denied life insurance can be a disheartening experience, but it's important to remember that a rejection isn't the end of the road. Here are some steps you can take if your life insurance application is denied:

Ask for more information

Contact the insurance company to find out the specific reasons behind the denial. Insurance companies consider medical and non-medical risks when evaluating applications, including serious medical conditions, poor results from medical exams, bankruptcy, criminal records, positive drug tests, or dangerous hobbies. Make sure the information they have is correct and up to date. If any information is incorrect or insufficient, you have the right to appeal by providing additional documentation or evidence.

Check with your workplace

If the denial is based on accurate information, consider checking with your employer to see if they offer a group term life insurance plan. Group plans usually don't require a medical exam and can provide some level of coverage until you can secure your own policy. However, keep in mind that group plans may have lower coverage amounts and you will lose the coverage if you leave your job.

Reach out to a life insurance agent

Consult an independent life insurance agent who can guide you through the underwriting process and help you navigate any red flags in your application. Agents have a wider market reach and can search for policies that better suit your needs. They can also advise you on when to reapply and suggest improvements to increase your chances of approval.

Allow for a waiting period

Sometimes, improving your health and correcting any issues that led to the denial is the best course of action. Use the denial as motivation to adopt healthier habits and make positive lifestyle changes. This can include improving your diet, exercising regularly, quitting smoking, or addressing any health conditions. A waiting period can also help address non-medical reasons for denial, such as letting speeding tickets fall off your record.

Apply for a different policy

Consider applying for a different type of policy, such as simplified issue life insurance or guaranteed issue life insurance. Simplified issue life insurance doesn't require a medical exam, but you'll need to fill out a medical questionnaire. Guaranteed issue life insurance is suitable for older individuals or those with serious medical conditions, as it doesn't require a medical exam or extensive questioning. However, these policies typically have higher premiums and lower payout amounts.

Explore alternative insurance products

If you're deemed high-risk, you may not qualify for traditional term life insurance. In this case, explore alternative options such as final expense life insurance, accidental death and dismemberment insurance, or group life insurance through your employer. Final expense life insurance covers end-of-life expenses and offers lower death benefit payouts at a higher price. Accidental death and dismemberment insurance only pays out if you die or are injured in a qualifying accident, regardless of your medical history. Group life insurance through your employer usually doesn't require a medical exam and can provide basic coverage.

Make lifestyle changes

Insurance companies may postpone your application and request improvements in specific areas, such as increasing your credit score or stabilising your medical prescriptions. Use the waiting period to make the necessary changes and provide concrete examples of your progress.

Understand your legal rights and protections

Familiarise yourself with anti-discrimination laws that protect against unfair practices in the insurance industry, such as the Civil Rights Act of 1964, the Age Discrimination in Employment Act, the Americans with Disabilities Act, the Genetic Information Nondiscrimination Act, and the Affordable Care Act. These laws prohibit discrimination based on race, age, disability, or other protected categories.

Appeal the denial

If you believe the denial was unfounded, you can challenge the decision by writing a well-structured appeal letter and providing additional information or documentation to counter the reasons for denial. You can also consult a financial advisor or insurance professional for personalised advice and guidance.

Frequently asked questions