Have you ever filled out information for life insurance only to find the premium is larger than the quote? Well, your insurance company may consider you a high-risk individual.
Insurance companies ask you numerous questions about your health and lifestyle. This is all to determine whether you require high-risk life insurance.
Commonly, a higher-priced insurance policy is high-risk. Now, after receiving the price tag, sticker shock is common. High-risk policies get pricey.
It is critical you understand how insurance companies determine who qualifies for high-risk life insurance. By understanding the nuances, you can ultimately avoid high-risk life insurance. You can also recognize the aspects that determine high-risk life insurance in your own life.
If you know you may qualify for high-risk life insurance, your sticker shock will not be as grand.
What is High-Risk Life Insurance?
Insurers divide applicants into rate classes, usually standard, preferred, or super preferred. Different insurers may call them different names, but the purpose remains the same. Insurers want to group you based on your health conditions.
If you have critical health conditions, insurers rate you below the “standard” category. This increases the price of your life insurance policy. The insurers consider you a high-risk individual.
Insurers also consider how high risk your occupation is. They will also consider you high risk based on your hobbies.
Because of your high-risk status, the cost of your policy will be higher, making it high-risk life insurance.
Insurance companies look at the mortality rate when determining if a job is high risk. Simply because there is a risk for injury or death does not mean it’s high risk.
Insurers look at the data to back up the status of high risk. They consider mortality rates, and that’s it. So, a job could pose the threat of injury, but if the data is not there to back it up, insurers do not consider it high risk.
Let’s go over some occupations that insurers consider high risk.
Fishing Industry Workers
For those questioning this assertion, tune into the television show Deadliest Catch. You will not question the danger of this job for much longer.
If you are an employee in the fishing industry, your insurers may classify you as a high-risk individual.
Keep in mind, working on a boat is not the only qualification for high-risk life insurance in the fishing industry. Many insurers also consider jobs outside of the boat just as dangerous.
Active Military Service People
Military men and women provide insurers with an increased risk. Because of that, their insurance policies are costlier.
Insurers may decide the price based upon branch and level of military service.
Pilots come in all shapes and sizes. Some pilots fly commercial planes while others fly private planes.
Some pilots do not fly professionally. They simply fly as a hobby, or they fly to get their family from point A to point B. Some pilots do not fly planes. They may fly blimps or helicopters.
Because of this, insurers will take these factors into consideration while determining the level of risk. Insurers will ask questions about how often a person flies and where they fly to determine the risk of insuring.
Law Enforcement Workers
Law enforcement is an understandable high-risk occupation. However, insurers look at the extent of the occupation.
Some law enforcement workers only work part-time patrolling. Others are full-time, and they are actively placing their lives at risk. Insurance companies look at these factors when determining the level of risk.
Keep in mind, law enforcement workers are high-risk individuals. Because of that, they have high-risk life insurance. The price may fluctuate depending on the level of risk.
This also extends to municipal firefighters, but it is crucial to understand that even hobbies can put you at high risk.
Many firefighters are on a volunteer basis, and there are some that do this as an occupation. Regardless of your level, firefighting voluntarily or professionally places you at risk.
Insurers evaluate your lifestyle to determine whether you have high-risk habits. These habits consist of smoking cigarettes or cigars and drinking more than the insurers deem necessary.
However, the category rate depends on the level of consumption. Some insurers give standard rates to smokers if they consume a lower amount of tobacco than on average.
Insurers may deem you high risk if you are an avid scuba diver. If you race motorcycles, they may deem you a high risk.
For many insurers, standard jobs are not enough to get a standard rate. Depending on the level of risk, the insurers may charge you additional fees or give you high-risk life insurance.
High-Risk Health Conditions
Insurers look at the health of applicants to determine their level of risk. Insurers will then focus on the mortality rate of each condition to determine the level of risk.
There are some conditions that do not appear on the application form, meaning insurance companies do not consider them a high-risk condition.
Let’s go over some of the health conditions that insurance companies consider high risk.
An underwriter will need additional information about the cancer diagnosis and treatment.
They ask about the treatment as well as prognosis. Keep in mind that skin cancer typically does not count in this scenario.
Lou Gehrig’s Disease or ALS
ALS is a neurodegenerative disease that negatively affects nerve cells in the brain and spinal cord.
The mortality rate of this disease is high, and there is no known cure. Because of that, applicants need to purchase life insurance with higher rates and a 2-year waiting period. Many insurance companies will not pay the full death benefit before those two years.
Although there are now treatments, many insurance companies do not offer traditional or standard rates to those with HIV.
Because of this, those diagnosed with HIV/AIDS are high-risk individuals, according to the insurers. However, guaranteed issue life insurance is an alternative to those with HIV/AIDs.
Dementia and Alzheimer’s are both prevalent diseases across the country. Because of the lack of cure and high death rate, life insurers cannot offer those with Dementia with standard insurance coverage.
Stroke or Heart Attack
Those who have previously suffered from a heart attack or stroke can qualify for a standard rate as long as the event occurred 12 months ago. The heart attack or stroke also cannot have caused permanent damage or paralysis.
How Does Risk Affect Life Insurance Rates?
Depending on your level of risk, the insurance company may charge you higher rates. Typically, the higher the risk, the higher the rate.
Based on your lifestyle and health, the insurance company will assign you a rate class. From there, they will calculate your rates.
On average, high-risk life insurance has higher rates. As a high-risk individual, you present an above-average risk. When you present an above-average risk, the insurance company considers themselves more at risk when insuring you.
Tips for Buying Life Insurance When You Are High Risk
As a high-risk individual, it is crucial that you find the right rates for you and your family. Here are some tips to help you when purchasing life insurance when you are high risk.
Be aware of your current conditions
Insurance companies will most likely turn you away or present high rates right after a diagnosis or heart attack. Once your medical history demonstrates success, you can reapply to see if lower rates are possible.
Find the right agent
Working with the right agency ensures you find the insurance company that best suits your needs. You need an agent that has connections to many insurance companies to offer the best rates. An agent is a vital portion to purchasing life insurance. Finding an agent that works for you and your health is vital.
Look for improvements in your health
Remember that insurance companies deem you high risk less than 12 months after a heart attack or stroke. After 12 months, you are no longer considered high risk. That is the perfect time to apply for life insurance to get the best rate.
Focus on what you can control
If high-risk hobbies consider you a high-risk individual, you lessen the amount of time you spend on that hobby. Insurers will see that as a step in the right direction.
High-risk life insurance means higher rates. Life insurance keeps your family safe in case of an emergency. Because of that, it is crucial to have life insurance, especially if you are at high risk. NextGen Life Insurance is here to help you get the best policy for your situation. Get your free quote today or call us at 816-281-8750 to get started.
Bear in mind that some of the links in this post are affiliate links and if you go through them to make a purchase I will earn a commission. Keep in mind that I like these companies and their products because of their quality and not because of the commission I receive from your purchases. The decision is yours, and whether or not you decide to buy something is completely up to you.