What is high risk life insurance? What can I do if I am deemed to be high risk?
These are questions we are here to answer. High-risk life insurance can be intimidating. Either you do not want to pay the higher premiums or you are scared you will be denied for the life insurance.
High-risk life insurance does not have to be so scary. Plenty of options are available. In fact, in my industry experience, high-risk life insurance companies exist. Sure, they do not advertise as such but they insure many different variations of life insurance policies for individuals that are deemed high risk. Life insurance for high risk individuals can present more work for the agent, but nothing to fret over. High risk life insurance carriers are always willing to look at your case.
The most important part of the process is gaining an understanding of how high-risk life insurance works. What is your condition? How do life insurance carriers view you in terms of underwriting and risk? In my experience, insuring high risk individuals rarely revolves around cost.
A crazy phenomenon known as, “adverse selection” tends to take place in these situations. Once you know you need the life insurance, you go out and attempt to get it. While nothing is wrong with this approach, it does go to show the importance of gaining life insurance before you run into problems. We will discuss the potential problems in this guide to obtaining high risk life insurance.
Let’s first cover what high risk life insurance is.
If you are reading this blog, my best guess is that you have some underlying medical condition. It has most likely got you a bit skeptical about your chances of obtaining life insurance. Another scenario you may be in is you know you can get coverage, but what will it cost you? All valid questions.
My first point I would like to make is thinking back to why you wanted the life insurance in the first place. Many consumers, my self-included, lose sight of the real meaning behind life insurance. You get into conversations with agents and all the sudden the purchasing decision becomes negotiations on ratings and price.
Insiders tip– We have zero control of the rates or price. No matter how much you believe you are a preferred plus or the price can be swayed lower, it cannot. All we can do is be a helping hand for you and that is why we are here.
Myself or other independent life insurance agency owners do not set these prices. We are only here to help. Good Life Protections wants to give you honest recommendations of your best options of protecting your family.
Actuarial tables are a primary source of information life insurance carriers use to determine what rates they set for life insurance. They are tables or spreadsheets that show the probability of an individual passing away before an upcoming birthday.
Why does this matter? It plays directly into your rates. Insurance carriers do not have actuarial tables for individuals at certain ages.
They have tables from past experiences with medical conditions. These help them predict outcomes. Think of it as a giant pool of data. It is almost like how you found us on google. Yes, we know you googled life insurance with high risk to find our valuable information.
Over time, life insurance carriers have compiled the data from thousands of individuals for certain medical conditions. The experience they have had with each condition decides the favorability of them insuring you. Also, what the rates may be.
This is how they can pay death claims for the loyal policyholders. Without this data gathering and being selective, they would become insolvent. This would result in affecting thousands of policyholders.
Life insurance carriers also use mortality tables. They would use these when looking at high risk life insurance policies and high-risk individuals. A mortality table seems strikingly close to an actuarial table.
A mortality table breaks down segments of the population. It also analyzes the likelihood of a group of individuals dying at certain age intervals. This is another factor of the equation when it comes to issuing high risk life insurance policies. They must get comfortable with the statistics to feel warm and fuzzy about offering the high-risk life insurance coverage.
Life insurance ratings work straightforward. You have a total of 12 possible ratings you can achieve. This is not including “flat extra charges” which we will discuss soon. Also, note that the 12 ratings can vary from life insurance carrier to life insurance carrier. Sometimes they use table ratings such as Table 1 and Table 2 all the way up to Table 8. Some use letter abbreviations such as Table A through Table G.
Typically, you will start at a preferred plus. This rating is extremely easy to get knocked out of. You do not only have to be healthy, but the rest of your lifestyle needs to be squeaky clean as well. Preferred plus would not be a class you will fall into for a high-risk life insurance policy. Preferred plus can also be known as, “Super Preferred” or “Preferred Best”.
-To achieve this rating, you would need to be…
Within the height and weight guidelines. Let’s first look at this. Here’s an example from AIG.
Build Chart for American General Life Insurance
As you can see, a preferred plus for a male, you need to be at a pretty healthy weight. This is the same for females. You could be deemed high risk from your height and weight ratios on a medical exam.
These tables cut off at standard ratings and you will begin adding table ratings for extra pounds. Each table rating added will typically add 25% to your life insurance policy cost. Once you fall out of the standard weight zones, you are technically considered high risk in the life insurance carriers eyes.
During your paramedical exam, you will have measurements taken of your shoulders, chest, and waist. This is where if you are very stocky or built, you still have a chance of achieving excellent rates. This is not always though.
Let’s dig a little deeper into table ratings for high-risk individuals and high-risk life insurance.
In the following example, we are going to run the rates beginning at preferred plus (best rating) all the way to a Table 8 (worst rating). This will allow you to see the difference in the pricing for the life insurance carriers.
The following illustration will be for a male (non-smoker) 30 years old as well as male 30 years old (smoker). We will work our way through the possible health ratings you could achieve.
After Table 8, unfortunately, the next step is a decline. The tables do not drop down any further than this. The tables we reflected on the high-risk life insurance was also only covering non-tobacco users.
Let’s look at the same tables for someone who likes the nicotine.
As you can see from our demonstration, high-risk life insurance can become costly. Especially, when you add in nicotine use.
Depending on how closely you viewed the images, you will also notice the same life insurance carriers tend to be the top dogs on pricing. **These were taken from the cheapest to the 5th cheapest options across the board.
All these carriers have special niches that they work with when it comes to high risk individuals seeking life insurance. It is important to not chase the cheapest premium because most likely it will cost you later. Let an agent help guide you through the process.
A great example of this would be Protective Life Insurance Company. They are fantastic insuring individuals with heart issues; typically, at a Table 6 rating (high risk life insurance). Yet, when viewing the images, you may be quick to jump to the cheapest option who often will flat out decline you. Life insurance agents are still important in these situations; you should lean on them. At Good Life Protection we have helped thousands of individuals secure high risk life insurance. Individuals who have a wide variety of health conditions and high-risk factors.
Now that we understand how table ratings and life insurance ratings work, let’s dive deeper into the high-risk part of life insurance. Many other factors can be used to determine if you are going to be in the market for high risk life insurance.
High risk life insurance begins with your overall health. Health conditions alone can quickly put you into a high-risk life insurance classification. Or it can even possibly be declined for life insurance.
Some conditions will change your ratings and overall ratings more than other conditions. As we discussed before, it is always important for you to look for a life insurance agent that understands the underwriting niches of each carrier. It can make for huge cost savings. Again, life insurance carriers such as Prudential or Protective Life are great with heart conditions. Phoenix Life Insurance and Banner Life/ William Penn are great with type 2 diabetics and substandard life insurance pricing.
These conditions will dramatically change your life insurance rates. These will place you in high risk life insurance classes. It is going to be the underwriting process and diligence of your agent that gives you a chance at affordable life insurance rates. Let’s break down an example of some basic underwriting of one of these conditions.
Agent’s, including myself at Good Life Protection, are experts at understanding where to begin the process with underwriting for high risk life insurance. In this example, we would start by looking at your medical condition in an advance underwriting engine. This is for type 2 Diabetes. This is going to give us a baseline of where to begin the process with you. These results are linked to all the most reputable companies that Good Life Protection represents.
Terms Included in this example-
Fully Underwritten– Simply means it will need the full process. Good Life Protection always recommends full underwriting for most high-risk life insurance. Certain exceptions do exist however.
For those of you who have shopped life insurance, this is something to why they ask all those invasive questions over the phone. If we do not understand your condition, it is very difficult to help you.
If a life insurance agent does not ask these questions and you have a high-risk concern, Good Life Protection would recommend looking elsewhere. You will be in for quite a surprise on your life insurance rating you were quoted, compared to what you receive. It would be a complete waste of time without proper questioning and transparency with your life insurance agent.
Your options do not end at fully underwritten life insurance policies with high risk life insurance. You may still qualify for non-medical life insurance as well. Let’s look at the same example. An individual with type 1 or type 2 diabetes.
As illustrated above, you can see that American National Life Insurance and Phoenix Life Insurance Company will offer life insurance with no medical exam. These can be extremely beneficial life insurance policies to consider. No invasive medical test, fast turnaround, and easy approval processes.
Medications can dramatically change your fortune with high risk life insurance. This becomes especially true if you take several medications. It does, however, make a big difference in what the medication is for and how well it is controlled.
Life insurance carriers also like to see “stabilization” with high risk cases. Let’s assume you take medications for blood pressure. If it is controlled and you are not switching medications every six months, you may qualify for standard life insurance rates or better. This would knock you back into the “non-high-risk life insurance bracket”. According to nclexonline.com, these are the top 10 prescribed medication of 2017.
Since high blood pressure and high cholesterol dominate medication’s prescribed, we can assume it is the most common health concerns we face. Let’s look at a few underwriting examples of how they can place you in high risk life insurance classes and table ratings.
American National Life Insurance and Phoenix Life Insurance will be our example carriers for high blood pressure. The illustration is also showing options for getting life insurance without needing a medical exam completed.
Good news, right? Standard rates sound like a win. It does, however, get more complicated. Depending on the number of medications needed to control the high blood pressure, it could knock you down into the table ratings we discussed before.
Many life insurance carriers will begin placing you in high risk life insurance classes at medication number three. This varies from company to company.
It also makes a big difference if you have a second condition complimenting the first condition.
Example- Let’s say you take two medications for high blood pressure and it is controlled. You also take two medications for type 2 diabetes; most likely you will fall into the high-risk classes.
Yes, it is true. Your job can also hurt your chances at obtaining life insurance. Unless you are an active duty military member you most likely will not face declines. You also will not face the high-risk rating tables. It is often treated with something known as “flat extra fees”.
Flat Extra Fee’s – An additional amount added to the premium per $1,000.00 of face value.
Since Good Life Protection frequently blogs about law enforcement and life insurance, let’s use law enforcement for our example. Let’s say you are a police officer in Chicago. That alone is most likely no issue with the life insurance carrier. This would not place in you a high-risk class or cause a “flat extra” fee. But, let’s say you are also a member of the narcotics team and bust down drug dealer’s door serving felony warrants. This would be a completely different story.
The life insurance carrier would not rate you into a different high-risk class. What they would do, is most likely assess the flat extra fee onto your life insurance policy and monthly premium.
This would be based on an annual amount per $1,000.00 of coverage.
Let’s say you are a 30-year-old male, nonsmoker, seeking $500,000.00 in coverage over 10-year level premium term insurance. Here would be your top three rates from starting with the lowest rates possible across all life insurance carriers.
If you were accessed the flat extra charge for the high-risk occupation, your rate could have $2.50 added per $1,000.00 in coverage annually.
Taking your final rating to the following charges.
Other dangerous professions that could increase your monthly premiums for life insurance:
If your profession falls into one of these categories, it does not mean you will be a victim of higher life insurance premiums or high-risk life insurance. Some carriers view occupation completely differently than other carriers. Fill out an instant quote form to the right or call Good Life Protection today. Let’s discuss your unique situation and find the best possible rates for life insurance.
Dangerous hobbies can also place you in high risk life insurance. It is again going to be in the form of “flat extra fee’s” that we discussed before.
You will not face any different ratings or be assessed a high-risk table rating. You will most likely be assessed the “flat extra charge”. And lastly, you may even be completely declined for the life insurance altogether. Some common examples of these “hobbies” would be the following.
The illustration we created earlier for the $2.50 flat extra charge, is the way most of these carriers would treat these risks. They could also add exclusions to the policy. Basically, you would be covered for all forms of death except the specific exclusion. If you are a frequent skydiver, you may be covered for all forms of death. But, the policy can state that in the event of death due to skydiving, your policy will not pay the death claim.
Work closely with your agent to ensure that you understand all the fine print of the life insurance policy. If you absolutely need the coverage for such exclusions, work with your agent to see what the best offers may be for your unique situation. High risk life insurance is simply as it states. It is high risk. Not impossible. Just high risk.
Your criminal history is most likely not going to assess you “flat extra charges” or place you in a high-risk life insurance bracket. It is going to cause a life insurance carrier to decline you all together. Most carriers will want to see no felonies for 10 years, but some exceptions do exist. Carriers are also very strict on driving or “Motor Vehicle Reports”. If you have many driving under the influence of alcohol or drugs, you may not be able to get some coverage for quite some time.
A good alternative for coverage if you fall happen to have a bad driving record would be, 5 Star Life Insurance.
5 Star Life Insurance Company will not pull your motor vehicle report. The only catch is that you cannot be declined for life insurance before applying with them. This is where working with an independent agent helps greatly. If you apply with a carrier first, get declined, and then attempt to pivot to 5 Star Life Insurance, it will also be declined. Make sure you know your options before submitting applications blindly.
Your financial background will also play a large role in your chances of obtaining life insurance. Bankruptcies is one of the biggest items that life insurance carriers will look at. Bankruptcies come in a few shapes and sizes and it does make a difference which bracket you fall into.
Chapter 7- This is the simplest form of bankruptcy. Your debts are virtually eliminated. A trustee will determine which parts of your property to sell to distribute to your collectors.
Chapter 11- This primarily pertains to businesses. You will most likely merge your debts and find a method to provide recovery and debt repayment.
Chapter 13- This version of bankruptcy, you get to keep your property. Yet, you will most likely sacrifice future earnings on a repayment plan to pay your creditors back.
Life insurance carriers will want to know when and if your bankruptcy has been discharged. This can make a big difference of how the life insurance carriers will proceed with offering coverage to you. If your bankruptcy has been discharged and you are financially getting your feet back under you, you have a strong chance of not having large repercussions. Also, a strong chance of not being placed under high risk life insurance.
You should always speak to an independent agent with cases of bankruptcy and life insurance. Often, he or she may be able to advise you to postpone your application. Other times, you may be perfectly fine to put your application in and get coverage immediately. At Good Life Protection, we work with bankruptcy often. Life insurance carriers do exist that will not consider it high risk.
A few good carriers to consider would be:
So, now that you know what might make you be placed into high-risk life insurance, what can Good Life Protection do to help you through the process?
We are not trying to beat a dead horse with this advice. It is however paramount to your chances at life insurance at premiums you can afford. You need to have life insurance agents who know what they are doing. Agent’s that have a large basket of life insurance carriers to work with. Not just any life insurance carriers, but the top life insurance carriers. They need to be experienced with asking the difficult questions and making sure you cover all basis.
The agents also need to be willing to go above and beyond to place life insurance in force for you and your family. Tricks of the trade exist that make high risk life insurance more manageable and easier to place.
Quick quoting can be a very powerful tool for independent life insurance agents and independent agencies. I personally represent over 40 life insurance carriers. Sometimes, medical conditions arise that I am not all too familiar with.
Sure, we see a lot of the same medical conditions daily but every other day something new arises. Surprisingly enough, the life insurance carriers are already on top of it. They are aware of medical conditions in today’s population. They most likely have tentative rates and rough guesses at outcomes of a life insurance application.
What is quick quoting?
Let’s say you call me and have several medical conditions or a medical condition I am not familiar with. Or, let’s say I am not sure how the life insurance carriers will underwrite it or rate you. I would simply reach out to all the life insurance carriers I represent and present the facts. I would shop the entire market for you all in a day’s work. A live underwriter will field the request and examine the facts. Also, get back to us with a good guess of where we could land, or how high risk of life insurance we are looking at.
This a huge benefit to the consumer. Would you rather call 40 carriers and speak to 40 agents who are going to push you buy a policy at a risk class you are not? I think it is a better avenue to present the case one time to one agent with the carriers at his or her disposal and allow him to do the work for you. It is our job and we take pride in helping.
Cover letters are a bit more advanced than quick quoting and come second in the process for a high-risk life insurance case. Once the agent and client agree on a carrier, we are going to apply. However, underwriters are a bit like police detectives. The more information you deliver early on, the happier they are. Surprisingly enough, the more it can help your life insurance rates. Let’s say you had a bankruptcy on your financial background.
We find a life insurance carrier that will accept this risk. Instead of submitting the life insurance application and answering the question “yes” to prior bankruptcies, we explain the circumstances. I have personally written hundreds of cover letters for individuals to help provide them with better life insurance rates or push them into better risk classes for coverage. It details the information in depth for the underwriter and allows the agent to “dress things up” a bit.
A life insurance underwriter can only go off the information in front of them. The more the better. Especially, if it is information that explains things or makes a negative situation look more positive.
Good Life Protection understands high risk life insurance and we want to help. Many different items and different criteria can bump you into high risk life insurance. It is important to understand that you do have options.
The premiums can be cheaper than you might think and you will not always be declined. Most importantly, do not be afraid to explain your situations to a licensed agent. Above all, work with top rated life insurance carriers and shop the open market OR allow an agent to do so for you.
Article Published 6/24/2018- Joshua Martin– Founder- Good Life Protection