How to Find Affordable High-Risk Life Insurance
High-risk life insurance is a type of life insurance that is designed for people who are considered a higher risk to insure. If you have a job or a hobby that puts you in dangerous situations, you may be considered high risk. In addition, if you have poor health, insurance companies may regard you as a high risk.
The way insurance companies classify high risk varies greatly. You may face higher insurance rates if you are classified as a high risk to insure. As a result, in order to find the best affordable life insurance, we recommend obtaining quotes from a number of insurers.
How does being classified as high-risk affect life insurance?
The fact that you are a high risk to insure can have an impact on the cost of a life insurance policy. You may also encounter limited coverage options in terms of policy size, as some insurers refuse applications for specific types of risk. For example, if you are a senior over the age of 81, many insurers will refuse to provide coverage unless you have no health issues.
- Finally, being classified as a high risk can affect the types of policies available to you. For example, if you are classified as high-risk, AIG will only offer permanent life insurance policies. However, policies for all other health classes are available in both term and whole life.
Can I buy life insurance if I am considered a high risk?
If you are considered high-risk, you can buy life insurance, but your coverage options may be limited and your rates will likely be higher. Your high-risk status, also known as impaired risk insurance, will be determined by a number of factors, including your health, lifestyle, profession, habits, and hobbies. Exact classifications may differ between insurance companies, but these factors assist insurers in determining whether an applicant is considered high-risk.
The most significant distinction between high-risk and standard life insurance is the cost of coverage. If you are classified as high-risk, your insurer's projected life expectancy will be reduced. As a result, you pose a higher financial risk to the insurance company because it may need to pay out the death benefit sooner than it would for someone who does not have high-risk factors.
Life insurance for high-risk occupations
A hazardous occupation may place you in the high-risk category because there is a chance you will die while performing your duties. According to the Bureau of Labor Statistics (BLS) Census of Fatal Occupational Injuries, 23% of commercial fishermen are fatally injured or die on the job. This is the highest of any occupation, which is why insurance companies almost always reject applicants with this occupation. Roofers, on the other hand, have a lower fatality rate and may be able to obtain life insurance from some providers.
Examples of high-risk occupations include:
- Underground miners
- Farmers and ranchers
- Commercial fishermen
- Construction workers
- Roofing specialists
- Steelworkers
It is important to note that not all life insurance companies define dangerous occupations in the same way. During the underwriting process, an insurer will ask you questions about your job's day-to-day activities as well as the working environment. This enables the company to assess the key risks associated with your occupation.
What if my employer offers a group insurance plan?
Employers frequently provide group life insurance policies to their employees. This is very common in high-risk occupations because employers want to protect their employees who may have difficulty obtaining individual coverage.
We recommend that if your employer provides a certain amount of life insurance at no extra cost, also known as basic coverage, you take advantage of the policy. Basic group plans, on the other hand, are typically limited in their coverage, with maximum limits of $50,000 or the employee's annual salary. As a result, if a basic policy is insufficient to meet your financial obligations, we recommend that you obtain supplemental life insurance coverage. This is available as a supplemental plan through your employer or as an individual life insurance policy.
Compare rates and options between your employer's coverage and what you discover through your own research to get the best policy for your needs.
Life insurance for people with high-risk diseases and habits
If you have health problems or a pre-existing medical condition, the severity of your condition will determine whether you are classified as high-risk. Certain diseases reduce life expectancy, raising the overall risk for insurance companies.
If you have habits that reduce your life expectancy, you may be considered high risk. For example, if you smoke cigarettes or cigars on a regular basis, you may be considered high-risk, though not all smokers fall into this category. If you have been smoking for a long time or only smoke infrequently, you may be eligible for preferred or standard tobacco health ratings.
High-risk diseases and behaviors include:
- Crohn's disease
- Heart disease
- Organ transplants
- History of cancer
- Kidney disease
- High cholesterol
- Smoking cigarettes or cigars
- Chewing tobacco
Each life insurance company has its own risk tolerance for patients with specific diseases or conditions. AIG, for example, provides insurance to people with coronary artery disease if they obtain an attending physician statement. Transamerica Life Insurance, on the other hand, refuses all applicants with coronary disease. Because of these differences, it can be beneficial to research underwriting guidelines from life insurance providers to understand what they accept and deny.
Life insurance for high-risk hobbies
When applying for life insurance, your personal hobbies may also cause you to be considered a high risk. This is primarily determined by the type of hobby and the frequency with which you engage in it. For example, if you enjoy bungee jumping and jump 10 or more times per year, Ameritas Life Insurance will charge you an additional $5 per $1,000 in coverage. However, if you jump less than 10 times per year, you will not be charged this additional fee and will be eligible for standard health rates.
High-risk hobbies that life insurance companies typically inquire about include:
- Skydiving
- Scuba diving
- Bungee jumping
- Racing (boat, car, bike, skiing)
- Parachuting
- Hang gliding
If you only want to try an activity once, you would not be considered a high risk to insure. For example, if you go skydiving for the first time this year, a life insurance company is unlikely to consider you high-risk. As previously stated, the frequency of these hobbies has a significant impact on the cost of life insurance and whether or not a provider will accept your application.
How are high-risk life insurance rates determined?
Before offering coverage, the insurer will ask a series of questions about your lifestyle, medical history, and family history when you apply for permanent or term life insurance. Your risk level and health rating will determine whether you qualify for a policy and the rates you will pay. These are determined during the underwriting process and, if necessary, a medical examination.
Each life insurance company uses a similar rating system, though the names of the categories may differ. Overall, the higher the category you qualify for, the lower your premium.
Life Insurance Rating Categories
- Preferred select: Nonsmokers in good health with little to no family medical history are preferred candidates.
- Preferred: Nonsmokers who are in great health with a minor condition.
- Standard plus: Nonsmokers in good health who may have a couple of minor conditions or have high blood pressure.
- Standard: Nonsmokers with average health or have a family medical condition.
- Preferred smokers: Smokers, or those who have quit or smoke on occasion, who are in good health and have no medical history in their family.
- Standard smoker: A healthy smoker.
- Table rating: A separate category for people with poor health or who are considered a high risk to insure.
The table rating system is typically used to determine rates for high-risk life insurance. These ratings are referred to as substandard insurance and have the highest coverage costs.
With table ratings, the applicant receives a letter (A-P) or a number (1-16) indicating the percentage of the standard premium amount that must be paid. Every letter or number down the table increases the standard premium by 25%. For example, if the standard premium is $100, a table rating of B would require you to pay 50% more, or a premium of $150. If you have a rating of 7, you will pay 175% more than the standard rate, or $275 more.
Although table ratings are the most common method of determining rates for high-risk applicants, each insurance company has its own method of assessing your risk level. For example, one insurer may assign a table rating to someone with high cholesterol, while another insurer may offer that same person standard life insurance rates. This could be due to the fact that the second provider specializes in policies for people with high cholesterol.
Choosing the best 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 to determine which carriers are appropriate for your high-risk situation.
As previously stated, insurance companies that specialize in the type of high-risk life insurance that applies to your situation 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 increase your annual premium by 25% or more.
If you are unable to locate a life insurance company that will provide the policy you require, we recommend contacting an independent insurance broker. Experienced brokers and agents can advise you on which risks insurers will accept and answer your questions. Additionally, some high-risk insurance brokers may be aware of which insurance companies accept applicants with your risk profile.
Guaranteed acceptance life insurance
If you can't get standard underwritten coverage but still need a policy, consider guaranteed acceptance life insurance. These policies do not require any medical exams or lifestyle questions, and rates are solely determined by your age, location, and gender.
Life insurance providers offer quotes that are more expensive than standard life insurance and usually cap the death benefit at $25,000. This is because they are unable to determine an appropriate price based on your risk profile. You will not, however, be denied coverage.