If you have a pre-existing condition, you are not alone. A recent analysis by the Department of Health and Human Services reports that anywhere between 19 and 50 percent of non-elderly Americans may have a pre-existing condition.
If you are concerned about how your unexpected passing could affect those who depend on you financially, like your loved ones – spouse, children, or others you help to provide for – then you may be considering purchasing life insurance. You’re in the right spot! We’ll be exploring more in-depth what life insurance with pre-existing conditions looks like.
How does life insurance work? A life insurance policy is a contract between an individual (“the insured”) and an insurance provider. In exchange for paying their monthly premium, if the insured passes away, the insurance company will pay a death benefit to the insured’s named beneficiaries.
The larger details of a life insurance policy can vary based on the type of life insurance you choose, but they will almost always ask an applicant for information on their age, lifestyle, health history, and any pre-existing conditions. These factors can affect a person’s ability to be approved for life insurance, and these factors also affect how much someone could pay on their monthly premium.
Before we move forward, let’s define a pre-existing condition. For the purpose of life insurance, a pre-existing condition is any illness or medical diagnosis you received before applying for life insurance coverage.
We’ll look at many of the considerations involved when someone is shopping for life insurance with pre-existing conditions and how they could impact insurability, cost, and options.
How medical conditions affect the cost of life insurance
Not all pre-existing conditions have the same impact on insurability for life insurance. The higher the risk to your health and life your pre-existing condition is, the more difficult or expensive it could be to obtain life insurance. If you’re otherwise healthy, a low-impact pre-existing condition may not have a great effect on your insurability or the cost of your premiums.
Low-to-medium-impact conditions:
- Anxiety
- Asthma
- Depression
- High blood pressure
- High cholesterol
- Sleep apnea
High-impact conditions:
- Alcoholism or drug abuse
- Cancer
- Diabetes
- Heart disease or heart attack
- HIV
- Kidney disease
- Smoking
How do life insurance companies know you have a pre-existing condition?
Insurance companies will ask you a series of questions during the application process to help them examine your risk and determine the premiums. Some insurance companies will then require a medical exam to confirm your cholesterol, blood pressure, and blood sugar levels. You may also be asked for your primary care physician’s information. If you signed a HIPAA release form, then the insurance company may request your medical records from your doctor’s office.
While it may be tempting to not disclose your pre-existing conditions, it could slow down the application process, lower your chances of getting a better rate or cause you to be declined for life insurance.
How do life insurance companies evaluate medical conditions?
Diagnosis: The more serious your diagnosis is, the more you may have to pay for life insurance.
Treatment: The length of treatment for your condition, whether your condition has improved, and if you have been hospitalized for your condition could all affect your premium.
Prescriptions: You could get lower rates if you’re on fewer medications and if their dosages have been consistent over time.
Length of diagnosis: A longer diagnosis could show that your condition may not be improving or could worsen over time.
Related concerns: Other illnesses or unhealthy habits could cause your pre-existing condition to worsen. For example, an otherwise healthy person with high cholesterol could be considered a lower risk than a person with high cholesterol who smokes.
The good news is that showing improvement on any of the above could help lower your life insurance rates!
What about high-impact pre-existing conditions?
Some of those pre-existing conditions may reassess your insurability after a certain amount of time. If you struggled with drug or alcohol abuse, you may have a better chance of getting a life insurance policy after years have passed. Life insurance will generally deny coverage for at least three years for alcoholism and at least five years for drug addiction. For people who have had cancer, it would be difficult to be approved for a policy if you’re currently being treated for cancer or have received a diagnosis in the past five years.
How to buy life insurance if you have a pre-existing condition
It’s important to consider all of your options for life insurance as well as when you should apply for a policy.
What should I consider when it comes to applying for life insurance?
Age: It can benefit you to purchase life insurance when you’re younger. On average, life insurance rates increase 8 to 12 percent each year you wait to apply, based on age alone. Your pre-existing condition and your younger age may weigh more positively with a life insurance company than your pre-existing condition and a greater age. Rather than waiting to see if your condition changes, know that many insurers may reconsider your rate after a year if your condition and health has improved. Another benefit to getting life insurance earlier is that if you are locked into a life insurance rate and then develop a condition later on, your premium will not go up!
Treatment: Showing that you are actively managing your health conditions with treatment, healthy life choices such as diet and exercise, and even reducing your number of prescriptions, could work in your favor. Insurance companies could take your documentation of effective treatment into consideration and it could help you get lower rates.
What types of life insurance should I consider?
Term life insurance: This type of life insurance is often considered the simplest and least costly form of life insurance. Term life insurance lasts only as long as you decide (generally terms are between 10 and 30 years) and is often chosen to help people protect the loved ones that depend on their income if the financial provider were to pass away.
People often purchase term life insurance when they have a mortgage and/or loved ones who depend on them financially. The application process is known to be straightforward and may not even require a medical exam! Many people with a pre-existing condition may still be approved for term life insurance.
Whole life insurance: This type of life insurance is considered permanent and is designed to last your entire life. Premiums can be much higher for this type of life insurance because of the length of the policy and other financial options within the policy.
If you are interested in this type of life insurance, a pre-existing condition will not automatically disqualify you, but your premiums may be more expensive than if you did not have the condition.
Riders: This is not a type of life insurance, but instead, an add-on to a life insurance policy that some insurance companies will offer. If you are worried about developing a condition later on in life or your pre-existing condition getting worse, a rider could give you the ability to use some of your death benefit amount while still alive.
- Accelerated death benefit: This rider would allow you to request a portion of your death benefit early if you were to be diagnosed with a terminal condition or illness.
- Chronic illness accelerated death benefit: This rider would allow you to request a portion of your death benefit early if you are struggling to complete daily activities (feeding yourself, bathing, etc.) due to your illness.
- Critical illness accelerated death benefit: This rider would enable you to request a portion of your death benefit early if you were to become critically ill from a health event like a stroke or a heart attack.
What if I am not approved for any of these types of life insurance?
Even if your pre-existing condition disqualifies you from the types of traditional life insurance mentioned above, you may still have some options to be covered under a different life insurance policy.
Group life insurance: Check your company benefits package – many companies will offer free or discounted group life insurance as part of their employee benefits.
These types of policies do not ask you health questions in order for you to be covered. While the coverage may not be as high as may be offered by traditional life insurance, it is usually based on your salary (1x your salary, 2x your salary, etc.) and could provide your family with some financial relief if you were to pass away.
Guaranteed life insurance: This type of whole life insurance is designed to help pay final expenses (end-of-life costs, funeral arrangements, etc.). This is considered guaranteed issue life insurance and doesn’t require a health questionnaire or a medical exam. Almost all applicants are approved for this type of life insurance.
Where do I get started?
If you are unsure about whether your pre-existing condition could allow you to get term life insurance, you could always start with a free quote. At Bestow, the entire process – from quote to application – is done online with no medical exam required. Start with your free quote and if you like what you see, apply online in just a few minutes. If you are approved and pay your premium, you may be able to receive coverage same-day.
