Life Insurance And Pre-Existing Conditions: What They Can Discover?

Life insurance is a valuable tool to protect your loved ones and enhance your financial planning. However, for those with pre-existing medical conditions, the process of obtaining life insurance can be challenging and expensive. Pre-existing conditions are medical issues that were diagnosed or treated before applying for life insurance, and they can significantly impact the cost and availability of coverage. While it is still possible to obtain life insurance with a pre-existing condition, the specific policy options and rates depend on the type and severity of the condition, age, current health status, and lifestyle choices.

How do pre-existing conditions impact life insurance rates?

Pre-existing conditions can make it more difficult and expensive to obtain life insurance. The specific policy types one qualifies for depend on the particular medical problems, how well the condition is managed, and the insurer.

Insurers use a tiered system to determine the risk of covering an individual. Policyholders are typically classified into four groups: Super Preferred (or Preferred Plus), Preferred, Standard (or Regular), and Substandard. Those with more pre-existing conditions are usually placed in the lower-tier classifications, resulting in a higher premium or even coverage denial.

The impact a pre-existing condition has on an individual's life insurance premium depends on its severity. Generally, the more severe a condition is, the more one can expect it to affect their premium. Here are some examples of conditions that may have a major or minor impact on life insurance premiums:

Conditions that may have a major impact on life insurance premiums:

• Cancer
• Heart disease
• Chronic illnesses
• High blood pressure

Conditions that may have a minor impact on life insurance premiums:

• Mental health conditions (depression, anxiety, etc.)
• High cholesterol
• Obesity

Insurers assess each case based on several criteria to determine an individual's risk level:

• Severity of the medical condition: Pre-existing medical conditions that significantly raise an individual's mortality risk will almost always result in a higher life insurance premium.
• Whether the issue is current: A medical condition that creates serious, ongoing health problems may place an individual in a higher-risk category.
• Date of diagnosis: A longer time from diagnosis can increase the chance of complications or other issues occurring, and the insurer may scrutinize an application more closely if the diagnosis happened long ago.
• Management of the condition: Pre-existing medical conditions that show signs of improvement and respond well to treatment may result in a lower-risk classification. Taking fewer prescription drugs or stable prescription dosages over time may be viewed positively by the insurer.
• Lifestyle: Habits like smoking can put an individual in a higher-risk class, increasing the cost of life insurance.

While pre-existing conditions can negatively impact life insurance rates and coverage options, individuals can still qualify for various life insurance policies. However, they may need to pay higher premiums due to the additional risk associated with their health history.

What kind of life insurance can you get with a pre-existing condition?

Even with a pre-existing condition, you can still get life insurance, although it may be more expensive and limited in its benefits than life insurance for people without pre-existing conditions. The specific policy types you qualify for will depend on your particular medical problems, how well your condition is managed, and the insurer.

Guaranteed issue life insurance

A guaranteed issue life insurance plan could be a good option if you have a pre-existing condition because the policies are guaranteed to be issued. There is usually no medical exam, so those with pre-existing conditions may be able to more easily get coverage through this type of life insurance policy. Guaranteed issue rates tend to be more expensive and coverage amounts are lower than other types of life insurance. Additionally, a guaranteed issue life policy offers lifetime coverage. As long as premiums are paid, you should have coverage until you pass away. Rates should stay the same for the life of the policy.

Term life insurance

Term life insurance is usually a more affordable solution because it is only offered for a set period of time (typically between 10 and 30 years). Policyholders may lock in low rates for coverage and may even qualify for coverage despite having pre-existing conditions. However, it is worth noting that your chances of approval largely depend on the severity of your condition, and your premium will likely be higher with a pre-existing condition than without one.

Group life insurance

It may be possible to access a group life insurance plan through your employer. These policies are offered to a group of individuals at a more affordable rate since coverage is usually basic in nature and costs are split among a large group of people. Group life insurance plans are typically offered to employees as part of their benefits package, and some allow employees to add their spouse or children to the policy. Your employer might even cover the entire cost of your premium.

Coverage amounts are usually limited to a multiple of the policyholder’s annual income, which may not align with your needs. Group life insurance plans are not as customisable as private policies, either. However, if you only need coverage to supplement existing life insurance or don’t need a large amount to satisfy your needs, group life insurance may be a good option.

Tips for buying life insurance with a pre-existing condition

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. However, you can always reapply, especially if your medical records demonstrate that your treatment has been effective. Some 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

Look for an independent life insurance agent who works with an impaired risk specialist. This is a broker who 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 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 will be recorded in the MIB Group insurance database, which is shared with other insurers and may hurt your chances of buying coverage from another company.

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

Being denied life insurance coverage can be disappointing, especially if you have a family that relies on your income. However, there are several steps you can take to get back on the road to coverage. Here are some options to explore:

Ask for more information

Contact the insurance company or your insurance agent to find out the reason behind the denial. Insurance companies consider both medical and non-medical risks when assessing applications, so understanding their specific concerns is key. Once you have the reasons, you can check that the information they have is accurate and up to date. If there are any errors, you have the right to appeal the decision.

Check with your workplace

Your employer may offer a group term life insurance plan that you can join. While it may not provide as much coverage as you would like, it can offer some level of death benefit until you can secure your own term life insurance in the future. Group plans are usually free and can be supplemented for additional coverage, although this will cost extra. Keep in mind that if you leave your job, you will lose this type of coverage.

Reach out to a life insurance agent

An independent life insurance agent can be a lifeline when you're struggling to get insured. They understand the ins and outs of the underwriting process and can help you navigate any red flags in your application. They can also search across a wider market to find a policy that suits your needs. An agent can advise you on the next steps, which may include waiting a few months before applying again.

Allow for a waiting period

Sometimes, the best course of action is to address any health issues that led to your denial. Use the time to improve your diet, exercise regularly, and build healthy habits. These changes can not only improve your chances of getting approved for life insurance in the future but also benefit your overall well-being.

Apply again for a different policy

If your usual insurer no longer offers the type of life insurance you need due to your age, consider applying for a shorter term. If you have a serious health condition, explore no-medical-exam life insurance plans, such as simplified issue life insurance or guaranteed issue life insurance. These options may have lower payouts or higher premiums, but they can provide some coverage if traditional life insurance is not available to you.

Try a different insurance provider

Each insurance company has its own underwriting standards, so being denied by one insurer does not mean that others will deny you as well. Consider working with an independent insurance broker or agent, as they work with multiple insurance companies and know which carriers are more likely to approve your application. They can guide you toward insurers that are more likely to accept your application, even if you have a pre-existing condition.

How to improve your chances of getting life insurance with a pre-existing condition

If you have a pre-existing condition, it can be more challenging and costly to obtain life insurance. However, you can still likely find a policy that suits your needs if you explore your options. Here are some tips to improve your chances of getting life insurance with a pre-existing condition:

• Stick to your treatment plan: Demonstrate your commitment to managing your condition by adhering to your treatment plan. This may include regular visits to your healthcare provider, taking prescribed medications, and following their medical advice.
• Maintain a healthy lifestyle: Engage in regular exercise and maintain a healthy weight, as this can positively impact your overall health and reduce the risks associated with your pre-existing condition.
• Shop around for insurance providers: Different insurance companies have varying policies and criteria for assessing applicants with pre-existing conditions. By comparing quotes and policies from multiple insurers, you can find the best coverage and rates that fit your needs.
• Be honest and provide detailed information: When applying for life insurance, be transparent about your medical history and current health status. Provide as much information as possible, including details about your treatment plan, lifestyle habits, and any improvements in your health.
• Consider working with an insurance broker: Brokers specialise in helping clients find suitable life insurance policies. They can guide you in finding insurers who are more likely to offer favourable rates for your specific condition.
• Consider alternative options: If you cannot obtain traditional life insurance, explore alternative options such as group life insurance through your employer or guaranteed issue life insurance, which accepts all applicants regardless of their health status.

Frequently asked questions