High-Risk Life Insurance

If you’re a smoker, have a pre-existing medical condition, a family health history of chronic illness or a high-risk occupation or pastime, it could be harder for you to obtain life insurance coverage at a reasonable price. That’s because life insurance companies will take those factors into account when evaluating your eligibility for coverage and determining your premiums.

If you’ve had trouble qualifying for a life insurance policy due to a medical condition or lifestyle factors, there may still be an option at your disposal. Read on to learn more about life insurance coverage for high-risk applicants.

What is high-risk life insurance?

High-risk life insurance is a term used to refer to life insurance options for which high-risk applicants may be eligible.

Both term and whole life insurance policies may still be available to high-risk individuals, albeit at a higher cost. If you are young and want to cover temporary financial obligations for your dependents — such as a mortgage or children’s education expenses — a term life policy could be a cost-effective option.

Term life insurance is generally less expensive than whole life because policies last for a set period of time, typically 10 to 30 years. Term life is also a pure life insurance product, meaning it only has one component: a death benefit. If the insured dies within the policy term, their beneficiaries receive a payout.

Whole life insurance, on the other hand, does not expire as long as the insured pays their premiums. Besides providing a death benefit, these policies also have a cash value, a type of savings or investment component that grows tax-deferred. Once you have enough cash value, you can borrow against your policy or use the funds to pay your premiums or purchase a higher coverage amount. These features make whole life insurance the more expensive life insurance option.

Now, if you have health issues and have been denied coverage, you may want to consider guaranteed issue life insurance, a type of whole life policy that doesn’t require medical exams or questionnaires. We’ll go over this option in more detail later on.

Life insurance risk classes

Life insurance companies classify applicants into risk groups based on their predicted life expectancy. Applicants in good health and who don’t participate in dangerous activities will have an easier time finding life insurance coverage.

Conversely, people with pre-existing medical conditions or dangerous jobs or hobbies may have a harder time finding coverage. And if they are insurable, they’ll pay higher-than-average premiums.

While risk classes or categories vary by insurance company, most use a generalized system. Here are some common risk categories:

• Preferred select/preferred plus: Applicants are in excellent health and have no other risk factors. These policyholders generally pay the lowest premiums.

• Preferred: Applicants are in generally good health and have few or no dangerous hobbies or occupations. These policyholders typically pay lower-than-average premiums.

• Standard plus: Applicants may have minor health issues but are generally healthy. They can expect to pay slightly lower-than-average premiums.

• Standard: Applicants may have some health problems or a family history of significant disease. They may also have a somewhat risky lifestyle. Most applicants will fall into this category and can expect average premiums.

• Table-rated/substandard: Applicants may have significant health problems; a family history of early death or serious illness; or a dangerous job, hobby or habit. These policyholders can expect to pay higher-than-average premiums.

Many life insurance companies will accept some degree of risk when underwriting a policy. That means you can get traditional life insurance coverage if you are willing to pay a higher-than-average premium. However, if you’ve been denied coverage in the past, a guaranteed issue policy may be your best option.

Guaranteed issue life insurance

Guaranteed issue, or guaranteed acceptance, life insurance doesn’t require a medical exam or questionnaire. Some companies have an age cap or limit, which is usually between 80 and 85. You're guaranteed coverage if you meet the insurer’s age requirements and other criteria.

Nevertheless, there are some tradeoffs when you buy guaranteed issue life insurance. Some of them include:

• Higher premiums

• Generally, low death benefit amounts

• Potentially graded benefits, meaning beneficiaries will receive a reduced death benefit or just a return of premiums if the insured dies within the first two to three years of coverage, as outlined in the policy

While guaranteed issue life insurance is a type of whole life insurance policy, it doesn’t accrue cash value. It’s sometimes called burial insurance or a final-expense policy because the limited death benefit is often used to cover burial expenses. Many life insurers offer up to $25,000 in coverage, so it may not be enough to cover other big expenses such as paying off a mortgage or settling an estate.

What is considered high risk to insurance companies?

Life insurance companies assess risk differently based on age, gender, medical history, family health history and lifestyle choices, among others.

The following lifestyle factors and medical conditions are commonly considered high-risk by insurers.

Lifestyle factors

Your habits, hobbies and occupation could put you into the high-risk category with many insurers. Here are the lifestyle factors most commonly considered to be high-risk:

Alcohol use

Alcohol use can lead to many health problems, such as liver disease, heart disease and cancer. It also increases the risk of being in a car accident. If you drink more than the recommended amount of alcohol, life insurance companies may consider you high-risk.

Smoking and tobacco products

Smoking cigarettes or cigars, vaping and using smokeless tobacco all shorten life expectancy. Tobacco products increase the risk of developing many types of cancers, heart and respiratory disease, diabetes and other medical conditions.

If you’re a current smoker, you’ll likely be deemed high-risk by life insurance providers. If you’re a former smoker, you may also face higher premiums. Some insurance companies may also consider marijuana smokers high-risk.

Dangerous hobbies

Hobbies such as skydiving, rock climbing, motorcycle racing and scuba diving are considered high-risk. Participating in these activities will usually put you in a high-risk category when shopping for life insurance.

Dangerous occupations

Life insurance companies consider some jobs high-risk because they’re more likely to lead to early death. These include mining, roofing, fishing and firefighting, among others. Police officers, pilots and construction workers also fall under this category.

If you’re in a high-risk occupation, your employer might offer group life insurance to you and other employees who may otherwise have difficulty finding coverage. These policies are usually quite limited, so you may need supplemental life insurance to get the coverage you want.

Imprisonment

Being imprisoned will make it extremely difficult to secure life insurance. A felony on your record could also push you into the high-risk category. Every life insurance company assesses risk differently, so request quotes from multiple providers to find one that will accept your application if you have a criminal record.

Medical conditions and medical history

Companies that sell fully underwritten life insurance usually require a basic medical exam to determine your overall health before issuing you a policy. Even some no-exam life insurance policies may require you to answer questions about your health.

Insurance companies may also get your medical records from a third-party provider to better evaluate your health. Using this information, they can view any diagnoses you've received and your prescription medications.

Certain medical conditions are considered high-risk and will make it more difficult for you to get life insurance. Your risk level could also be higher if you have a family history of certain medical conditions, even if you haven’t been diagnosed.

Cancer

Having cancer is generally considered a high-risk factor. If you’ve had cancer and it’s currently in remission, an insurance company may take into account the type of cancer you had and the length of time you’ve been in remission when calculating your risk level.

Dementia or Alzheimer’s

Having dementia or Alzheimer’s disease makes you a high risk to life insurance companies. These conditions have no cure and decrease a person’s average life expectancy.

General poor health

An insurance company may consider you high-risk if you’re generally in poor health or take several medications, even if none are for high-risk conditions.

HIV/AIDS

Life insurance companies consider HIV and AIDS to be high-risk conditions. In the past, applicants with HIV/AIDS were almost always denied coverage. However, advancements in treatment options have led to greater availability of life insurance options for people with these conditions.

If you have HIV or AIDS, you’ll pay higher-than-average premiums, but you’ll most likely be able to secure a life insurance policy to protect your loved ones.

Chronic pain and illness

You may have difficulty finding a traditional life insurance policy if you have chronic pain or other chronic illnesses. Life insurance companies will take into consideration factors such as the type of condition you have, how long you’ve had it, your age and your overall health.

If you’re repeatedly denied traditional life insurance coverage, consider a guaranteed issue policy.

Strokes

If you’ve had a stroke, you are at an increased risk of experiencing health issues down the road. If you had a ministroke, or transient ischemic attack (TIA), you’ll have an easier time obtaining coverage than if you’d had a full stroke.

Other considerations include the length of the stroke and whether you suffered any permanent neurological damage. Guaranteed issue life insurance may be your only option if you’ve been denied traditional life insurance.

How to find the cheapest life insurance policy if you’re high risk

Life insurance will be more expensive if you’re classified as high-risk based on the medical conditions or lifestyle factors discussed above. But, by taking a few extra steps, you can find the most affordable option:

• Work with an experienced insurance agent. Working with an independent insurance agent with experience in finding coverage for high-risk applicants is a good way to find the cheapest, guaranteed issue life insurance policy.

• Shop around for a policy. Whether you’re working with an agent or researching policies on your own, the most important thing you can do is shop around. Every life insurance company assesses risk differently. If you are denied coverage by one company, it doesn’t mean another won’t approve you. Shopping around can also help you get the lowest premium for the coverage you seek.

• Read about the best life insurance companies. Policy options and riders vary by company, so reading company reviews can help you narrow down on life insurers offering the type of coverage you need. For example, not all companies offer no-exam life insurance or whole life insurance.

Also remember that while you may be considered a high-risk applicant now, that may change in the future. Your risk level is not permanent; a career change or improvement in your medical condition could result in lower rates.

Summary of high-risk life insurance

If your health or habits could affect life expectancy, insurance companies will likely consider you a high-risk applicant. Being classified as high-risk could mean paying higher-than-average premiums and may even limit the life insurance options available to you.

An insurance provider can classify you as high-risk if you:

• Have a dangerous job
• Have a risky hobby
• Smoke or use alcohol
• Have a criminal history
• Have a serious medical condition
• Have a family health history of a life-threatening disease or early death

If you’ve been denied coverage before, you may want to consider purchasing a guaranteed issue life insurance policy. This type of whole life policy may be more expensive than other options, and coverage amounts are generally lower.

Additionally, guaranteed issue policies generally don't have a cash value component and may offer graded benefits. This means that if you died within the first couple of years after the policy was issued, your beneficiaries could receive a reduced benefit or just a reimbursement of the premiums you paid.