What Are Your Options for Life Insurance as a “High-Risk” Individual?

You may have heard the term “high-risk” floated around when it comes to other insurance policies, particularly auto insurance and home insurance. Insurance is all about risk. The riskier you are, the more likely you are to pay more for your insurance. And, if you’re just too risky, some insurers may deny you coverage altogether! While it’s better to do what you can to avoid a high-risk label, with life insurance, it just may not be an option. There are many reasons why you might be defined as high-risk and, if you have, it can be difficult to find affordable insurance – or coverage altogether.

In this blog post, we plan to address the various challenges that are faced by individuals with pre-existing conditions/risky lifestyles looking to obtain life insurance, and tackle the matter of suggesting alternative options to preserve their financial futures and help them reach their financial goals.

What would cause me to be labelled “high-risk” by a life insurance carrier?

Upon being defined as high-risk, your rates and application process will be (unfortunately) impacted. A high-risk label can deny you from coverage altogether, which just means you’ll have to look for coverage through the more niche markets.

What makes someone high-risk, anyway? Well, it could be due to having been diagnosed with a medical condition, it could be because you work a dangerous job, or you have a high-risk activity you like to do on the regular. Your occupation may be considered high-risk if –

• If you work with explosives in any capacity
• If you work high off the ground
• If you work underground
• If you are regularly exposed to hazardous chemicals
• If you are in the military
• If you are exposed to the use of firearms or use them
• If you travel to dangerous locations for work

A job is one thing. Sometimes, risky hobbies can also have you labelled high-risk. Yes, we love our “adrenaline junkie” fun times, but sometimes our policies may contain exclusions due to specific hazardous activities. So, if you’re a snowmobile enthusiast who dies because your vehicle flipped on you during a run, your beneficiaries will not receive a death benefit.

Here’s a list of the hobbies that insurers may view as hazardous:

• Skiing
• Snowboarding
• Snowmobiling
• Sport aviation
• Skydiving
• Climbing (rock, ice and snow, mountain)
• Scuba diving
• Motor vehicle racing

Once you have applied for a life insurance policy, their underwriting squad will grade your risk scale, which may determine your eligibility for coverage and your price. At this point, you could be labelled high-risk. Being labelled high-risk for a risky lifestyle may not be the same as with a medical condition; rather, the difference is that certain causes of death due to your lifestyle or occupation may be excluded from coverage, but you can still purchase traditional life insurance.

Being labelled high-risk due to a pre-existing medical condition is a different matter altogether. We’ll go into the alternative options for high-risk individuals with pre-existing medical conditions struggling to get insured in the sections below.

What does it mean if I have been labelled high-risk?

Whether your label was the result of a medical diagnosis or because of a high-risk activity/occupation that you partake in, you may have been deemed high-risk. Unfortunately, a high-risk label can result in you being denied coverage, or it can mean your options for coverage are limited. You may be able to acquire life insurance in two forms if you are high-risk: through a simplified life plan, or a guaranteed life insurance plan. Simplified policies cost more and offer less coverage, but guaranteed plans cost even more and offer even less covering. Try to use only guaranteed as a last option if you are denied simplified life insurance and traditional life insurance.

What is simplified life insurance?

Simplified life insurance is typically offered in both term and permanent life insurance forms. A medical exam will not be required for simplified issue insurance policies, but you will be required to answer some health-related questions as per your application. You will not be required to partake in a medical exam, and premiums may be much higher than your traditional life insurance. Simplified life insurance policies are a good option for those who want faster approval and do not want to take a medical exam, but are willing to also pay for higher monthly premiums. Simplified life insurance plans have less coverage amounts than traditional life insurance as well.

Is a guaranteed life insurance plan an alternative for me as a high-risk individual?

A guaranteed life insurance plan is essentially a life insurance plan that does not require a medical exam and does not “ask any questions.” This is most ideal for people who were deemed as high-risk because of a serious medical condition they were diagnosed with, since these policies won’t cost you more – since there isn’t any medical exam to gauge your overall health.

These policies feature:

• No medical questions asked
• No visits from paramedical companies or nurses
• Approval within a few hours/few days
• Most policies cap out between $25k to $50k

Guaranteed life, however, is a type of permanent life insurance. It has a maximum payout of $50,000, although some insurers will cover less, and it has the highest premium of any policy. If you have no other choice, guaranteed life is an option, but if you are perfectly healthy, do not skip out on the medical exam. Seriously – it may be a little inconvenient on your end, but it can save you thousands of dollars throughout the lifetime of your policy.

For more information regarding high-risk life insurance or options as someone who has been diagnosed with a medical condition and is finding it difficult to obtain insurance, give us a call here at Excalibur Insurance and we’ll help find options for you.